Technology is the answer to the frictionless trade problem

 
Jonathan Roberts
Triggering Article 50 - Port Of Dover
The technology exists, and the market is moving towards it anyway (Source: Getty)

The ongoing debate about the nature of Britain’s relationship with the EU post-Brexit is a many-headed and complicated beast.

We are often reminded that UK imports from the EU total £347bn, or 53 per cent of total British imports.

The EU is our largest trading partner, and this is in large part because the trade is frictionless: the movement of goods is easy, and transaction costs and restrictions are non-existent.

Read more: May's gamble: Prime Minister faces backlash on Brexit plans

It follows that if there are any issues with this process, it represents a problem for every link in the chain, which extends all the way to businesses and individual consumers in the UK.

It is for this reason that the ongoing debate around a customs agreement with the EU is so important. The inability to pass 53 per cent of all UK imports through UK ports, free of checks and delays, could cause huge logistical problems, the effects of which could ripple through the economy and directly affect the price and availability of goods within our country.

But finding a political agreement is only part of the story – and it’s one that is distorting the narrative of the situation.

A tendency to sensationalise the impact of greater checks on goods going across the border has, since the vote in June 2016, often led to stories evoking doomsday scenarios, like a permanent “Operation Stack”, where we see 20-mile lorry queues along the M20.

To understand how this can be avoided, let’s first look at what we mean by “frictionless trade”, and why goods coming in from the EU have less friction, compared to imports from elsewhere.

The Port of Dover is what we call a RoRo – or “roll-on, roll-off” – port. The name relates to how cargo is loaded and then discharged from a vessel: rather than use cranes or other heavy equipment, cargo simply rolls onto or off of the vessel in question.

This is utilised for short distance crossings (like the English channel). It means that these goods can pass through ports with much less friction (time spent loading, unloading, stacking, and checking) than those coming in from outside of the EU across longer distances.

This RoRo operation is made even more expedient due to our shared customs agreement, and thus no need to stop and check every truck that rolls through.

If we want to maintain frictionless trade after we leave the EU, we need to stick to this model as much as possible. That is where the panic over customs checks and stacked-up lorries is coming from.

Frictionless trade is vitally important, and I’m advocating in the strongest possible terms a solution that allows for the smoothest movement of goods through ports and into (and out of) the UK. But I worry that fear surrounding trade is preventing us from seeing solutions that are already there.

Technology is crucial to this discussion. The reason we stop traffic at customs is to identify the origin of the goods and the origin of the vehicle transporting them. If a technological solution could be found for this, frictionless trade could almost be guaranteed.

Technology could, for instance, determine the origin of goods and log that information before they had even left their country. Number plate recognition technology could match the passage of the vehicle to the information on the goods already logged. Lorries could be paired with their logged customs declarations in the government’s Customs Declaration Service system.

This is not space-age stuff. Already, the technology exists, but UK customs and border control has not implemented and integrated it into in existing infrastructure in such a way as to allow for frictionless trade on the day we leave the EU.

This is not a surprise: implementing the technology is a large-scale operation, and could take, by our estimates, anywhere between five to 10 years to do.

That time-scale might be reduced with significant and immediate investment from the government, but we must not kid ourselves that it will be ready for the end of any transition period. That’s why a customs agreement is so necessary for at least the interim period.

But simply because something is hard does not of course mean it is not worth doing, especially in the long term. Indeed, worthwhile things are very often difficult, and beginning the process of incorporating the right technology at our ports is nothing if not worthwhile – regardless of whatever deal we eventually end up with.

Call it a “highly streamlined customs arrangement” or “max fac” if you must. Whatever the name, the technology for it exists, and the market is moving towards it anyway. But it will take time, and in the context of Brexit, time is the one thing we don’t have.

Read more: Govt told new customs system will take 10 years to set up

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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