Lords EU Committee calls for urgent Government action to prevent non-tariff barriers from damaging UK businesses

The letter presents the evidence gathered by the Committee during its inquiry into the impact of non-tariff barriers on future UK-EU trade in manufactured goods, and how these could be addressed in the new economic relationship.
 
The Committee found that:

• Businesses are already stretched as a result of the COVID-19 pandemic. Some businesses, particularly SMEs, may not be able to absorb the double shock from COVID-19 and the post-transition requirements.
• Smaller businesses are not ready for the new UK-EU trading relationship. The Government must step up its engagement and support work to ensure businesses are prepared.
• The Government should continue to argue in favour of more liberal rules of origin, so that businesses across different sectors can benefit from tariff-free access. The agreed rules should also be as clear and simple as possible, so that the burden of proving origin does not outweigh any tariff costs.
• The Government should continue to make the case for a UK-EU agreement on mutual recognition of conformity assessments, which would reduce unnecessary duplicative costs for businesses.  Failure to achieve this could have severe consequences for parts of UK industry and potentially limit the availability of certain products in the UK.
• Decisions on regulatory divergence should only be made after careful assessment and consultation with the sectors involved.  A mechanism should be set up for working closely with UK manufacturers to ensure their views are reflected in future decisions about regulatory divergence from the EU.
• Further work is urgently needed to support the flow of goods across the GB-EU border. A significant proportion of goods will not benefit from the phased-in approach to imports, while the new border operating model does not cover the EU side of the border in sufficient detail.
• The existing Authorised Economic Operator scheme is no panacea and those businesses that trade exclusively with the EU are unlikely to qualify. A complementary trusted trader scheme should be devised urgently, so that it has the potential to play a significant role in facilitating future UK-EU trade.
• The Government should have a contingency plan to work with ECMT members and the EU to ensure continued road access by hauliers under any outcome.

Baroness Verma, Chair of the EU Goods Sub-Committee, said:
 
“Facilitating UK-EU trade at the end of the transition period requires more than simply removing headline tariffs. Our Committee found that non-tariff barriers have increased over time, often outstripping the cost of tariffs.
 
“New rules of origin, regulatory barriers and customs requirements will be a challenge for many businesses, particularly for the 150,000 businesses that have hitherto only traded with the EU, and smaller businesses.
 
“With only five months left before the end of the transition period urgent Government action is required.”
 
Download the Committee's letter to Michael Gove MP, Chancellor of the Duchy of Lancaster.