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Debates

The UK and Europe

Technology and customs after Brexit

Marcus Shepheard / Sep 2017

Image: Shutterstock

Technology already underpins the movement of goods in and out of the UK. There’s a complex web of systems that help UK businesses trade internationally, reducing paperwork and preventing delays. But Brexit has people asking whether, outside the EU Customs Union and Single Market, technology could deliver a frictionless border. Our new report pours cold water on that idea.  

There are already 57 different ICT systems that support UK border operations. Together helping the smooth passage of almost 500 million tonnes of trade each year through our UK seaports.

These systems are critical to ensuring that, for any goods coming from outside the EU, the right duties are paid, the right checks take place and that goods entering the UK market meet the right standards. But despite almost 60 different systems working in concert, there is still friction.

For UK traders with European supply chains, it’s a different story. Goods can move freely between the UK and the continent, unimpeded by checks and burdensome documentation. Every day 240km of trucks pass through Dover and the Channel Tunnel alone; carrying everything from fresh fish to radioisotopes. The driving force of this free movement of goods is membership of the EU Customs Union and Single Market, not the technology.

Leaving the Single Market and EU Customs Union introduces friction. Whether is customs declarations, rules of origin or regulatory controls, there are new requirements introduced that lead to activity at the border. The question is whether new technology can minimise the impact of these changes.

Politicians, industry leaders, academics and commentators have all suggested ways that new technologies could help to manage and reduce the requirements for controls and checks on goods entering the country.

For example, in the not too distant future, every truck, container, train, plane or ship could have its own digital equivalent of a passport. Tied to it, could be a list all the goods contained within, their source and destination, owners, and the status of any insurance or bonds covering them in transit. These consignments can be tracked using a combination of GPS tracking, automatic number plate recognition (ANPR) and smart databases.

Then there some more imaginative suggestions. Technologies such as blockchain could ensure the integrity of manifests from point to point, and protect against corrupt practises. Machine learning methods might feed on datasets rich with information about product safety, public health and business practises to make robust assessments of the likely risks associated with any given consignment.

While these technologies undoubtedly hold some potential for border operations in long term, they offer little in the way of options for the UK Government preparing for day one outside the EU.

With less than 600 days until the article 50 deadline there is not the time to design and develop these types of system, let alone implement them. And Government already has its hands full.

The existing computer system which handles customs declarations (CHIEF) was built in the 1980s and was due to be replaced five years ago. Its replacement, the Customs Declaration Service (CDS), is reportedly on-track to come online in January 2019. However recent reports from the Infrastructure and Projects Authority, and the National Audit Office have cast doubts on the readiness of CDS.

Part of the difficulty for government is the complex web of external organisations that are critical to border options – from customs handlers to port operators. Any change in government must be reflected in these private sector businesses and it takes time. To get a sense of scale – around 8,700 users or intermediaries will be affected by the new customs system.

When HMRC put in place the Import Control System in 2012 organisations were given 18 months to adapt. The introduction of the EU’s Union Customs Code in 2016 came with a four-year implementation phase for businesses.

When you look at these sorts of timelines, it becomes clear that novel technology is not a viable option if the Government is to be ready for ‘day one’ outside the EU.

The focus needs to be on delivering projects already in train. HMRC needs to ensure that CDS is ready for day one, and the UK should prioritise negotiating continued access to existing EU customs and trade systems for the foreseeable future.

Being ambitious with technology is important, but so is being realistic.

 

Marcus Shepheard

Marcus Shepheard

September 2017

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