Mixed response to UK government's Brexit white paper free trade proposal

12 / 07 / 2018

Business groups have expressed a mixed response to the UK government's white paper on the country's exit from the European Union (EU).

Aerospace trade group ADS said that it welcomed the white paper as it gave businesses certainty ahead of the country's exit from the EU in 2019.

However, ADS said there are important and complex issues that still to be resolved, including around customs arrangements, while aviation safety regulators in the UK and EU must start technical discussions as soon as possible.

ADS Chief Executive Paul Everitt said: “This White Paper on the Government’s detailed proposals for our future relationship with the EU makes good progress in addressing concerns expressed by our industries and others.

“The proposed free trade area for goods is a welcome step and the Government’s plan for continued participation in important EU regulators like EASA and the ECHA will help secure frictionless trade that benefits both the UK and the EU.

“There is now little time left before the UK leaves the EU to reach the comprehensive agreement for a smooth Brexit we need to avoid the disruption of no deal.

“We hope the EU will respond positively to this White Paper as a basis for further detailed discussions and we urge negotiators on both sides to work together to reach solutions that protect jobs and investment.”

Law firm Womble Bond Dickinson said the proposal for a free trade area coupled with a facilitated customs arrangement to allow cross-border trade to be as frictionless as possible could be complex.

The proposal will rely on companies obtaining trusted trader, also known as authorised economic operator (AEO), status. This will rely on these trusted traders telling customs if goods are passing through the UK on their way to Europe.

Womble Bond Dickinson legal director Malcolm Dowden said: "The usefulness of any AEO scheme depends on mutual recognition. Any end-to-end process for the import or export of goods works only if it works at both ends.

"The government's white paper cannot guarantee that AEO status granted in the UK would be recognised by the EU27. Consequently, it merely expresses the hope that the UK will be able to 'agree mutual recognition of Authorised Economic Operators (AEOs)'.

"Without mutual recognition, AEO status would be of little value – and mutual recognition can only be achieved through a full political agreement with the EU. In the event of a 'no deal' Brexit, or of a deal that did not include mutual recognition, the 'trusted trader' concept that underpins the white paper suggestions would not provide 'frictionless' trade."

Dowden also pointed out the complexities of obtaining AEO status, saying the process can take up to 120 days but often takes much longer.

Adam Marshall, director general of the British Chambers of Commerce, said: "At last, businesses have a more comprehensive understanding of the government's aspirations for the UK's future relationship with the EU.

"This vision should not have taken two years and three weeks to emerge, but it is nevertheless a welcome starting point for businesses.

"Momentum and pace are now needed to translate ambition into answers to the real-world, practical questions that businesses face.

"Even with the welcome direction of travel in the white paper, companies still don't know how they'll be paying VAT, how they can move people between offices, or whether goods will get across borders with a minimum of fuss.

"It is incumbent on the two sides to work pragmatically and productively on the nuts-and-bolts detail of the future relationship over the coming weeks, drawing on business experience and expertise."

Parcel firm Parcel Hero said the white paper was "surprisingly good news for British exporters".

ParcelHero head of consumer research David Jinks said: "The phased introduction of a new Facilitated Customs Arrangement, that would remove the need for customs checks and controls between the UK and the EU, as if they were a combined customs territory, is a hugely sensible and pragmatic approach.

"We’ve not tried to hide our fears over the imposition of new tariffs and red tape at EU borders. The White Paper’s aim of establishing a new free trade area, maintaining a common rulebook for goods, covering only those rules necessary to provide for frictionless trade at the border, seems sound common sense."

However, ParcelHero does have "significant reservations" about the loss of free access between the EU and UK to online services.

The new paper specifically says there will be new arrangements on digital trade, including e-commerce, recognising that the UK and the EU will not have current levels of access to each other’s markets.

This could be a major loss of access to lucrative markets for some of Britain’s world leading e-commerce businesses, the firm said.

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