The bureaucratic nightmare facing UK exporters on New Year’s Day

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UK firms may need to bring in inspectors from the EU after January 1 to ensure their goods can leave ports for mainland Europe without being subject to technical checks at the other end, a trade policy expert has warned.

Dr Peter Holmes of the UK Trade Policy Observatory (UKTPO) is warning firms may need to pay to have EU-approved inspectors visit their factories to certify their exports meet EU regulations – even in the event of a Free Trade Agreement between the UK and EU.

The University of Sussex Business School economist warns chaos may ensue for British port authorities in the first days of the new trading arrangements – particularly if French officials insist on checking if the UK has continued to uphold international obligations on health and safety regulations on food products through physical inspections.

Dr Holmes is advocating for an implementation period to follow the end of the transition period on December 31 to ease a smoother changeover.

Dr Holmes, a UKTPO member and Reader in Economics at the University of Sussex Business School, said: “On the day the transition period ends, the British Government, if it has its way, will lose all legal obligation to enforce the EU technical regulations. But that means its new “light touch” testing regime could kick in at once.

“The EU or the French Government could well say the day before the end of transition, you had an international obligation to make sure that inspections took place that made sure health and safety requirements for food products were enforced or other technological requirements. But no longer.  So we are no longer going to accept certificates issued after the end of Transition if there is only a very basic FTA or the No Deal, we are going to insist that inspections are carried out by our own people.

“This might mean that things will have to be checked as they cross the border. For a lot of cases, to get the paperwork that will exempt your product from physical inspection you’re going to have to fly someone in from a standards testing agency in the EU which is accredited under EU rules to certify compliance with EU rules. And that’s going to be quite a problem for a lot of firms.”

Dr Holmes was speaking on the latest episode UKTPO podcast Trade Bites Trade Bites which will be released later today.

Sam Lowe, Senior Research Fellow at the Centre for European Reform, joined Dr Holmes and regular host Chris Horseman, Deputy Editor of Borderlex, to discuss the pros and cons of extending the post-Brexit transition period.

In the episode, Dr Holmes urged the UK Government to explore the option of an implementation period which had been prominent in Theresa May’s rhetoric for mitigating disruption when implementing Brexit.

Such a tactic would allow for more time to iron out the complexities of Brexit but would need to be sold as progress towards exiting the transition period to hardline Brexiteer Conservative MPs, Dr Holmes suggested.

He said: “You could have a situation where a lot of the details still had to be fleshed out during the so-called implementation period, so change would not be overnight. You agree the broad principles but then you agree that certain things will be spelled out later, such as the exact way in which the Northern Ireland system is going to work which is going to be very complicated.

“I can see the hardliners of the Conservative Party going completely crazy if we had an implementation period that looked like an extension of the transition period but in a way it does seem to address the problems. It allows the Government to claim it really has left the transition period but it allows the change to be smooth enough for firms to get their heads around what they have to do and tidy up the loose ends that need to be fixed.”

Dr Holmes said he still believed an FTA could be achieved before the end of the year but warned that the coronavirus pandemic had made that deadline even more challenging.

The challenges of conducting negotiations by Zoom had limited opportunities for informal soundings and private discussions often key to breaking impasses, Dr Holmes said.

He added that Covid-19 had added even greater uncertainty to the Brexit process – particularly around what regulatory changes or customs practices the EU will insist upon on public health grounds.

Dr Holmes said: “The costs of having No Deal are so enormous that even the present government, which is driven by ideology, may be forced to rethink its approach. There’s a decent chance that we go along the implementation agreement approach. On balance, I think there will probably be some sort of deal. It will make the UK worse off than we are now but now as badly as with no deal.”

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