Freight News, Logistics, Business, Forwarding

No Deal Brexit still on the cards, says forwarder

[ March 7, 2019   //   ]

Leeds-based Tudor International Freight managing director, David Johnson says that EU traders should continue to prepare for a no-deal Brexit, despite the Prime Minister’s announcement that MPs would be able to reject the option of the UK leaving on 29 March.
He said that there was understandable relief among business at concessions Prime Minister Theresa May had made in the event of a revised withdrawal agreement being rejected by the Commons next week, with MPs being given a chance to instruct the government to seek extend the Brexit deadline.
Mr Johnson warned, however: “Even if the relevant votes are to reject a no-deal outcome and seek a deferral of our departure, a cliff-edge exit will be far from off the table.”
He explained one reason for this was no-deal would remain the default legal position. It would therefore take effect on 29 March if it was not replaced through an amended version of the withdrawal agreement receiving Parliamentary approval or an extension to this date being agreed by the EU, both of which were far from certain.
Mr Johnson said: “One obstacle to approval of the amended deal is latest reports suggesting any concessions the government can extract from the EU on the so-called Irish backstop, apparently the main reason for the original withdrawal agreement’s Commons rejection in January, will be insufficient to overturn its record 230-vote defeat.
“In addition, any deadline extension would have to be agreed unanimously by the other 27 EU states and in recent days French president Emmanuel Macron plus other senior bloc sources have said a deferral would only be granted if it was for a clear and important purpose. This could be to hold a second referendum or general election, but not merely to give the UK more time to prepare for no-deal, for example.”
Johnson added that, even if a deferral was agreed, Mrs May had made clear that she favoured only up to a three-month extension.
He said: “Given the current Parliamentary deadlock, in which there’s apparently no majority favouring any outcome, it’s perfectly feasible the UK’s EU traders could find themselves approaching the end of this limited extra period with nothing significant having changed and a no-deal Brexit again looming, as it is now.”
He added that a UK government paper published in recent days, which had received relatively little national media attention, had underlined just how damaging a no-deal Brexit would be for the country’s EU traders.
He said: “The document estimated around 240,000 UK businesses, which currently only trade with the bloc, would become subject to customs processes. It also stated the likely administrative burden on British companies overall from the additional customs declarations required, given current trading volumes, would be about £13bn a year.”
It also made clear the EU would hold any goods not correctly customs cleared, which, it said, were “expected to be a significant proportion in the early period after exit day.”
In addition, Mr Johnson said, the paper admitted the flow of goods via Dover and Eurotunnel could be “very significantly reduced for months.” It also stated the effect of factors such as new tariffs of up to 70 per cent on UK imports from countries in the EU and with which the bloc had free trade agreements “is likely to be severe in a number of areas”.