Solving the EU-UK Customs problem: pay where you enter
May 22nd, 2018
This letter from Stephen Bush was published by the Daily Telegraph on 17th May 2018
Of the two mooted schemes before the Cabinet (front page article May 14th). Mrs May’s preference for a “new customs partnership” suffers in the eyes of its parliamentary critics from the requirement to continue to collect EU external tariffs at the UK border.
After entry, goods imported by British-based companies would be given a rebate for the difference between the EU external tariffs and the presumably smaller UK tariffs agreed as part of trade deals with non-EU. The alternative scheme before the Cabinet “Max Fac” appears to this reader to be too undefined as a basis for negotiation with the EU.
Leaving aside the question of who would pay for the rebate, the customs partnership scheme is also unlikely to appeal to the EU negotiators because it does not deal with the” rules of origin” question where non-EU originating goods, which will not have in effect paid the full EU external tariff, would pass tariff-free from the UK into the EU something the World Trade Organisation (WTO) might well object to.
However, the solution is not difficult if you follow the standard international principle that import duties on goods are collected by the jurisdictions levying the tariff at the point where they enter their territory.
On this principle after Brexit, non-EU goods when entering the UK will pay the UK tariff to the British authorities rather than the EU tariff they pay to the EU now. They will carry a machine-readable bar code certifying this. Goods, or parts of goods, entering the EU from the UK, but originating from outside the EU-UK zone, will pay any difference between the EU and UK tariffs to the EU customs as will continue to be the case for other non-EU goods.
This scheme can be implemented more or less straight away. No new forms or procedures at the ports are required. If the EU and UK external tariffs for some goods are the same for a while the only difference will be is that all the duties accrue to the British exchequer rather than the EU’s.
This scheme also solves the ostensible Irish border problem. If the Irish customs do not want to collect any tariff differences in their favour at the border, well that is up to them and the EU, not up to the British.