With only days left until the end of the post-Brexit transition period, the disruption caused by border closures related to the new variant of Covid-19 is a reminder of how dependent the UK economy is on trade across the English Channel.
As yet, there is no sign of a trade deal with the EU. And while the government insists “huge advances” have been made in its preparations for what may happen from January onwards, businesses that trade across the border are extremely concerned.
Duncan Buchanan, the policy director of the Road Haulage Association, says he is expecting something “between shocking and a catastrophe”.
And the National Audit Office said recently that, despite progress by government departments, “it is still likely that widespread disruption will occur from 1 January 2021.”
Deal or no deal
There will be big changes at UK borders, whether or not a free trade deal is agreed with the EU.
An agreement would remove the need for tariffs (or taxes) to be paid on goods crossing borders.
But from 1 January, goods entering the EU from Great Britain (England, Scotland and Wales) will face large amounts of new paperwork and checks, including:
- customs declarations
- rules of origin checks
- product safety certificates
- food inspections
Hauliers will also need to make sure they have the right transportation paperwork before they drive to the border.
There is particular focus on what is known as the short straits route between Dover and Calais, and the nearby Channel Tunnel, which taken together handle about four million lorries a year.
“This is the biggest imposition of red tape that businesses have had to deal with in 50 years,” says William Bain from the British Retail Consortium.
Phasing in checks
Last summer, the government decided not to seek an extension to the transition – the 11-month period allowing for UK/EU negotiations on a future relationship (during which rules and trade have stayed the same).
It ends on 31 December, and controls on British exports to the EU will begin the next day.
But in response to the Covid crisis, the government will delay, for six months, full controls in the opposite direction – on goods entering Great Britain from the EU.
There will be checks from 1 January on controlled substances such as alcohol and tobacco, and traders deemed to be a risk will also be asked to fill in customs declarations. But most checks on goods coming in from the EU will be delayed until 1 July, a deadline that could in theory be extended.
“I think we will want to monitor it,” the chief executive of HM Revenue and Customs, Jim Harra, told MPs last month. “Hopefully we will not still be in a situation where Covid-19 is consuming as much of people’s attention.”
Access permits for Kent
Other plans to tackle disruption include diverting some trade to other ports around the country, and the government has built big lorry parks in Kent to try to avoid long queues on motorways.
Some of these plans have put into practice early, to deal with the Covid border closures affecting Dover and the Channel Tunnel. Hundreds of lorries have already been diverted to Manston airfield.
From 1 January drivers of lorries weighing more than 7.5 tonnes will also need to acquire a Kent Access Permit before they enter the county. They will have to show that they have all the paperwork they need to ferry goods to Europe.
But that doesn’t deal with the challenge of the thousands of vans that cross the Channel every week.
“What has been serially misunderstood by various parts of government is the scale of the complexity for people on the ground dealing with the paperwork,” says Duncan Buchanan.
That could mean that instead of queues on motorways, many traders won’t be able to leave their depots.
“Either they won’t be able to get vets to sign off on their meat exports, or they won’t be able to get their permit because they don’t have the right bits of paper,” says Shane Brennan, chief executive of the Cold Storage Federation.
“We might see a quite significant holding off of trading – people just not moving stuff in the first few weeks.”
Eighty-five per cent of the volume of trade between the EU and Great Britain is carried by EU hauliers, who are often paid not by the hour, but by the kilometre. If they think there will be too many delays, many may simply not come.
The government says the readiness of traders to deal with the new system remains its biggest concern.
“The sheer scale of the overall operation means there are literally many millions of moving parts,” permanent secretary of the cabinet office Alex Chisholm told MPs. “Inevitably there are going to be some difficulties for some individual people as they adjust to the new regime.”
The government is “urging business owners to make their final preparations before new rules come into force” and it has announced a new Border Operations Centre as part of plans “for the UK to have the world’s most effective border by 2025”.
Questions have been asked about how changes at the border might affect food supply. The short answer is no-one can say for sure, but nearly 30% of all the food consumed in the UK is imported from the EU.
The challenge is particularly acute because in January and February the UK grows relatively small amounts of fruit and vegetables. The winter months are when it is most dependent on supplies from southern Europe. So, if there are delays, they could cause some shortages on the shelves.
“Some gaps are possible but we’re not going to run out of food – that’s not going to happen” says Ian Wright, chief executive of the Food and Drink Federation.
If there was no deal, though, and tariffs were imposed, things are likely to become really difficult for a while.
When it comes to non-perishable items, there has been some stockpiling in preparation for either outcome, but those extra supplies won’t last forever.
“The crunch point is probably not going to be in the first few days or weeks of January,” William Bain argues. “Towards the end of the month, when new orders start being placed and delivered, we will start to see the processes in Kent and the other ports really tested.”
But it’s not only about food.
Other retailers, which are used to moving their stock freely around the EU customs union are now having to create separate supply chains for the UK. That is costing them more money, and their new systems have yet to be tested properly.
Northern Ireland’s border
It’s not just about trade across the English Channel.
Trade across the Irish Sea between Great Britain and the Republic of Ireland will be subject to the same pressures, while Northern Ireland will be a special case under the terms of the Northern Ireland protocol in the Brexit Withdrawal Agreement.
Northern Ireland will remain in the EU single market for goods, and unlike the rest of the UK it will continue to enjoy frictionless trade with the EU with no checks of any kind at the land border with the Republic.
But there is a price to pay for that – new bureaucracy within the UK between Great Britain and Northern Ireland.
The EU, for example, has strict rules on products of animal origin: meat, milk, fish and eggs.
These products must enter the single market (and from 1 January Northern Ireland) through a border control post where paperwork is checked, and a proportion of goods are physically inspected.
There will be a grace period of three months for big supermarkets, but many smaller traders and shops will have to get used to the new rules straight away.
Shipments of any product crossing from Great Britain to Northern Ireland will also need a safety and security declaration, and a customs declaration from a new IT system which none of the traders have used before.
The government has set up a Trader Support Service to help.
The details of new trading arrangements between Great Britain and Northern Ireland were announced in early December, and provided some clarity. They include an agreement which means the vast majority of goods being shipped from GB to NI will not be at risk of having tariffs imposed.
But there are plenty of unresolved issues.
Traders are seeking answers about how to send parcels from Great Britain to Northern Ireland, and some online retailers have already suspended deliveries.
The trade from British to Northern Irish ports often involves multiple small shipments on a single lorry – all of which will need the right paperwork.
“We need clear rules for everyone in the supply chain,” says Duncan Buchanan, “and when you scratch the surface it is just not ready.”
It is expected that many checks will be carried out on a ‘light touch’ basis to begin with, especially if there is an overall EU-UK deal to make things easier.
But anyone trading between Great Britain and Northern Ireland is going to have to get used to a new way of working very quickly.