Chequers customs chaos heralds £1 billion post-Brexit bonanza for smuggling rings - People's Vote

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Chequers customs chaos heralds £1 billion post-Brexit bonanza for smuggling rings

Smugglers could use Britain to evade import tariffs for goods after Brexit, illegally gaining up to £1 billion in areas marked for full tariff reduction by Government ministers and Brexiteers, such as wine, clothing, and foodstuffs.

The Government White Paper’s proposal for a Facilitated Customs Arrangement entails no checks at the British border, leaving smugglers potentially free to transport goods in and out of Britain without controls on whether duties have been paid. 

As a result, false claims about the final destinations of goods could enable smugglers – if Brexit takes place - to import into Britain without paying tariffs, and transfer those goods to the EU, evading duties that apply there.

The news comes after the Prime Minister herself was unable to explain the feasibility and details of the Government’s proposed Facilitated Customs Arrangement in front of the Commons Liaison Committee.

 

Wes Streeting MP, a leading supporter of the People’s Vote campaign and a member of the Treasury Select Committee, said:

“The Government is already in a total mess over its fantasy customs plans, and this shows the serious consequences that the Brexit chaos has for our country.

“The UK has a proud track record in tackling organised crime. For Brexit to make it easier for people to illicitly smuggle goods across our border and not pay their way is simply unacceptable. 

“Nobody in Britain voted for the return to a golden age of smuggling. As new facts about Brexit come to light every day, it is clearer than ever that people need to be given a vote on the final deal.”

/ends

 

Notes to editors

The Government’s plan to leave the customs union has opened a debate on how Britain will be able to ensure the accurate and fair collection of customs duties after a hard Brexit.

The recently published White Paper seeks to address the issue through the proposal of a Facilitated Customs Arrangement, that would mean tariff eligibility would not be checked at the UK border, but instead by a so far non-existent mechanism that could control goods across the country.

 

The White Paper states that there will be no customs processes between the UK and the EU:

“Mirroring the EU’s customs approach at its external border would ensure that goods entering the EU via the UK have complied with EU customs processes and the correct EU duties have been paid. This would remove the need for customs processes between the UK and the EU, including customs declarations, routine requirements for rules of origin, and entry and exit summary declarations.” (HM Government, The Future Relationship between the United Kingdom and the European Union, July 2018, link)

 

It merely states that where the destination of a product cannot be determined properly, the UK will charge at the point at which the good is transformed for onward transport. No known technology to survey this is currently known to exist.

“Where the good’s destination is later identified to be a lower tariff jurisdiction, it would be eligible for a repayment from the UK Government equal to the difference between the two tariffs.” (HM Government, The Future Relationship between the United Kingdom and the European Union, July 2018, link)

 

The White Paper itself raises the possibility of this being abused to evade tariffs.

“The UK recognises that the rules and processes governing eligibility for repayment, including risk profiling and effectively targeted audit and assurance activity, must be sufficiently robust to ensure the mechanism cannot be used to improperly evade EU or UK tariffs and duties, through methods such as re-exporting of goods from the UK to the EU, or vice versa.” (HM Government, The Future Relationship between the United Kingdom and the European Union, July 2018, link)

As a result, importers have the opportunity to falsely state the destination of a product and transport it on to other EU countries via the UK border, which will have no infrastructure for customs checks under the Government’s plans. This will include goods that have been earmarked for full tariff reduction by Liam Fox and Jacob Rees-Mogg after Brexit, meaning smugglers could evade EU tariffs altogether.

 

New analysis from the People’s Vote campaign today shows that this could spark a Brexit bonanza, with smugglers being able to evade customs duties on goods worth at least £1 billion after Brexit.

The tariffs that could be evaded, based on quotes by Liam Fox, Dominic Raab and Jacob Rees-Mogg, are as follows:

Product

EU tariff

UK tariff

Quote

EU import value

Brexit bonanza

Wine of fresh grapes, including fortified wines; grape must other than that of heading 20.09

32%

0%

 

“Trade secretary Liam Fox has talked about the benefits of tariff-free meat from South Africa, wine from New Zealand and chicken from the US.” (The Guardian, 25 November 2017, link).

£83.77million (from New Zealand)

£36.8 million

 

Footwear, gaiters and the like; parts of such articles (Average tariff)

11.1%

0%

 

 

 

 

 

"The crucial aspect will be that under the white paper proposal we will have the full ability to reduce tariffs across the board on goods, including agricultural goods.” (Dominic Raab, Commons Brexit Committee, 24 July 2018)

 

 

 

“When we leave, we can set our own tariffs. Tariffs set at the European level make food, clothing and footwear more expensive. They are the highest proportion of the poorest in society’s expenditure. If we can get rid of those tariffs, we help the worst off in society.” (Jacob Rees-Mogg, 26 October 2017,link).

£4.6 billion (from China)

£506.1 million

Men's or boys' shirts of cotton, knitted or crocheted

12%

0%

£1.01 billion

(from China)

£131.8 million

 

Socks

11.8%

0%

£663 million (from China)

£78.23 million

Garlic, fresh or chilled

9.7%

0%

£67.9 million (from China)

£6.6 million

Rice

7.7%

0%

£143.5 million

(from India)

£11 million

 

Meat of bovine animals, fresh or chilled

12.8%

0%

£323.6 million

(from Argentina)

£41.4 million

 

Almonds (in shell)

2.8%

0%

£1.3 billion (from the US)

£36.4 million

Bananas, including plantains, fresh or dried

16.0%

0%

£729.5 million (from Ecuador)

£116.72 million

Coffee

6.1%

0%

£1.8 billion (from Brazil)

£108.9 million

TOTAL

 

 

 

 

£1.07 billion

WTO Tariff database, UN Comtrade Data, 2018