Why UK business prefers 'max fac'

May 11, 2018

What do Britain’s business leaders want to happen in the great “customs partnership” versus “max fac” debate?

Most companies probably find the row in Theresa May’s cabinet over the issue as tortuous and mind-boggling as the rest of us. Many are doubtless exasperated at the way her government has become paralysed by the issue, with rival cabinet ministers championing each model.

But when the prime minister convenes another cabinet committee discussion on Tuesday, ministers might spend a moment pondering what UK business actually wants. Informal soundings suggest the view of the business community can be summed up as follows.

First, many business leaders would ideally want the UK to stay in the customs union and single market. If they cannot get that, then they want clarity over the customs model as quickly as possible. It goes without saying that time is running out.

Secondly, it is the customs partnership that would probably prompt most doubts among business leaders.

The “partnership” would mean Britain acting on the EU’s behalf when handling goods from elsewhere, imposing EU tariffs — even if higher — then passing the money on to Brussels.

As a concept, this has lots of political appeal. It allows Mrs May to resolve rival views on Brexit in cabinet by saying the UK will have a frictionless border, while also doing trade deals with non-EU states. It also promises an invisible border in Ireland.

But as a scheme, the customs partnership is totally untried and untested. As one business figure puts it: “It involves having two tariffs, it involves tracking goods constantly, it involves importers paying a higher tariff rate today in order to get a rebate tomorrow. It brings lots of worries regarding cash flow and compliance — and big headaches if not done correctly.”

Then there is the “maximum facilitation” option, which accepts the need for a customs border, including in Ireland. It would use new technology and “trusted trader” schemes to keep disruption in the flow of goods across the border to a minimum.

Lots of businesses would not be enamoured of it. Max fac would mean higher costs. It would create particular concerns for manufacturers — especially in the car industry — who rely on just-in-time supply chains.

But one business figure says: “Max fac is at least based on procedures that already exist. We have a baseline to work from, even if we don’t know the practical steps the government needs to take to make it happen.”

Of course, business leaders do not worry about the politics. And the problem with max fac is that it involves some kind of hard border across Ireland. That makes it difficult to see how Mrs May could get it signed off by the EU at the June European Council.

So a solution still seems some way off, which makes the entire debate utterly exasperating for British companies.

I suspect that Brexit is driving me mad

“My error is evident to me. Eyes open, I march on into it. I have not the slightest intention of shutting up.” (Matthew Parris in The Spectator)

Do voters support ID cards? It depends on the question

“The reintroduction of ID cards was the second most popular of the policies we tested. The most popular was a proposal to monitor all public spaces in the UK with CCTV cameras.” (Matthew Smith of YouGov, in The Times)

How Brexit shaped the local election vote

“There seems to be little doubt that the increased concentration of Conservative support amongst Leave voters that was in evidence in last year’s general election has been replicated in the local elections.” (Professor John Curtice at The UK in a Changing Europe)

Hard numbers

On Sunday, the Turkish president Recep Tayyip Erdogan begins a three-day visit to Britain.

Trade between the two countries has been thriving for several years and is currently worth about $16bn. But business executives say that the economic uncertainties of Brexit have led to a new push. Last year, the UK doubled its export finance programme for Turkey to £3.5bn. There are also efforts to increase co-operation on energy, healthcare, manufacturing and defence.

Let's block ads! (Why?)

Read again Why UK business prefers 'max fac' : https://ift.tt/2KRdCu2

Let's block ads! (Why?)