- Boris Johnson’s government must come to Parliament to explain an “extraordinary” leaked letter from the UK Trade Secretary Liz Truss, the opposition Labour party has said.
- The letter, which was leaked to Business Insider this week, can be read in full for the first time below.
- In her letter, Truss warns that her government’s Brexit border plans risk causing chaos at UK ports, smuggling from the EU, and could face a legal challenge at the World Trade Organisation.
- The leak led to Johnson facing consternation this week from Conservative MPs.
- Visit Business Insider’s homepage for more stories.
The Labour Party has demanded that Boris Johnson’s government appears before Parliament to explain an “extraordinary” leaked letter from UK Trade Secretary Liz Truss, which revealed its fears of chaos at Britain’s borders once the UK leaves European Union rules next year.
Business Insider on Wednesday exclusively obtained a copy of the letter sent by Liz Truss to Rishi Sunak, the chancellor of the exchequer, and Michael Gove, the chancellor of the Duchy of Lancaster, expressing “four key areas of concern” about the government’s Brexit border plans.
In the leaked letter, which Business Insider is today publishing below in full, Truss raised fears that new border arrangements with the EU, its biggest trading partner when UK leaves the Brexit transition period in January 2021, will not be ready in time.
She set out her concerns that ports will not be ready to carry out full import checks when they come into effect in July next year and warned that some ports could be vulnerable to smuggling as of January.
Truss revealed that the UK government’s planned system for applying UK and EU tariffs in Northern Ireland was not set to be ready for when it is needed in January.
She also warned Sunak and Gove that the UK government’s plans could be subject to legal challenge at the World Trade Organisation, as they involved temporarily giving the EU preferential treatment.
Asked about this last claim on Thursday, Johnson’s official spokesman insisted that “our approach is WTO compliant.”
“I can’t comment on leaked correspondence, things which I haven’t seen, but I’ve set out the border regime that we are putting in place,” he added.
However, the Labour Party on Saturday evening called on Johnson’s government to explain the letter to Members of Parliament, saying the issues it raises are “simply far too important to be left to the written correspondence between Cabinet ministers.”
“This leaked letter lifts the lids on a growing sense of chaos and confusion between Cabinet ministers at the government’s complacent approach to vital preparations ahead of December 31st 2020,” said Rachel Reeves, the shadow chancellor of the Duchy of Lancaster and shadow Cabinet Office minister.
“There is growing alarm from the business communities in Northern Ireland and increasingly in Britain that the ministers aren’t being entirely open about the state of preparations.
“These issues will affect countless businesses and jobs and are simply far too important to be left to the written correspondence between Cabinet ministers.
“This extraordinary leaked letter deserves answers, not just given to the House of Commons, but to the industries and people who stand to be affected if the government gets this badly wrong.”
The letter caused deep consternation among Conservative Members of Parliament, the Times reported on Thursday, and led to questions being directed to Prime Minister Johnson at a private meeting with backbenchers this week.
The letter also triggered alarm among business groups preparing for a new trading relationship with the UK’s biggest trading partner in less than six month’s time.
Dominic Goudie, Head of International Trade, Food and Drink Federation, said the industry was “constrained by the lack of clarity from government” and “cannot adapt with any confidence to the many changes” facing it.
“If the UK Government’s preparations are not ready in time, there’s a high chance that border infrastructure may not be able to cope with the volumes of goods and declarations that will be required on day one,” he told Business Insider.
“This presents a serious risk for the UK’s food and drink supply and the availability of products for consumers and shoppers. Food and drink manufacturers need a system that allows for maintaining just in time supply chains.”
The government’s plan to apply an EU tariff on all goods heading to Northern Ireland, revealed by Truss in the letter, is “untenable” and would threaten the cash flow of many businesses, The Northern Ireland Retail Consortium’s Aodhan Connolly told Business Insider.
“If true, a plan to implement EU tariffs, as a default, provides unprecedented problems to retailers who trade in Northern Ireland. “Retail accounts for 70% of the value of trade that crosses GB-NI and even if we were able to reclaim the tariffs the implications for cash flow while waiting for refunds makes the premise untenable.”
Read Liz Truss’ leaked Brexit letter in full
Dear Rishi and Michael,
I am writing to you to set out my key areas of concern on border policy risks and readiness for the end of the transition period and to seek your assurance that these concerns will be addressed. This letter comes in advance of the Border Operating Model publication on 13 July, where the UK’s proposals for the border will come under renewed scrutiny, both on the domestic and international stage.
My key concerns are outlined below:
1) The Staged Approach and WTO Challenge — When we exit the Transition Period, the UK will be vulnerable to WTO challenge regarding its border regime. This is especially relevant concerning the implementation of the NI protocol and the application of the staged approach. These measures could significantly impact on the UK’s reputation at the WTO and I would appreciate your assurance that full border checks for EU-GB goods will be implemented no later than July 2021 and that all messaging will clearly reflect this point. I would also like to underscore that, where there is a risk of legal challenge at the WTO, departments are responsible for mitigating the risk and for funding the costs of any defensive trade dispute brought against their measures. Given this risk, I was pleased to hear that following the XO meeting last Friday, it was decided that the temporary waiving of export declarations will not be included in the publication. I would want to be part of any decision to revisit this, either with reference to the publication, or plans thereafter.
2) Controls at the Border — I recognise there are challenges to delivering tariff declaration systems on both EU and Rest of World (RoW) imports but, to ensure we can develop appropriate handling plans for national and international stakeholders, it is essential that my department has a clear view of operation delivery plans, timescales and risks going forward. This is also particularly important for controlled goods at those EU-facing ports where the infrastructure to implement controls does not currently exist. Given the legal, reputational and security risks, I would like assurances that we are able to deliver full controls at these ports by July 2021 and that plans are in place from January to mitigate the risk of goods being circumvented from ports implementing full controls.
3) Tariff Assessment and Collection — I have some further concerns about tariff collection due to the staging in approach, especially around the increased likelihood of circumvention, where RoW traders could import their goods via the EU. This would undermine the effective operation of our trade policy, as well as create significant handling difficulties with negotiating partners. For example, it might lead to remedy tariffs being circumvented, due to a lack of checks at the border, in addition to impacts on TRQs. I therefore would like firm assurances that mitigation against such risks are in place. Further, I am seeking assurance that tariffs on goods from RoW, specifically from countries where the Trade Agreements Continuity programme applies, will also be payable from 1 January 2021 and will be collected within one month as is currently the case.
4) Northern Ireland Protocol risks— I understand that the digital delivery of the dual tariff system (both EU and UK tariff) in Northern Ireland is a high risk and that HMRC are planning to apply the EU tariff as a default to all imports in NI on 1 January 2021. This is very concerning as this may call into question NI’s place in the UK’s customs territory. Failure to deliver the UK tariff digitally in NI, would have political, legal, and reputational risks. I am keen to see HMRC and BPDG delivery plans, specifically on how both the UK and EU tariff will be digitally implemented, including detailed mitigations, and where there are risks to delivery by 1 January 2021. These plans should also include details of when commodity code divergence will be delivered for the whole of the UK.
As we fast approach the end of the transition period, we need to ensure that the UK border is effective and compliant with international rules, maintaining our credibility with trading partners, the WTO and with business. I encourage the continued close cooperation of officials in our departments to achieve this.
I am copying this letter to the Home Secretary.