LORDS

Non-tariff barriers require urgent consideration in the UK-EU negotiations

telescope manufacturing
30 July 2020

The EU Goods Sub-Committee, chaired by Baroness Verma, writes to Michael Gove about its inquiry on Beyond tariffs: facilitating future UK-EU trade in manufactured goods

Background

The letter presents to the Government the key findings of the inquiry. With only five months left before the end of the transition period, the Committee urges the Government to give these urgent consideration.

Chair's comments

Baroness Verma, Chair of the EU Goods Sub-Committee, commented:

"Facilitating UK-EU trade at the end of the transition period will require much more than simply removing headline tariffs. We found that non-tariff barriers have increased over time, often outstripping the cost of tariffs.

"New rules of origin, regulatory barriers and customs requirements will be a challenge for many businesses, particularly for the 150,000+ businesses that have hitherto only traded with the EU, and smaller businesses."

Key findings

  • Businesses are already stretched as a result of the COVID-19 pandemic. There is a serious risk that some businesses, particularly SMEs, will not be able to absorb the double shock from COVID-19 and the post-transition requirements. SMEs will need to be offered dedicated support.
  • The Government should continue to argue in favour of liberal rules of origin, so that businesses across different sectors can benefit from tariff-free access. The agreed rules should also be as clear and simple as possible, so that the administrative burden of proving origin does not outweigh any tariff costs.
  • The Government should continue to make the case and press the EU for an agreement on mutual recognition of conformity assessments, which would reduce unnecessary duplicative costs for businesses. Failure to achieve this could have severe consequences for parts of UK industry and potentially limit the availability of certain products in the UK.
  • Any decisions on regulatory divergence should only be made after careful assessment and consultation with the sectors involved. The Government should set up a mechanism for working closely with UK manufacturers to ensure their views are reflected in future decisions about regulatory divergence from the EU.
  • A significant proportion of goods will not benefit from the phased-in approach to imports, while the new border operating model does not cover the EU side of the border in much detail. We are particularly concerned that the UK has yet to develop the required capacity in the customs intermediary sector. The Government must step up its efforts to ensure that the UK has a sufficient number of trained customs agents for 1 January 2021.
  • The existing Authorised Economic Operator scheme is inaccessible and unlikely to have a widespread facilitating effect. A new trusted trader scheme should be devised urgently, so that it has the potential to play a significant role in facilitating future UK-EU trade. The new scheme must be accessible to a significant number of businesses, offering different status tiers, including one that is easy to obtain for SMEs.

Further information

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