UK markets closed

Post-Brexit trade plans would be far from straightforward

(c) Sky News 2017: <a href="">Post-Brexit trade plans would be far from straightforward</a>

News that the UK will seek to maintain its existing customs union arrangements with the EU for a transitional period after Brexit will be welcomed by big business.

The priority for those companies exporting and importing goods from the EU has been to avoid a "cliff edge" effect.

They want to be sure that, after Brexit, they may continue with a trade in goods that is, in the jargon, as "frictionless" as possible and avoids, for instance, a build-up of trucks at channel ports while safety checks are carried out and customs paperwork completed.

Accordingly, there has been a broad welcome from the likes of the British Chambers of Commerce and Federation of Small Businesses to the announcement, as well as trade bodies such as the British Retail Consortium and the ADS, which represents the aerospace, defence, security and space sectors.

However, getting to even this position is going to be far from straightforward, given that such a deal will need the blessing of the European Commission.

It, as its chief Brexit negotiator Michel Barnier was quick to note on Tuesday, wants to concentrate on securing the post-Brexit rights of EU citizens in Britain, achieving a financial settlement with Britain and resolving the Irish border issue before going on to discuss customs and trading arrangements.

Moreover, for some businesses, the UK Government's own proposals are likely to entail more bureaucracy and not less.

Central to the longer-term arrangement, following the transition period, would be measures to prevent goods that do not comply with EU regulations from being imported into the UK for onward sale to the EU.

That could entail a lot of hassle for importers and exporters as they have to prove that goods they are exporting are not, if they do not comply with EU rules, ultimately destined for the EU.

It looks a form-filler and box-ticker's charter. As one (Other OTC: IUSDF - news) wag put it, the proposals would simply replace red tape with red, white and blue tape.

Those exporters who supported Brexit, meanwhile, are likely to find little in these proposals to like.

They supported Brexit because they wanted to swiftly strike free trade deals with the likes of the US, Canada, India and Australia. A transitional arrangement along the lines proposed would put the completion of such deals way into the 2020s.

Lastly, the bigger question is what happens with services, which account for 80% of UK GDP.

In some ways, this is less pressing, as the single market has yet to be completed in many services.

But some key export earners, especially the financial services industries, are anxious that the Government sets out its thinking for their sectors quickly.