British companies dread a Brexit border breakdown

SEVINGTON, England (Reuters) – Deal or no deal, British companies will have to confront a wall of bureaucracy that threatens chaos at the border if they want to sell into the world’s biggest trading bloc when life after Brexit begins on January 1.

When Britain casts off from the European Union, firms that drive nearly $1 trillion in annual trade will have to navigate myriad new rules and red tape that will increase costs just as COVID-19 bleeds the economies of the West.

Outside the EU single market where trade flows freely, Britain’s exporters will have to complete a raft of paperwork including customs and safety declarations and navigate multiple IT systems to gain entry to Europe.

But with a matter of weeks to go, companies used to trading as easily to Berlin as to Birmingham are yet to see the new IT systems.

Customs brokers have not been trained, operators do not know what information is required nor how the rules will be enforced.

Many have predicted chaos. Even the government has said 7,000 trucks could be held in 100-km queues in Kent, south-east England, if companies do not prepare.

“It’s going to be carnage,” Tony Shally, managing director of freight specialist Espace Europe, told Reuters. “We’ll be fire-fighting from the 1st of January.”

The current row over whether Britain leaves the EU with or without a deal has helped mask the fact that the deal on offer represents the biggest change to UK trade since the formation of the single market in 1993.

Outside the bloc, companies will have to complete paperwork and submit goods for random checks to cross borders, increasing both the cost and time it takes to do business.

In 2019 Britain, the world’s sixth-largest economy, imported EU goods worth 253 billion pounds ($331 billion) and exported 138 billion pounds-worth to the bloc, when removing goods like oil and gold which distort trade flows.

To keep goods moving after Brexit, the government has published a new 271-page Border Operating Model, covering everything from the trade of rough diamonds to molluscs, chemicals and cultural goods.

A step-by-step guide on one of the main customs clearance sites gives a flavour of what traders can expect.

Points 12 to 15 state that “A Movement Reference Number” is generated by a “Transit Accompanying Document” and “Exit Summary Declaration”, and should be lodged with the “Goods Vehicle Movement Service”.

This then generates a “Goods Movement Reference” which is given to the driver, before a “Kent Access Permit” is secured to enter the county of Kent. Point 16 notes that anyone arriving in France without the correct documents could be sent back.

Customs brokers say the cost of paperwork could exceed the cost of moving small consignments. Completing a typical export declaration can require more than 50 pieces of information on transport, commodity codes and value.

The logistics industry estimates an additional 215 million customs declarations will need to be filled in each year after Brexit.

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