Taxation (Cross-border Trade) Bill (First sitting)

Emma Hardy Excerpts

Tuesday 23rd January 2018 Public Bill Committees

[Julian Sturdy]

Q I understand about the agreements, but if that existing means did not continue what implications do you feel that would have on potential trade?

Anastassia Beliakova: The intention of the Department for International Trade is now to roll over existing EU trade agreements, most of which accept preferential certificates of origin as a means of showing that the goods come from the EU. If in the future those agreements are not rolled over and there is not the same provision for the same means of declaring origin, that means that companies will not be able to get the reduced duty rate when they export to that market—or, indeed, import from it.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

Good morning—it is nice to see you all here. Earlier this week, the director general of the CBI said that the UK should seek to negotiate a comprehensive customs union with the EU. Having listened to all the complications that you have just outlined, would you support that proposal?

William Bain: The BRC is less concerned at this stage with the means of delivering frictionless and tariff-free trade with the EU, but what we do see is the overwhelming priority of the Government to focus on securing that. Our biggest market is the European Union, and it is likely to remain so for many decades to come.

To put it into perspective, our members say that 79% of food imports come from the European Union. That shows the sensitivity of sourcing contracts and supply contracts. For example, some retailers offer ready meals with cheddar from the Republic of Ireland in them, so it is used as an ingredient in products. If we do not get a deal that ensures tariff-free trade with the EU, the tariff on Irish cheddar is 44.5%. On beef from Ireland, it is 38.9%. On Dutch tomatoes, it is nearly 29%. That will have a serious impact on consumers, which is why we have said that, above all, by whatever mechanism they achieve it, the Government should aim for frictionless trade and zero-tariff trade with the European Union. Otherwise, consumers will face a big hit to their living standards.

Anastassia Beliakova: The same principle of having as little friction as possible in future trade with the EU is, of course, very critical for our members. On the specific question of the customs union, we are currently surveying our members—literally as we speak, or at least in the next few days—so, as and when those results are available, I will be very happy to share them with the Committee.

Peter MacSwiney: All the efforts over the last few years have been to remove bureaucracy. SITPRO made it its mission in life to try and simplify trade, and now we are introducing an inhibition to trade in the form of a customs entry. Taking what William said, of course duty plays a part, but even if there is a duty-free element you still have to do a customs entry, and it is hard to see where the benefit of that is. So, I would say that some form of customs union would be useful and beneficial.

Gordon Tutt: From a systems point of view—obviously, we are a vested interest here—the more declarations that are done, the more money for our members. That is why we take a very neutral position on this. But clearly, as my colleagues have said, there are a whole range of issues here, particularly in the movement of goods, which traditionally posed no threat. That goes in both directions—both into the UK and leaving the UK. We need to find a mechanism to allow those goods to move freely, without hindrance and without additional cost to trade.

[Nic Dakin (Scunthorpe) (Lab)]

Q Can I follow up Kirsty Blackman’s question about statutory instruments? Is it helpful or unhelpful to business confidence, including the confidence of your members, that so much of the detail—some people estimate that there will need to be about 1,500 statutory instruments—is left to secondary legislation? Is that helpful or unhelpful to business confidence?

Gordon Tutt: Having experienced some of the European legislation in recent years, particularly the way the UCC was written, I do not see that the current UK proposal is any more onerous than what we have seen coming out of Brussels—in fact, in some ways it is a lot clearer. And we do have the confidence here in the UK; again, I can only speak on behalf of my members. We have a very good rapport with customs and with other Government agencies, in that we can actually discuss the detail and get clear understanding, and intervention where it is necessary. So, I am not unduly concerned with what is being proposed.

Peter MacSwiney: I think of the point we made earlier. As Gordon has just said, the engagement is good but the timescales are not.

William Bain: The key point, Mr Dakin, is that obviously companies want to know what the impact on them and the wider industry will be. Having legislation with an impact assessment is very helpful, in being able to explore the pinch points—whether on customs, VAT or the staffing implications. The retail industry wants to see this legislation as early as possible, and to engage with Government about it. We know that this legislation is not amendable in this House or in the House of Lords, so it is even more important that industry has a very strong engagement with it at the earliest opportunity.

--- Later in debate ---

[The Chair]

Emma Hardy has a quick, mini-supplementary, four people want to ask another question, and we have 14 or 13 minutes—just to give you an idea of how to manage the time.

[Emma Hardy]

Q A quick question. You talk a lot about the need for clarity and time. Even if you were given the clarity you needed in the next couple of months, how long would you need a transition period to be to swap over to any new system?

Peter MacSwiney: It is hard to see the transition period being less than five years, in all honesty, based on experience of introducing systems over the past 20 years. Introducing a system is one thing, but educating the trade and getting the processes in place really does take a long time. It is hard to see that being done in much less than that.

Gordon Tutt: I would support Peter on that. We should not make the same mistakes as with the UCC. There are elements of that that cannot be introduced, even within the current transitional arrangements. We need to be mindful that it takes a long time to get the systems in place and, more importantly, to make sure that they have the connectivity to other trade systems around the world that are often providing this information. Five years sounds awful—and that is the worst case scenario. But if you work on a basis of five years, you can introduce elements much quicker, but some elements could take up to five years to introduce.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Q I will try to be brief. The fundamental issue for this Committee is that we must have a Bill that will cope with any scenario we face. It is unfortunate, but one of those scenarios could be a relatively hard border around UK and a big increase in friction in our trading relationship with the EU. If that were to happen, listening to the very good evidence you have given, will this Bill give us the powers and framework required to deal with that and then try and reduce as many of those barriers as possible? Alternatively, will some of these many known unknowns need to be addressed in our proceedings if we are to do that?

Peter MacSwiney: I think it would probably do the job. I have said it before and I will say it again: on this side of the channel, we will get our systems and processes sorted out, because that is what we do. I do not think it will address the issues on the other side of the channel. That is likely to be a bigger problem than what happens in the UK.

William Bain: The key issue for moving goods between the rest of the European Union and the UK is partly customs, but also regulation. The Bill puts in place different eventualities on customs, but it does not answer the questions on the regulatory framework, so that has to be dealt with. Also, these other issues about what happens to the common transit convention, to security agreements and to haulage permits and driver permits all affect the flow of goods. If those are not dealt with in this Bill, we encourage the Committee to explore how they can be dealt with otherwise.