The newest Brexit debate hones in on the type of customs arrangement the U.K. should have with its largest trading partner, the EU, once the U.K. leaves the Union. Prime Minister Theresa May recently announced a plan to enter the U.K. into a “Customs Partnership” with the EU, which was swiftly rebuffed by pro-Brexit members of her Party.
For U.K.-based fine art shipping companies, galleries and collectors, the free passage of goods within the European Union has kept shipping and logistics related to commerce in Europe pretty straightforward. Thus, the outcome of this debate will have strong implications and consequences for the global art industry.
So, what exactly does the proposed Customs Partnership entail? What is the pro-Brexit proposition? And most importantly for us, how would each affect the art logistics industry? While the answers to these questions are quite complicated, we've outlined each in simple, easy-to-understand terms.
THERESA MAY'S PROPOSED CUSTOMS PARTNERSHIP
“This [Customs Partnership] would remove the need for new customs checks at the border. The UK would collect tariffs set by the EU customs union on goods coming into the UK on behalf of the EU. If those goods didn't leave the UK and UK tariffs on them were lower, companies could then claim back the difference.” - BBC
The obvious benefit for the fine art industry is that goods transiting between the U.K. and EU would remain “unchecked,” therefore minimising disruption at border crossings.
However, opponents of this plan argue that it would invoke higher tariffs for U.K. businesses and bind the U.K. to EU trade regulation, forcing them to adhere to trade rules and tariffs as directed by Brussels. This goes against the underlying ideology of Brexiteers, who are campaigning strongly against this partnership.
the brexiteer counter proposal
“This [Counter-Proposal] would minimise customs checks rather than getting rid of them altogether, by using new technologies and things like trusted trader schemes, which could allow companies to pay duties in bulk every few months rather than every time their goods cross a border” - BBC
In this proposal, the U.K. would not be bound to the EU Customs Union. Instead, the U.K. would be allowed to negotiate trade deals directly with nations outside the EU and it would have the freedom to set trade tariffs and rules independent of Brussels.
Opponents of this plan point out that the reliance on technology would require huge investment from both government and businesses, and argue it is bound to cause delays during its introduction period.
So, what's next? and how might this effect commercial shipments between the uk and eu?
Only time will tell how Theresa May deals with the growing resistance from her pro-Brexit colleagues, and this internal division is likely to hamper her negotiations with the EU.
What we can be sure of is that with 50% of U.K. Exports going through the EU, any decision by the government is likely to have a huge impact on operational procedures and trigger increased costs for businesses as they introduce new methods of operation in order to be compliant with new laws. Our team at ARTA is watching how this plays out very closely, and is prepared to act quickly to make any necessary changes to our processes around shipping goods between the U.K. and EU. Our current prediction is that the U.K. will likely see a Swiss-style model for importing and exporting to and from the EU, so we are preparing for more TA/Bond shipments, paperwork and delays.