28th June 2018
New foreign clothing and textiles investment collapses in Vietnam
Lengthy queues at Kapikule, on Turkey’s side of its frontier with Bulgaria offer a depressing lesson for Britain’s Brexit planners.
A February 16 paywalled story in the Financial Times describes traffic queues of up to 11 miles, taking up to 30 hours for trucks to pass through, as drivers discover how even Turkey’s membership of a Customs Union with the EU fails to ensure easy border passages.
Britain’s Customs authority, HMRC, offered on February 8 a reasonably optimistic forecast of how new software will facilitate merchandise clearance through UK checkpoints. Though the country’s freight industry had been less optimistic a few days earlier, there does appear to be a reasonable programme in place of specifying procedures for clearing goods, consulting with businesses and ringing alarm bells if work slips behind schedules.
There is no mention, though, in Britain’s detail-light White Paper on Brexit of two other potential logistics bottlenecks:
The FT story casts light on both of these
Free movement of drivers
“The customs union means free movement of our goods,” said Erman Ereke, a member of the executive committee of the Turkish International Transporters’ Association. “It doesn’t mean free movement of our trucks.”
Non-EU truck drivers heading to the EU currently need a permit – issued nationally, not federally – for each country in which they will be driving. One major cause of the queues at Kapikule is the shortage of permits for crossing countries like Austria that lie between Turkey and the main EU destinations in the UK, Germany and France.
Britain, though, has a separate problem. 86% of the merchandise moving by truck into Britain comes on foreign-operated vehicles. These will also be detained at UK Customs unless the UK and EU can agree an appropriate process – like mutual recognition. But there is no system envisaged in the UK White Paper for negotiating with individual EU member states.
And while HMRC talks about customer consultation, the UK’s Road Haulage Association claims there is no process for consulting the freight industry on friction-free cross-border access for drivers.
Entry into Bulgaria
At the Kapitan Andreevo checkpoint on the Bulgarian side – the busiest land border in the EU – there appears to be a similar story. Documentation for each truck is individually checked, the FT claims, with 5% inspected at random. Britain’s HMRC claims its “stop and search” policy will be “risk-based”, and driven by electronically pre-filed clearance documents, and therefore fine-tuned to individual consignments’ likelihood to be non-compliant. That’s the new software it’s developing for 2019, and businesses ought – implies HMRC – minimise the risk of delay by establishing a record of accurate advance filing.
Indeed, in its evidence to Britain’s House of Commons, HMRC stressed its desire to be “facilitative”: to be at least as concerned with ensuring the fast movement of goods as with extracting every penny of potential tax revenue.
But there is no such commitment from French on Belgian Customs: indeed the French Senate in a February 15 report insisted France should ensure Britain suffers from its EU exit.
How things might be after Brexit
And in the post-EU world Britain’s apparel buyers and sellers are going to have to get used to the frequency of border controls that were last seen before most were even born.
At present, it’s not unusual for a fast fashion order, for example, to consist of:
Post-Brexit, that process, if continued, would involve Customs checks :
Brexit, of course, is likely to rationalise this process, with more fabric being sent direct to Romania, for example or more finished goods being shipped to warehouses within the EU. But at first, a process that today goes through one Customs control point (when the fabric arrives at Rotterdam), will go through nine: and at half of them, there will be a question mark over whether the driver will have the right paperwork to continue with his journey. And half of those Customs posts will not be operated by HMRC, but by foreign Administrations with no particular vested interest in speeding the process up.
The attitude of the French Senate, of course, indicates the risk the major EU Customs post receiving trucks from the UK will be specifically briefed to make things difficult.
Possibly worst of all, though: HMRC says that “up to 10% of movements” will be stopped for inspection. With all these new control points, trucks will inevitably be stopped and searched.
These procedures are all about to be up for discussion. But the trade needs to exert pressure to avoid the worst likely outcomes