In October last year, Drapers readers voted “securing trade deals” as their number one requirement in the Brexit negotiations. But since then a far more urgent and threatening challenge has emerged to Britain’s clothing retailers, brands and manufacturers.
Whatever post-Brexit trade deals the UK negotiates, both Britain and the European Union currently plan to re-impose customs controls on the borders between us on the day Britain leaves the EU – likely to be 31 March 2019. On 31 March this year, the Treasury select committee said its “confidence had collapsed” that the new Revenue and Customs IT system needed to process all this would be ready on time.
Our industry now faces a grave risk that clothing supply chains may buckle completely by April Fool’s Day 2019. That risk affects us all: it is not confined to the 30% by value of our clothes that are made in the EU.
Though the UK government promised to seek “frictionless” border controls, Revenue and Customs estimates that having any border controls at all will increase the number of commercial consignments it will have to clear from about 60 million annually to 390 million. The new IT system Revenue and Customs plans to bring fully online by January 2019 should let most be cleared electronically within seconds.
But Revenue and Customs still estimates that between 5% and 10% of consignments will need physical checking. That’s tens of millions more lorries stopped than at present – and Revenue and Customs, whose operational budget will be 20% lower by then, has published no plans to employ extra staff.
Changing the colour of passports would be a lot cheaper than Brexit
Earlier this year, the UK’s IT auditing authority downgraded its judgement of progress on the new system to amber/red, meaning it is “in doubt”, and faces “major risks”. So, on current plans, we face delays at all our borders – and there are no plans, either, for extra truck waiting space at our already congested ports. Indeed, the whole logistics system faces a crisis:
- There are no clear plans yet for giving work permits to EU drivers, who deliver four-fifths of our imports from the EU to UK warehouses
- We at least know a bit about Revenue and Customs’ progress. French and Belgian customs have far fewer plans for processing our exports – and there is no published scrutiny on their progress
- It is not only EU trade: soaring customs clearances risk crashing the entire system if the changeover is not properly managed. And our channel ports won’t just be clearing goods from the EU: another 10% of our clothes come through Europe from Mediterranean countries such as Turkey and Morocco. A substantial proportion of Asian imports are shipped to continental ports including Bremen and Rotterdam, or are air freighted to the Inditex global hub in Spain and then come to the UK by lorry.
But there is an alternative.
We are threatened with this mess mainly because prime minister Theresa May’s government decided to exit the European single market arrangements the day we leave the EU – quite contrary to assurances from many Brexit campaigners.
But it is now clear from May’s resignation letter, and EU reaction to it, that there will probably be some transitional agreements when we leave. The simple answer to the threat of massive disruption is to decide now that customs barriers will not be re-imposed until there are adequate procedures for a painless changeover.
The reason the government wanted immediate customs controls was partly symbolic – although just changing the colour of passports would be a lot cheaper. It also thought there would be lots of new trade deals with other countries.
There should be no customs controls between the EU and UK until there are adequate facilities on both sides of the borders
But we can’t even begin to negotiate trade deals until we have left the EU. And they inevitably take time. US president Donald Trump promised to start renegotiating NAFTA (the North American Free Trade Agreement) the day he took office. He is yet to start the process, so it is almost impossible to see any results implemented before the end of 2018.
Our trade’s number one priority has to be to ensure that there should not be customs controls between the EU and UK until there are adequate customs facilities and procedures on both sides of the borders. And “adequate” means time has been allowed for real-world testing, and for proper training of customs staff and the thousands of us ordinary civilians who will be using the system.
There are elections in most of England on 4 May, and throughout the UK on 8 June. I encourage you to tell campaigners you will only support a parliamentary candidate who promises to vote against any Brexit proposal that doesn’t contain an absolute commitment to stay in the single market until we have a customs system capable of handling the growth in customs clearances. On 12 May, the day after parliamentary nominations close, we’ll post a list of such candidates on our website.
Mike Flanagan is CEO of Clothesource, which provides resources to aid clothing buyers and manufacturers, including price competitiveness data, product strengths and sourcing training. Email him here