Brexit latest: Leaving the customs union will inevitably mean expensive border queues for firms warn trade experts

The UK Trade Policy Observatory said even a new customs deal would inevitably lead to considerable disruption relative to the current frictionless cross-border goods trade with the EU

Even if they are exempt from checks UK exporters may have to queue up to prove it (Reuters)

Theresa May’s hard Brexit will almost certainly mean British firms will face expensive queues at customs borders, trade experts have warned.

In her speech at Lancaster House last month the Prime Minister confirmed that the UK would leave the EU customs union, saying this was unavoidable if the UK was to strike its own new trade agreements with the rest of the world.

But Ms May also held out the prospect of a “completely new customs arrangement” with the EU which some ministers have suggested could bypass the disruption of intrusive and expensive “rules of origin” checks for British goods exporters and importers that would otherwise follow a clean UK departure from the official customs union.

The purpose of rules of origins checks is to ensure that a firm is not illicitly importing goods from a third country into a free trade area without paying the appropriate tariff.

Yet trade experts at an event on Wednesday organised by the UK Trade Policy Observatory (UKTPO) in London said that while it might be legally possible to conclude new customs arrangements this would not eliminate the need for firms to demonstrate to customs officers they were exempt from rules of origin and various product standards checks, and that this would inevitably lead to considerable disruption relative to the current frictionless cross-border goods trade with the EU.

“Having a certificate doesn’t mean it doesn’t have to be checked,” said Jim Rollo, deputy director of the UKTPO.

“There has to be some check or everyone else [crossing the border] claims they’ve got the certificate.”

Mr Rollo said estimates for the additional cost for firms facing rules of origin tests on exports ranged from an increase of between 1 per cent to 10 per cent.

But he stressed that even exemption from these tests would not mean frictionless movement of goods after leaving the customs union and that this would almost certainly lead to queues of lorries at borders.

“The point is not whether we need [exemption certificates] or not but whether we can prove [it] when we meet a customs officer. It’s the time spent in queues that’s the really expensive bit – that’s [drivers'] wages and depreciation of lorries.”

Turkey has its own customs union with the EU – eliminating tariffs and standards checks on goods imported into the EU – yet lorries regularly have to queue for more than 14 hours at the Turkey-Bulgaria land border.

“There may be elements of rent that are being collected in these queues … [and] there may be things you can do by [checking] one lorry in five…but having the certification doesn’t mean it doesn’t have to be checked,” said Mr Rollo.

Federico Ortino of King’s College London and Clifford Chance said an analogy for UK firms would be the disruption currently faced by British citizens when they travel to the rest of the EU versus EU citizens who move around the bloc’s passport-free Schengen zone.

“There will be a longer queue for those who are not in the EU and a shorter queue for those that are part of the EU. The border hasn’t disappeared,” he said.

The British car industry, which has deeply integrated pan-European supply chains for components, has been particularly alarmed by the implications of leaving the customs union.

Emily Lydgate of the University of Sussex said there are two kinds of EU border checks: one for rules of origin and the other one for checking EU regulatory requirements have been met.

“I don’t see how we can eliminate the need for those checks even if we have agreements for certain sectors,” she said.

Ms May plans to trigger the two-year Article 50 divorce process from the EU by the end of next month.

Trade experts have warned that the EU are unlikely to even start discussing issues such as a new trade terms and customs arrangements with the UK until the divorce bill has been agreed.