By Rachel Lund, Head of Analytics and Insight at the British Retail Consortium

While much of the debate around the UK’s future trading relationships with the European Union has focused on the impact of possible tariffs, the additional checks and controls (so called non-tariff barriers) applied to goods imported into the UK from the EU once we leave the customs union and single market, could be just as damaging to businesses and consumers as tariffs.

At present, when goods enter the European Union from outside member countries they are subject to checks and controls. There are 405 of these controls in total, with fresh beef facing 22 of these measures, strawberries 28 and pharmaceutical products 44 (See Table 1). These are in place to ensure that products do not contain pathogens, contaminants or residues that are a risk to human health; that they comply with rules of origin and that the correct levels of taxation are levied.

As part of the EU customs union and single market we are not currently subject to any of these controls. However, if we leave the EU without a deal, that will change.

In the case of some meat imports, compliance with these measures could mean each shipment undergoing a veterinary inspection to obtain a certificate before export, followed by a submission of documentation (relating to veterinary health and origins of produce) to UK authorities, which will then have to be verified, before an appointment is booked for physical inspection of products on arrival. Consignments may then have to wait for several days before inspection at a UK border post.

While not every import will be subject to this level of control, the increase in the administration for most goods will be significant. Products will also be at risk of substantial delays if border posts struggle to cope with the anticipated five-fold increase in customs declarations under a no deal scenario.

These additional controls will not come without a cost. Work by KPMG Netherlands (2018) suggests that imports of meat into the UK from the EU could face additional costs of more than 1,000 euros per shipment of meat. Our own analysis, which builds on the work of several recent academic studies (Dhingra et al 2016; Bergen et al 2009) finds that imports of food and beverage products would face an average increase in the cost of importing from the EU of up to 29% from Non-Tariff barriers alone, under a no deal scenario. Impacts on food are particularly high given the number of checks involved, although non-food goods would face increases too: up to 7% in the case of clothing and textiles (Table 2).

Although it’s unlikely that there would be a complete pass through onto consumers, cost increases of this magnitude would inevitably lead to higher prices for consumers: A recent study by Oliver Wyman suggests that under a no deal scenario, families could end up paying an additional £1000 a year across their consumption basket at the same time as the profit margins of retailers and other businesses are likely to come under significant strain.

This may sound pessimistic, however most of the impacts could be avoided by a trade deal with the EU and by taking a number of pragmatic steps which the BRC lays out in its Custom’s Road Map. A deal with the EU is the only option for protecting UK households: unlike tariffs UK border controls cannot be removed unilaterally without involving difficult legal disputes with our global trading partners over the UK’s adherence to international trade law.

Table 1 – Non tariff measures by selected goods

Good

Number of non-tariff barriers

Meat of bovine animals, fresh or chilled.

22

Meat of bovine animals, frozen.

30

Cheese and curd

30

Cabbages, cauliflowers and similar brassicas.

7

Strawberries

28

Other berries

29

Fabric

12

Ceramic products

10

Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated nameplates and the like; prefabricated buildings

45

Pharmaceutical products

44

UNCTAD (2017), TRAINS NTMs: The Global Database on Non-Tariff Measures

Table 2 – BRC estimates of increases in costs of importing from the EU from non-tariff barriers under a no deal scenario

Source: BRC analysis, Dhingra et al 2016; Bergen et al 2009

 

Non-tariff barrier cost impact as % of value of product

Food & beverages

29%

Textiles & clothing

7%

Wood & paper products

3%