The Retailer Winter edition_2020

UK/EU trade

NEWS FROM THE bRC

We need a mutually beneficial deal for UK and EU retailer and consumers

William Bain Policy Adviser - Europe and International british Retail Consortium

Firstly, in order to achieve an agreement with zero tariffs and zero quotas, the EU has set: • Red lines of a deal on mutual fisheries opportunities with the UK by the middle of 2020. • A clear level playing field agenda of dynamic alignment with EU rules on state aid and competition. • Non-regression clauses on environmental, social and labour rights. During the UK General Election campaign, the Conservatives declared the ambition for autonomy on state aid rules. Pragmatic analysis of the economic impact of the trade-offs between autonomy and market access will be key to any compromise here. Secondly, on regulation – given the UK Government rejects both a Single Market arrangement and the approach signposted by the 2018 Chequers White Paper for wholesale alignment across trade in goods – can both sides reach an agreement to limit new trade friction? A deal based simply upon the WTO’s Sanitary and Phytosanitary Agreements (SPS) and Technical Barriers to Trade (TBT) agreements, or the World Customs Organisation (WCO’s) customs agreement, or World Intellectual Property Organisation (WIPO) agreements on Intellectual Property, would represent a significant rupture from the regulatory model of the last thirty years. New barriers on customs red tape, transit, indirect taxation, sanitary and phytosanitary paperwork, conformity assessment - via border or market product checks - would bring costs, delays, and reduced product quality for consumers on perishable items. A good alignment, deal could limit friction in several ways: • Through a common SPS system involving no checks between GB and the EU or within the UK. • Common regulatory approaches on toys, chemicals, pharmaceuticals, electrical and industrial products. • Keeping customs red tape low through agreed waivers from the need for exit or entrance summary declarations. • Common framework for VAT and excise. • Accords on conformity assessment, transit, security, safety.

We need a mutually beneficial deal for UK and EU retailer and consumers The UK General Election of 12 December 2019 resolved the ‘if’ and the ‘when’ of the UK’s departure from the EU on 31 January 2020. But the ‘how’ and the ‘what’ of the future relationship is still shrouded in winter fog. The redrafted EU Withdrawal Agreement Bill received Royal Assent at the end of January, paving the way for the UK to enter the transition period on 1 February when existing trading rules on customs, indirect taxation and goods regulations will apply and be enforced until the end of 2020. The UK Government intends to rule out an extension to the transition period, meaning any new trade agreement will have to be negotiated and capable at least of provisional application by the end of this year. Attention has turned quickly to the shape of the future UK-EU trading relationship. The election results appear to have taken options such as a customs union or Norway-style relationship with the EU off the table. It is inevitable that some new friction will apply to the movement of goods between the UK and EU by retailers and other industries. To offer one example, retailers moving goods between the UK and France will need to be aware of the new requirements from rules of origin - which will depend on the tariff relationship between both sides and what will count as qualifying content involving third party inputs or processing. It will mean additional red tape in terms of proving the origin of goods crossing the border. Some form of customs declarations appears inevitable, costing as much as £56 per individual item, with further implications on costs for goods movements. On the application of the new trading arrangements for Northern Ireland (NI), rules of destination will similarly apply to goods despatched from Great Britain (GB) which may terminate their journey in NI or pass into the EU Single Market through entering the Republic of Ireland (ROI). There are two key areas required to avoid a cliff-edge fall into World Trade Organisation (WTO) trading terms at the end of this year – a zero tariff, zero quota commitment, and a good alignment, low friction deal which limits new red tape for retail and costs and delays for consumers.

22 | winter 2020 | the retailer