Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

But this is what these smart Brits have voted for – they just didn’t have a clue!

Posted by hkarner - 8. April 2017

Date: 07-04-2017
Source: The Economist
Subject: To see how trade may work after Brexit, visit Dover’s docks

While goods from the European Union pass through seamlessly, those from elsewhere face long waits

TO MOST Britons, the white cliffs of Dover are symbols of independence and defiance, especially against any prospect of invasion from the continent. But the clifftops also afford an excellent view of one of the great success stories of Britain’s more recent integration with Europe: Dover’s eastern docks.

This is the centre of Britain’s seamless trade with the European Union. A long line of lorries snakes slowly but uninterruptedly around concrete concourses and onto the roll-on, roll-off ferries that make the short crossing to Calais. So smooth is the process that the port can handle 10,500 lorries a day. About £120bn ($150bn) of traded goods comes through Dover each year, 17% of Britain’s total. A few miles away at the Channel Tunnel, up to 6,000 more lorries arrive daily. Yet delays are rare because Britain’s membership of the EU’s single market and customs union mean there is almost no paperwork to hold things up.

Soon that will change. In two years Britain is due to leave the EU—including its single market and customs union, Theresa May has said. The prime minister’s vision of a “hard Brexit” will mean the return of customs barriers in some form, and thus hold-ups at the ports.

There are many benefits to the current, “frictionless” system, as Mrs May has accurately described it. One is that the ease of trade generates more trade: there has been a fourfold increase in the number of lorries coming in and out of Britain via Kent since customs barriers within the EU were abolished in 1992. Another is that British industry has used this reliable, round-the-clock delivery system to exploit “just-in-time manufacturing”, which allows carmakers, for instance, to dispense with expensive inventories and warehousing. Take the Mini, manufactured by BMW. Minis are essentially built to order, as each customer selects options for the trim and interior. The company plans production a week in advance, to the very hour that the different parts are scheduled to arrive.

To see how things might work after Brexit, visit Dover’s western docks. This is where trucks from non-EU countries arrive to clear customs. About 500 come here daily, from the Dover ferries and the Channel Tunnel, and their clearance is rather less seamless. Drivers have to park and fill in a form at the freight clearance office. A computerised system known as the Customs Handling of Import and Export Freight (CHIEF) logs details automatically, indicating what the goods are and what the import duty might be, but it has to be checked. Even for lorries from countries with close trading relationships, like Switzerland, all this “can take anything from 20 minutes to an hour” from disembarking, says Tim Dixon of Motis, the firm that runs the operation. For countries operating under World Trade Organisation rules only, the process could take much longer. Ominously, the Motis office has a TV lounge, launderette and restaurant in case the drivers have to lie up for a bit.

This glimpse into the future is the stuff of nightmares for British business. Just-in-time manufacturing windows could be just-missed; food importers and exporters could see their perishables wilt with the wait, especially as customs procedures might have to be repeated on the French side. Irish hauliers are particularly anxious, as 80% of Ireland’s road freight to Europe goes through the British mainland. Post-Brexit, they might have to clear customs four times.

There is another headache. By coincidence, CHIEF is due to be replaced by a new system in March 2019, the due date for Brexit. Designed to cope with 60m customs declarations a year this will now have to cope with about 300m. The project already seems to be in trouble. In November the government customs service gave it a “green” rating, meaning all was tickety-boo. Yet in January it was rated “amber/red”, meaning it was “in doubt”, with “major risks”. Andrew Tyrie, the chairman of the House of Commons Treasury select committee, is ringing alarm bells. “The consequences of this project failing, or even being delayed, could be serious,” he warns. “Much trade could be lost.”

Even if the new system does work, it will still require companies to input complex data, and often quickly. Businesses could outsource this sort of work to professionals, but whereas there were 125 such customs agents at Dover before 1992, there are only 24 left. All this will add to costs; even if Britain were to negotiate a good free-trade agreement with the EU, any deal would require customs formalities, says Michael Lux, who used to work on customs for the European Commission. The number of customs officials may have to double, he says. It might be possible to devise a system whereby lorries from “trusted trader” companies are waved through, but this does not take account of the fact that many will be carrying consignments from different sources. Furthermore, no fewer than 34 government agencies have the right to interdict traffic, a splendid recipe for bureaucratic hold-ups.

So finely tuned is the operation at the western docks, and so heavy the weight of traffic, that the slightest glitch can cause lorries to stack up on the approach roads to Dover. And when French ferry operators went on strike during the summer of 2015, the M20 motorway turned into a lorry park, losing businesses £21m worth of stock that was ruined by the wait, according to the Road Haulage Association. If Mrs May continues her pursuit of a hard Brexit and the upgrade of Britain’s customs operation maintains its leisurely pace, the summer of 2019 could be more chaotic still.

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