Leaving the EU: Customs

Debate between Seema Malhotra and Philippa Whitford

Wednesday 16th May 2018 Commons Chamber

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

I am grateful for the opportunity to speak in this important debate on the future of our trade in goods and often the services associated with them—a matter on which I spoke in our recent debate in the House.

The Government have shown that they are not capable of reaching a decision in the national interest. What we are set to receive in the next few weeks will be a fudge between the Prime Minister’s warring Cabinet factions. It is time to trust Parliament to address these complex matters and to give it all the information it needs. I therefore support the motion.

We hear from those who criticise the EU that we need to escape its bureaucracy and red tape, but the irony of the Government’s two customs proposals is that they would lead to more barriers and more delays than we currently experience with the customs union. Let me set out some key points.

First, there is the customs partnership, which could undermine the tariff systems of both the UK and the EU. It would require us to track the movement of every good imported to the UK for which the UK and EU did not have identical tariffs and quotas. That surveillance could multiply exponentially over time. Sussex University’s UK Trade Policy Observatory has said that it is very hard to see how it could work, and even the Government’s own HMRC is reported to believe that the proposal is unviable. Secondly, there is the “max fac” option. To put it simply, that would eventually require some infrastructure on the Irish border, which the Government themselves ruled out in the joint report in December and which the EU would be unwilling to revisit.

Perhaps the worst aspect of this, however, is that even if both the Government’s proposals worked perfectly, neither could be in place by the time we needed them. After the Government had finally made a decision, it would reportedly take up to three to five years for the systems to be up and running. That is likely to take us between one and three years past the end of our transition period. So the choice is very simple, but it is a choice that the Prime Minister is refusing to make. Either we stay in the customs union, or we impose unnecessary barriers and costs on British businesses and infrastructure at the Irish border.

[Dr Whitford]

It is not just a question of infrastructure at the Irish border as if there were just one checkpoint. There are more than 270 crossings. During the troubles many of them were blocked by boulders, and people had to make detours of 20 or 30 miles. We cannot send the people who live near the border in Northern Ireland back to that situation.

[Seema Malhotra]

The hon. Lady is absolutely right. Indeed, I believe that there are more crossings on that border than in all the other EU countries put together. That, I think, is a reality check on what is actually possible.

The practicalities of what those barriers and costs will mean can be assessed through two real-world examples, aerospace and medicines. The UK’s aerospace industry is a global success story that attracts significant investment. In my constituency, for instance, there is Boeing’s parts distribution centre in Feltham, the largest such centre in Europe. It relies on complex and globally integrated supply chains. Hundreds of aerospace parts currently flow back and forth daily across the EU’s borders to and from the UK, before being integrated into new aircraft or used to support in-service fleets. The just-in-time demands of the aerospace industry require quick and predictable border processes so that parts can reach their destination and repairs can be done in hours. Maintaining that speed for aerospace goods post Brexit is vital.

As for medicines, the Proprietary Association of Great Britain, the industry body for consumer medicines that we all know and use such as Beechams and Calpol, has said that a customs union is crucial to

“minimise the additional time and administrative burden”

at the border. Ingredients for products that we use daily can cross the UK border up to four times during the manufacturing process.

We know that this debate is taking place in the absence of any credible evidence to suggest that leaving the customs union would be of net benefit to the UK. It is time to recognise that it is not an academic debate that will have no consequences, but a serious debate whose consequences could cost us billions and have an impact on jobs and prosperity for decades to come.