UK aerospace trade association ADS has warned that either of the two customs options under consideration by the UK government for border arrangements post-Brexit would cause "substantial disruption and cost" for the sector.
In a letter to the UK parliament's Committee on Exiting the European Union and Treasury Committee, ADS chief executive Paul Everitt predicts that the government's "maximum facilitation", or max-fac, option could generate additional "highly damaging" costs of up to £2.3 billion ($3.1 billion) for the industry.
In 2017, ADS estimated that max-fac could generate costs of £1.5 billion. In raising its forecast, the trade body cites an "increase in the value of exports to the EU". It adds: "This reflects global growth and the critical role UK companies play in highly integrated European supply chains."
Everitt argues that "a customs union combined with a high level of regulatory alignment between the UK and EU is necessary to minimise new costs, maintain industrial competitiveness, and protect the high-value jobs our [aerospace, defence, security and space] sectors provide".
He describes max-fac as "inadequate" because although it might cover customs requirements for shipments, it would not feature rules of origin, regulatory compliance checks or the continuity of road-haulage licences.
"Having the best physical and IT infrastructure to handle customs procedures would not prevent compliance checks and queues at the border," argues Everitt.
"Relying on technology and other elements such as 'trusted trader' schemes – including Authorised Economic Operator (AEO) designation – falls short and would not guarantee fast-track movement across the border. AEO is a complex and heavily administrative scheme that does not suit all companies, particularly smaller suppliers."
The government's alternative proposal, of a UK-EU customs partnership, is "untested and presents several issues", in Everitt's view. Tracking and tracing shipments would be "onerous given both the volume of parts and the integrated nature of our industry and supply chains", he says.
A customs partnership would require "huge system changes" and create "prohibitive" costs. "There is significant complexity in any version of this model," says Everitt.
He concludes that "a customs union" between the UK and EU would "minimise new costs to a far greater extent than the two models currently proposed".