A report prepared by the Institute underscores the needs for stability for British businesses and highlights potential pitfalls.
As per the report of a think tank that was released on Monday, the introduction of post-Brexit customs checks could cost traders upwards of $5.28 billion (4 billion pounds) a year.
Theressa May’s government has stated it plans on leaving the European Union’s customs union when it leaves the European Union; it is however interested in negotiating a new relationship to ensure trade is as frictionless as possible.
As per a report prepared by the Institute, titled ‘Implementing Brexit: Customs’, the British government needs to offer bankable certainty to business and help them plan for changes to customs.
After Brexit, nearly 180,000 will have to face customs declarations norms. As per government estimates, an extra 200 million declarations a year will have be made by British businesses, with each declaration costing 20 to 45 pounds each, said the IfG, which puts the total additional cost at 4 billion to 9 billion pounds.
“The scale and cost of change for many traders could be significant. Government must engage with them in detail about changes, understanding their requirements and giving them as much time to adapt as possible,” reads the report.
The British government has proposed two options for future customs relationship: while one is a system that uses technology to make the process as smooth as possible, the second sees the creation of a new customs partnership and removes the need for a customs border.
It wants a transition period after Britain leaves in March 2019 to allow time to adapt.
The European Union however has said, all negotiations related to the customs will have to wait until the two sides have made enough progress on the rights of the expatriates, Britain’s border with Ireland, an EU member, and a financial settlement.
“To be in and out of the customs union and ‘invisible borders’ is a fantasy,” tweeted Guy Verhofstadt, the European Parliament’s coordinator for Brexit, following the British government’s floating of its proposals. “First need to secure citizens rights and a financial settlement”.
In order to avoid a cliff-edge, the government must make sure all concerned – from port operators to freight companies and local authorities, are ready, said the IfG in its report.
It has also highlighted the fact the British government will have to work with EU partners to ensure issues at European ports do not cause significant disruption to supply chains.
“In the past they have been given years to adapt to any government change; they now have fewer than 20 months to prepare without yet being clear what they are preparing for,” reads the report. “Successful change relies on all these organizations being ready.”