EU: Trade in Goods (European Affairs Committee Report)

At that time, full customs declarations were due to be implemented in January 2022, with sanitary and phytosanitary, or SPS, controls and safety and security declarations due to follow in July 2022. The customs controls were indeed implemented as planned, in January 2022. In their response to the committee’s report in February 2022, the Government said that they would introduce the remaining controls on time. However, the remaining controls were delayed yet again in April 2022 and are now not due to be implemented until the end of 2023 at the earliest. Our committee engaged in correspondence with the then Minister for Brexit Opportunities, Jacob Rees-Mogg MP, in the wake of that delay. He confirmed that the latest decision reflected a more fundamental change in approach, with the nature of the border regime as well as the timetable under review. He was also dismissive of concerns about the impact of asymmetry at the GB-EU border, saying that the Government rejected

“the premise that increasing burdens for importers and increasing costs for British consumers will help our exporters”.

However, there is still uncertainty about the future border regime. We were told that the Government would publish a target operating model in autumn 2022 that would set out in detail how and when the new border regime would be implemented. We still await that document. According to the Department for Environment, Food and Rural Affairs, it is now due to be published in early 2023. Can the Minister provide an update on the UK’s future border control regime and the publication of the target operating model?

Questions have also been asked about the UK’s biosecurity, given the absence of the remaining SPS controls on imported plants and animals from the EU. Last summer the Food Standards Agency said that

“the continued absence of a fully implemented UK import control regime for EU food and feed reduces our ability to prevent foods that do not meet the UK’s high standards being placed on our market.”

What steps are the Government taking to safeguard the UK’s biosecurity in the absence of the remaining SPS controls?

On the overall impact of the end of the transition period, the committee’s report concluded:

“Although the worst-case scenario of widespread disruption did not come to pass, GB-EU trade in goods is now more complicated and expensive than it was before January 2021.”

We noted that SMEs and the agri-food sector were particularly hard hit. In their response, the Government said that the new relationship

“will contain many benefits for individual businesses; but … this involves some change”.

Our committee wrote back to the Government asking them to explain what these many benefits were. In his reply, the then Minister for Europe, Graham Stuart MP, highlighted the TCA’s provisions for zero tariffs. I found his answer somewhat perplexing and disappointing.

The committee’s report identified some more specific problems that traders have faced and proposed several solutions. However, the Government’s engagement with those recommendations, both in their response and in the subsequent correspondence, was mixed. On SPS requirements, the committee highlighted that these had been a major challenge for exporters and called on the Government to seek an SPS agreement with the EU. The government response did not engage with that recommendation. In a subsequent letter, the Minister clarified that the Government were “open to discussions” on SPS, but not on the basis of “alignment with EU rules”.

On customs, the committee called for increased EU-UK co-operation, including exploring a so-called single customs office model. The Government dismissed this recommendation, arguing that the TCA did not provide the legal basis for co-operation of this kind.

On VAT, a major concern for small businesses, the committee welcomed the Government’s efforts to persuade the EU to list the UK for VAT purposes, which would eliminate the need for businesses to engage an expensive fiscal representative when exporting to the EU. The Government have since said that they will continue actively to pursue facilitation in this area.

These and other matters could all be addressed within the plethora of trade specialised committees set up under the trade and co-operation agreement—committees that are operational but not really operating due to the Northern Ireland protocol impasse.

There may be further challenges on the horizon. Businesses that the committee spoke to in the inquiry were not opposed to regulatory divergence, provided that it was carefully considered. However, the Retained EU Law (Revocation and Reform) Bill could produce further divergence between the UK and the EU in an unplanned way and in ways that might interact with the trade and co-operation agreement. What assessment have the Government made of the compatibility of the retained EU law Bill with the UK’s commitments under the trade and co-operation agreement, in particular regarding the level playing field provisions on employment and environmental standards?

There was a lot in our report and, I feel, many clues as to how to improve matters. Trade is always mutually beneficial; I fervently hope that the many trade-specialised committees can be unleashed soon to unlock that benefit. In the meantime, I very much look forward to the debate ahead. I beg to move.