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Possibility of extended Customs Union Membership

Many businesses trading with the EU will have welcomed the increased possibility of the UK remaining in the Customs Union beyond March next year after Prime Minister Theresa May agreed a draft withdrawal deal with the bloc.

The negotiated text, if ratified by both parties, would ensure a 20-month transition period after our departure on 29 March 2019, during which we’d remain Customs Union members.

If a new long-term trade deal can’t be concluded by July 2020, the draft agreement says the parties can agree to extend the transition period indefinitely. If they don’t agree on this, the so-called backstop arrangement will come into force. This has been put in place largely to avoid the return of a hard border in Ireland and under it, the UK and EU would remain in a single customs territory “unless and until…a subsequent agreement becomes applicable.”     

The reason for the widespread welcome is that the present arrangements mean trade with the EU could hardly be easier, quicker or cheaper for UK businesses trading with the EU or the freight forwarders, like ourselves, that they employ.

Among the great benefits of the Customs Union, which includes all EU states and some other countries, for the UK’s EU traders, are it avoids tariffs on goods shipped between members and burdensome checks at borders. 

Our membership of the Customs Union has helped hugely to create the current situation that when we import goods from the EU on a client’s behalf, for example, the only documentation we need is a copy of the packing list or commercial invoice and the travel document.

This is a waybill for air freight, a bill of lading for sea consignments and a CMR note - the abbreviation being derived from its French full name - for road haulage. No customs clearance processes or duties apply, and no VAT is payable before goods can be moved from receiving ports or airports.

Ensuring the transition period took effect would not only prolong this advantageous system for our businesses but provide time for the longer-term trading arrangements, including a customs system, between the UK and EU to at least start being negotiated and ratified.

Concluding such arrangements with by far our largest trading partner will be a complex undertaking and the outcome is still shrouded in uncertainty. But, for now, many businesses will welcome the fact that the UK might at least retain its place within the Customs Union for a meaningful period after Brexit.

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