13 April 2021

City AM: Brexit: Paperwork and bureaucracy have created barriers at the border as tough as tariffs

In the months since the Brexit transition period ended, trade flows at British borders have plummeted and border checks have been deemed so unworkable that their implementation has been pushed back by a year.

 Dire figures and delays point to the fact there is far more to free trade than tariffs, and still much to be done to fix the ramshackle situation for those trying to get British goods out to the EU and European goods in.

Confusion has wrought havoc for trade over the last three months. It has been characterised by boundless bureaucracy and uncertainty, despite a trade deal which prevents the introductions of new tariffs or goods quotas on UK-EU trade. Piles of paperwork and inexpedient bureaucracy can form a trade barrier as much as any tariff. To help British producers, businesses and consumers, there must be a concerted effort to cut red tape at the border, keeping paperwork minimal and manageable.

The latest victim of the border farce is the humble nematode, a parasitic worm used by gardeners and commercial growers for pest control. All products of plant and animal origin entering Europe require individual health certificates that must be stamped by an official government-certified vet. But nematodes are shipped 300bn at a time and aren’t exactly the bread-and-butter patients of vets. As a result, a factory in Littlehampton, claiming to be the only UK supplier of nematodes, has been unable to export a single shipment in three months. 

Overall, January exports from the UK to the EU fell by 40.7 per cent or £5.6bn when compared to December, according to the ONS. Total global exports fell by 19.3 per cent and total imports to the UK fell by 21.6 per cent, or £8.9bn, driven by a 28.8 per cent decrease in imports to the UK from the EU.

As the ONS points out, this is not surprising: trade was always going to take a hit in January due to pre-Brexit stockpiling and the introduction of new lockdowns. But the rapid fall in trade has undeniably been spurred on by cumbersome new barriers making trade more costly and the sheer size of the plunge is worrying.

Many health and safety imports set to come into place in the coming weeks have been pushed back by a year, granting some much-needed relief and breathing room to some importers. The checks mainly affect agricultural products and include things like physical inspections of animals and plants. The necessity of these delays exemplified the incompatibility of the current system.

In many other industries, and for exporters across the UK, there has not been the same amount of leeway. Those who are importing EU products have been afforded this flexibility, but those who want to export their products must continue to grapple with financial losses caused by goods being held up at the border. British fishermen have watched in horror as their fish and shellfish perish and rot because of bureaucratic difficulties. Across the board, businesses trying to do business with Europe are facing the increased costs of new red tape.

There is an important economic lesson here; despite best intentions, non-tariff barriers to trade can be extremely costly. Globally, these barriers, which can include measures such as regulations and rules of origin, increase trade costs by more than double that of tariffs. The UK desperately needs to address these roadblocks.

Pushing back import checks is a step in the right direction, an acknowledgement that the priority should be on keeping UK shelves stocked rather than forcing British importers and EU exporters to suffer through a slow and costly system. But more needs to be done to help all those who are having to navigate an uncertain trade landscape with the UK’s biggest trading partner. 

Brexit should be an opportunity to rethink and modernise border controls for goods, not make things worse. Safety is important, but risk should be incorporated into a lean, transparent and straightforward set of rules.

The government’s focus should be on crafting a system that makes trade as easy and frictionless as possible. Currently, the border is a mess. It’s still early days but for British producers and consumers every day counts. Trade policy must address these non-tariff barriers if the UK hopes to stay competitive and attractive in the global market.

City AM

Alice Calder

Alice Calder is a political commentator, associate contributor with Young Voices UK and a PhD candidate in economics at Sydney’s University of New South Wales.

© City A.M.