


Imports into Britain from Europe are about to be subject to customs checks
Exporters to the EU know what that means
ECONOMISTS LOVE the idea of a natural experiment. One upside of Brexit was the chance to observe the impact of a country leaving a low-friction trade environment and moving to a harder border. Examples of such shifts are thin on the ground. But the natural experiment has turned out to be messier than anticipated. Brexit coincided with the pandemic and its associated lockdowns, and was quickly followed by the most severe energy-price shock in decades. A clean read on the economic fallout from Britain’s departure from the EU has proved impossible.
A further complication arose from the British government’s reluctance to take back full control of its borders. Britain officially left the European Union on January 31st 2020 but in effect remained in the single market and customs union during a transitional period until December 31st 2020. In January 2021 Britain’s European trading partners imposed new border controls and bureaucracy on exports from Britain. But the British government itself has repeatedly delayed checks on goods coming from Europe. After five previous delays, the new controls will finally start to come into force on January 31st.
Although Britain has tariff- and quota-free trade with the EU, imported goods crossing the border will this year need forms. Food products will be subject to sanitary and phytosanitary (SPS) checks to ensure they meet national standards. As the full range of customs and SPS checks on European goods coming into Britain are rolled out in phases over the coming nine months, European exporters will confront the same issues that their British peers have been living with for the past three years.
Extra bureaucracy can lead to delays. Hauliers note that simply transposing two numbers in a 15-digit customs code can cause a problem that takes hours to resolve. Mistakes can originate with either the exporting or the importing firm. For fresh goods, such as vegetables and flowers, a delay of even a day or two can render an entire shipment almost worthless.
A particular concern for smaller British food firms since January 2021 has been the rules around what is known as “groupage”. A trailer loaded with a single type of produce from a single firm needs only one set of customs forms and SPS checks. But a trailer with multiple types of goods from a variety of sources has to have all of them checked individually. For high-end producers in particular, especially in product areas such as shellfish where firms tend to be smaller, the added bureaucracy and threat of delays have often proved too high to be worth the bother.
Trade figures released on January 26th show the asymmetric effect of Brexit on the goods trade so far. British goods exports to the EU were up by 10.3% in the third quarter of 2023 compared with the final quarter of 2020 (the end of the Brexit transitional period). That is a weak performance compared with British exports to non-EU countries, which increased by 19.7% over the same period. By contrast, goods imports from the EU have risen by 10.7% at the same time as imports from the rest of the world have been broadly flat. Make UK, a trade body for manufacturers, reported in December that 90% of its members were still experiencing problems exporting to Europe, down by only six percentage points since December 2020.
Now the pain will be more evenly spread. But that is no cause for cheer. Kent county council, which is responsible for the port of Dover, reckons that multi-hour delays for incoming shipments are a reasonable worst-case scenario. Retailers fear that new border checks may create upward price pressure after recent sharp falls in food-price inflation. As Britain’s exporters have found, more trade frictions generally means less trade. ■

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