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Brexit: prepare for the worst warns Freight Transport Association

[ May 4, 2018   //   ]

Businesses need to plan for a worst-case scenario after Brexit with no transition period, the UK excluded from EU trade deals, duties, quotas, burdensome rules of origin and delays at borders, Freight Transport Association (FTA) experts told a seminar at Multimodal on 2 May. A crucial meeting in June could decide the UK’s future fate, they added.

A panel of three FTA staff, along with port of Dover head of policy and communications Richard Christian, said that with little or no firm information emerging from either Westminster or Brussels, businesses could not assume that it would be business as usual after 19 March next year. They added that the next European Council meeting in June would be critical; without tangible progress, it was likely that the UK would then be on the path to a ‘no deal’ scenario, trading with the EU as a third country and with full border controls imposed on its traffic.

FTA head of European policy, Pauline Bastidon told the standing-room-only gathering that if a transition period was agreed, it would mean largely status quo for the UK’s trade to and from the EU. “But it’s not 100% certain. There are a number of important discussions to be had and difficult decisions to be made and unless there is agreement on the Irish border question, there will be no decision and a real risk of a ‘no deal’. Don’t assume that everything will be fine.”

All companies should be planning for a ‘worst case’ scenario, she said.

The Irish Government says it wants to see real tangible progress at the Council meeting in June, and at the moment that was “zero” she added. (On 1 May, EU chief negotiator Michel Barnier warned that no withdrawal agreement will be reached with the UK if there is no solution to the Irish border issue.) Even if a transition period was agreed, it would last only from March 2019 to the end of 2020, said FTA, though there has been talk of a possible extension.

FTA director of global and European policy Chris Welsh said also that if there was no progress at the June Council, “we can’t assume that UK importers and exporters will continue to benefit from EU trade deals. While trade with third countries and customs clearance would continue largely as before, if the UK was to exit existing EU trade deals it could mean quotas or duty having to be paid as the UK exited EU preferential duty agreements.

The UK could also be subject to burdensome proof of origin requirements, Bastidon added.

She also warned that EU food and other goods could be subject to sanitary and phytosanitary checks on any goods containing meat or plant products. These promised to be much more onerous than fiscal checks, which could at least be computerised.

Dover’s Richard Christian said that whereas EU traffic transit the port with only a two-minute dwell time, for the small percentage of non-EU traffic times were of the order of 20 minutes per vehicle. But even adding two minutes time for each truck from the EU would lead to a 17-mile queue of traffic, he claimed.

Another issue that the politicians had so far failed to give any clarity on were truck permits and recognition of driver licences, Bastidon continued. In fact, FTA deputy chief executive James Hookham said that this could be “a real showstopper if we don’t get it right”. Permits under OECD rules are extremely restrictive and could lead to operations being unable to send trucks to the EU where they had run out of them.

FTA would like to see mutual recognition of O-licences, and while most EU member states were favourably disposed to this, there had been no official confirmation that this would be the case.

There was also no indication on whether cabotage operation by UK-registered trucks would continue to be allowed after Brexit.

The panel also advised traders to at least consider the benefits of gaining Authorised Economic Operator (AEO) status although, with so much uncertainty, they admitted that it was hard to quantify what the benefits would be. In answer to a question from the audience, they confirmed that AEO status would only absolve traders from fiscal checks, not phytosanitary ones.

A member of the audience said that it had been hard to get any information from HM Revenue and Customs. However, the panel pointed out that HMRC was as much in the dark about Brexit as the trade, so this was perhaps understandable.

Richard Christian at Dover said however that he had had extensive contacts with HMRC and they were well aware of the possible implications. The events of a couple of summers ago with miles of trucks stacked at the Channel ports had “made people realise what a problem at Dover looks like.”

Meanwhile, on 2 May, press reports were circulating some members of Theresa May’s cabinet were threatening to resign if the government pushed ahead with plans for a customs ‘partnership’ with the EU whereby the UK would effectively remain part of the EU for fiscal purposes.

The European Research Group of 60 Conservative MPs led by Jacob Rees-Mogg, issued has issued an ultimatum to the Prime Minister. This has the potential to bring down the Government, throwing the eventual outcome of the Brexit plans into even more doubt.

 

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