Business, Forwarding, Freight News

No Deal still on the table, warns Tudor Freight boss

[ November 25, 2019   //   ]

The UK could still be heading for a no-deal Brexit at the end of 2020 says director of Leeds-based forwarder Tudor International Freight, Adam Johnson.

This was the logical conclusion to be drawn from recent statements by government representatives such as Prime Minister Boris Johnson and Chancellor of the Duchy of Lancaster Michael Gove.

The government has said that if a majority Conservative administration takes power after the general election on 12 December, the UK will leave the EU – under the terms of the draft withdrawal agreement concluded at October’s European Council meeting – on 31 January 2020.

Both the Prime Minister and Mr Gove have now added that the subsequent standstill transition period will cease on its current end date of 31 December 2020. This is despite the draft withdrawal agreement specifically allowing for the period to be extended for up to two years, provided this is agreed by 1 July.

Mr Johnson said: “The key problem with not extending the transition period is it only leaves nine months for the whole future relationship with the EU to be agreed and ratified, as realistically negotiations won’t begin until next March. This timescale is, to put it politely, ambitious.

“For one thing, agreement will need to be reached on a vast range of issues on top of goods and services trade, which will be complex enough. These include regulatory standards, aviation, fisheries, security, science, defence, data and labour mobility.”

Mr Johnson said the government’s timescale would demand negotiating mandates, covering all relevant areas, being agreed on both sides by early next year, but this may not be straightforward and could easily be politically contentious.

He added that another complicating factor for the negotiations was the Prime Minister’s wish for Britain to leave the EU’s single market and customs union, in favour of a new free-trade agreement. This would allow Britain to diverge from EU regulations and make its own trade deals with other nations in the future.

He said: “Even if all the Prime Minister has in mind initially is a basic zero tariff, zero quota regime for goods trade, it’s hard to point to a deal of this sort the EU has concluded with a third country previously. It also seems possible member states will be reluctant to grant Britain this access to their market if it can gain a competitive edge by undercutting them in areas such as workers’ rights at home.”

He said: “The Prime Minister apparently believes his timescale is realistic, because Britain and the EU will be starting their negotiations in complete regulatory alignment. But this overlooks that these will be the first trade negotiations in history where the object is divergence, not convergence.”

This was likely to make the negotiations more complex and time-consuming than for a conventional free trade deal

Even if the transition period was extended for the two years would be a challenge. The Institute for Government think-tank had suggested that four years would be a more realistic overall timeframe for such a deal and some experts had predicted five to seven years would be needed.