EU agreement implementation, US UK

Week in London: Fourth UK border check delay, talking with US, dealing with Indiana

The UK still has no control over its customs border vis-à-vis the European Union….And London is trying to get around lack of market access progress with Washington by talking to individual US states.

London scraps plans for 1 July border controls, plans new ‘digital borders’

Plans to introduce checks on agri-food imports into the United Kingdom as from 1 July are to be scrapped, the government announced on Thursday (28 April).

No physical checks on imported goods will be carried out, or requirements for export health certificates introduced, pending the introduction of a new-style ‘digital border’ for the UK which is now expected in late 2023.

Border controls were due to have come into force when Britain left the EU single market on 1 January 2021, but these had already been deferred on three separate occasions. The most recent such occasion was last autumn, when a scheduled introduction date of 1 October 2021 was put back to 1 July 2022.

The announcement has provoked fury among UK port owners who claimed they had spent over £100 million investing in the infrastructure needed to apply the controls.

But trade bodies welcomed the move, saying that the introduction of new import checks risked causing further disruption to food supply chains, and pushing up costs at a time when food prices were already soaring.

No need for ‘complex and costly’ checks

The shift in UK policy on border controls, which had been trailed for some time in advance, was announced in a written statement to parliament by Jacob Rees-Mogg, the minister for ‘Brexit Opportunities’.

“Introducing controls in July would have replicated the controls that the EU applies to their global trade. This would have introduced complex and costly checks that would have then been altered later as our transformation programme is delivered. The challenges that this country faces has underlined that this is not the right thing to do for Britain,” Rees-Mogg’s stated.

“No further import controls on EU goods will be introduced this year. Businesses can stop their preparations for July now”.

Government officials subsequently confirmed that the schedule for phasing in these controls had been definitively scrapped, rather than simply postponed for a fourth time.

‘Technologically advanced’ border systems promised

Instead, the government will now focus on the introduction of a “transformative programme to digitise Britain’s borders, harnessing new technologies and data to reduce friction and costs for businesses and consumers”, said Rees-Mogg.

The same regime would apply equally to imports from the EU and from the rest of the world, the minister emphasised.

It is clear that the UK government sees its proposed light-touch approach to border controls as a positive benefit of Brexit, and essentially a business-friendly move.

The new border model would, the minister said, “be based on a proper assessment of risk, with a proportionate, risk-based and technologically advanced approach to controls”.

A so-called Single Trade Window, designed to streamline border bureaucracy, will start to be rolled out as from next year, while the government is also seeking to create what it calls an ‘Ecosystem of Trust’ between government and industry.

Details of the new Border Operating Model are to be published this autumn.

Ports furious – small businesses relieved

But Tim Morris, CEO of the UK Major Ports Group, was scathing in his assessment of the new policy.

“Many ports have been working incredibly hard and have invested over £100 million of their own money to build a network of brand new border checks to meet the requirements the Government has been insisting on for several years. This now looks like wasted time, effort, and money to develop what we fear will be highly bespoke white elephants,” Morris said.

On the other hand, the national chair of the Federation of Small Businesses, Martin McTague, said: “Imposition of full import controls this summer would have meant yet another burden for small firms which are already wrestling with new trade rules and spiralling operating costs. This move will give them more time to prepare for future changes and reassess supply chains.”

Risk of WTO challenge?

All existing border measures will remain in force – such as the requirement to pre-notify goods prior to arrival at the border, which came into effect from the start of 2022.

But one potential risk for the UK is that, by leaving its borders essentially open for imports from the EU for up to another couple of years, it opens itself up to WTO challenge from non-EU suppliers who will continue to face full border controls in the meantime.

Warm words but not much substance from second round of UK-US trade ‘dialogue’

Positive words and statements of intent emanated from this week’s round of meetings between US Trade Representative Katherine Tai and various UK officials and stakeholders – but there was little in the way of substantive agreements.

Tai was in the UK for the second round of talks in the ‘UK-US Dialogue on the Future of Atlantic Trade’, which was held in Aberdeen on Monday (25 April).

Following talks with international trade secretary Anne-Marie Trevelyan, Tai said the two governments had “directed their teams to work at pace over the next several weeks to develop an ambitious roadmap with economically meaningful outcomes”.

SMEs in focus

One key focus was on supporting transatlantic trade between SMEs.

The post-meeting communiqué said the UK and US would work together to “identify and overcome barriers to trade, focusing on trade facilitation for SMEs, sharing and promoting best practice, and working together on activities to promote and support SMEs, including those owned by under-represented groups and women entrepreneurs, and those in disadvantaged communities”.

A UK-US ‘SME Dialogue’ has been organised in June in Boston with the aim of working towards achieving those objectives.

Supply chain resilience, green technology and food security were also on the agenda, while diplomats succeeded in skilfully including key catchphrases of both the Johnson and Biden administrations in a single clause with their reference to “levelling up and worker-centric trade”.

The dialogue process launched last month with an inaugural round of talks in the US city of Baltimore.

UK close to tying up trade and cooperation deal with US state of Indiana

London said it is “in the final stages” of negotiating a memorandum of understanding with the US state of Indiana, in what London hopes will be the first in a series of such country-state accords on trade and economic development.

Penny Mordaunt, the minister of state for international trade, announced on Wednesday (27 April) that she was hosting talks with the Governor of Indiana, Eric Holcomb, with a view to getting the desired MoU closer to completion.

According to Mordaunt, the MoU should be ready for formal signature at the Indiana Global Economic Summit in May.

Pursuing mini-deals with individual US states has become something of a crusade for Mordaunt, who recently undertook a tour of several US state capitals with the aim of advancing negotiations for enhanced cooperation in a range of sectors.

A full free trade agreement with the United States federal government remains a distant prospect for now – but the UK is aiming to do deals with individual states covering those areas over which the latter have jurisdiction.

Although not having the legally binding status of an international FTA, the MoU will, in the words of the department for international trade, “enshrine the political will on both sides to enhance bilateral cooperation across economic development and trade and investment issues in the interests of UK and Indiana business”.

Mordaunt said the MoU would focus on areas such as provisions on innovation and regulatory cooperation, as well as including a section on workforce development, which will aim to “deliver accessible and inclusive workforce training and opportunities”.

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