The Government has published the first of a series of papers setting out its position on what the UK’s relationship with the EU should look like post-Brexit. The paper sets out two possible alternatives for a future customs relationship with the EU as well as detailing a transitional period immediately post-Brexit, which would mean close association with the EU Customs Union for a limited time, ensuring that UK businesses only have to adjust to a new customs relationship once.

The document highlights two possible approaches:

• A “highly streamlined” customs arrangement between the UK and the EU, with customs requirements that are as frictionless as possible. This would aim to maintain some of the existing arrangements that the UK has with the EU, while allowing the UK to pursue separate trade agreements with non-EU countries. This would include adopting technology-based solutions to make it easier for businesses to comply with customs procedures.
• A new customs partnership with the EU which removes the need for a UK-EU customs border. This could involve the UK mirroring the EU’s requirements for imports from the rest of the world where the final destination is the EU. This might require a repayment mechanism, which would see importers to the UK pay whichever is the higher tariff, before having to claim money back if their goods were sold to a customer in the region with a lower tariff.

Both of these proposals would be likely to create a significant increase in administration costs for organisations in the UK dealing with cross-border transactions. However, it is hoped that a new agreement will help improve the UK’s wider trade relationships, while protecting businesses and public services from unfair anti-competitive practices and maintaining high trade standards. The Government has also made it clear that it wishes to avoid a return to a hard border between Northern Ireland and the Republic of Ireland (as the only UK-EU land border).