Leaving the EU: Customs Arrangements — [Mr Gary Streeter in the Chair]

Part of Backbench Business – in Westminster Hall at 3:29 pm on 10 July 2018.

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Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy) 3:29, 10 July 2018

On that note, Mr Streeter, I thank you for chairing the debate and congratulate Stephen Hammond on securing it. I also want to mention the fact that there are quite a lot of people in the Public Gallery, which is unusual. It is good for people to see that debate in this place can be respectful and that it can be conducted without shouting as we perhaps do at Prime Minister’s questions. It might be fairly dry, but the issues we are debating are important to businesses in our constituencies. I will save most of the particularly lengthy speech that I could make for the debate on the Taxation (Cross-border Trade) Bill next week. I am sure that the two Front Benchers have heard most of it already anyway. As repetition is encouraged in this place they will be delighted to hear it again next week.

You will not be surprised to hear, Mr Streeter, that the SNP’s position is that we should stay in the EU. Scotland voted to stay in the EU, and I believe that is in the best interests of people in Scotland. That is not just because people voted to remain, but because I passionately believe that being a member of the EU has helped us culturally, and also had a huge economic benefit. If we cannot stay in the EU, I think we should stay in the single market and customs union. A number of issues about staying in the customs union have been rehashed and discussed in this debate and I will mention a few of them, but first I wish to comment briefly on the Chequers plan.

The Chequers plan should have been published before article 50 was triggered, and we should have had this level of certainty about the UK Government’s future plans at that stage. Businesses are worried about what will happen—in a recent poll, mainly small businesses said that they are using only in-house expertise to plan for what will happen post-Brexit. They are not bringing in any specialist knowledge, which is a problem. At this point, however, they cannot bring in specialist knowledge to help them plan, because we do not know what will happen. Even the plan from the UK Government—the Chequers agreement, as I am sure it will be known—provides no certainty because we do not yet have an agreement with the EU, which is fundamental. This is a negotiation, and we need certainty for businesses so that they can work out what customs arrangements will look like.

The hon. Member for Wimbledon spoke at length about some of the bureaucracy involved, and that is a key issue in leaving the customs union. He gave the statistic of £4 billion a year in extra bureaucracy, which is a phenomenal amount of money. If a two-minute delay at Dover becomes a 17-mile queue, that would be totally unmanageable, but there are not yet any plans. The UK Government issued a written statement about the possibility of creating extra lorry parks, but that will not cut it. We will need significant infrastructure investment for any delay to be manageable, which is a real issue.

I will come on to rules of origin checks, but phytosanitary and animal health checks will also be required at the border, which is a particular issue for the agricultural industry. As everybody knows, Scottish food is the best in the world, and being able to export it to the EU is incredibly important to us. Someone who is exporting langoustine to the EU does not want it to sit in a lorry for even an extra hour, because it will not be in a very edible state once it gets there. There is therefore a real concern about the possible impact on the quality of our exported food if there is any sort of delay.

Non-tariff barriers and rules of origin are important. Antoinette Sandbach raised a point about rules of origin that I have mentioned previously, and in particular the rolling over of the EU’s current free trade agreements with third countries. It is incredibly important to ensure that those free trade agreements include cumulation, so that when cars are sold that do not meet the 65% content rule—for example, if they are being exported to South Korea—cumulation of EU content with UK content can be included to allow that free trade agreement to continue. If those free trade agreements are not rolled over with an element of cumulation, on the day that the UK leaves the EU we will no longer be able to export cars to South Korea. That will be an issue for other countries as well, but the car industry has that 65% figure, which is important.

Although the UK has a system of authorised economic operators, its system does not have the same flexibility to allow someone to become an AEO that exists in some other countries. The UK Government have said that being an authorised economic operator will help with exporting, which it will. However, that AEO system needs to be more flexible and ensure that people can more easily fulfil the requirements to become an AEO. If there are any additional customs barriers to those that currently exist, many more people will need to apply to become an AEO and have less friction in their trade.

There is not yet clarity on how rules of origin will look, or on filling in the form, and I am slightly concerned that that was omitted from the Customs Bill. At the moment, the British Chambers of Commerce has things such as certified rules of origin, but the Bill does not state what our rules of origin form will look like, or whether the UK Government will create a form that business can fill in to replicate the EUR 1 form. Obviously, we cannot continue to use the EUR 1 form because we will be outside the EU, but the Government need to copy and paste it in, and it would be good if they could give certainty to businesses about what that form is likely to look like, so that they know with what they will be expected to comply.

We are told that the benefit of leaving the customs union is that we will be able to strike free trade agreements, but earlier the point was made pretty comprehensively about how low those free trade agreements will be. Earlier this year The Sun published an article called “Vote for bargains”, which it later corrected. It was put out by members of the European Research Group, and it stated that there would be a £1 reduction in the price of butter as a result of us leaving the EU and being able to reduce our tariffs. In reality, only 0.23% of the butter that we import comes from outside the EU, and that comes from New Zealand. It does involve a tariff, but it is only 0.23% of the butter that we import. Crashing out without a trade deal and having tariffs on EU butter would be a real problem for the UK. My best guess is that rather than £1, we are looking at a saving of a couple of pence, but that would be only for companies that export butter from New Zealand because it is not sold in any retail way that I could find.

The article also stated that there would be a £44 saving on a TV from South Korea. Given that the EU has a trade deal with South Korea that includes zero tariffs on such goods, it is important for us to challenge such assertions when they are made. Misinformation is being spread about the cost of tariffs, but in reality that cost is minimal compared with the huge cost of non-tariff barriers. As Helen Goodman said, if the gravity model comes into play, we do far more trade with the EU than with anybody else. If a country has a free trade agreement with another country, it will have some regulatory alignment with that other country; it will not be free to make all its own rules because it will have to sign up to some of that country’s regulations—we have already discussed chlorinated chicken, for example. It is not the case that the UK will be a sovereign nation that is able to make all its own rules; that is not how free-trade agreements work—they involve give and take.

I think the customs union is vital. The Chequers agreement does not solve many of the issues that we have been discussing, or give certainty to businesses. It is also likely to be unacceptable to the EU and it does not solve the problem of Northern Ireland because of issues with technology. Next week, during discussion on the Taxation (Cross-border Trade) Bill, we will have the opportunity to vote on an amendment tabled by Anna Soubry, which states that the UK’s negotiating position should be that we stay in the customs union. It is vital that Members support that amendment, and I think we have a majority in the House of Commons for that. If that is not the will of the people, I do not know what is.