UK Transport and Brexit News & Views No. 19

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Mark’s week

While the British and French elections dominate coverage of European politics, behind the scenes, the work on Brexit here in Brussels continues.  Although some in the UK believe the British Prime Minister Theresa May will secure a better Brexit deal with a strong general election mandate, the reaction in Brussels has been to stay calm and carry on regardless.  We must prepare for what they describe  as ‘the bitter realities of Brexit.’  For transport that means a particularly hard line will be adopted on shipping, ports and aviation.  For example, and it’s been repeated to us privately and now publicly, European leaders are preparing for customs controls to be introduced from Brexit day one in March 2019. As things currently stand there will be no deal on customs. Likewise on flights. The day we leave the EU all our current EU flying rights will cease. Now that can change but we need to offer something pretty substantial in return, and build a strong coalition to make it happen.  Relying on the British Government, even one with a strong and refreshed Brexit mandate, repeating the mantra you are a priority will not enough, especially if the other 27 don’t agree.  

1. Theresa May calls snap election, Brexit timetable remains in place
Last week, Theresa May surprised almost everyone by announcing that a general election will be held June 8, having previously stated that that was out of the question. In Europe, the decision was mostly welcomed, one senior EU official said: “The chances for a good outcome of the Brexit negotiations have just gone up tremendously. Instead of being at the mercy of the Brexiteers, PM May will now get a very, very strong mandate that will allow her to negotiate a reasonable deal with the EU.” EU politicians have also said that the election will not change their approach to the Brexit talks, and that they intend to stick to the timetable set out by Barnier.

2. Irrespective of the outcome of the general election prepare for customs controls from Brexit Day
Leading EP negotiator Guy Verhofstadt has stated in public what he and many EU leaders have told us in private. He dismisses the idea that May is calling a general election in order to secure a better deal with the EU as ‘nonsensical.’  And states ‘I have little doubt many on the continent see this election as again motivated by the internal machinations of the Tory party’.  His views were echoed by Donald Tusk, EU Council President and other officials. Vehofstadt warns that unless May softens her line on the jurisdiction of the ECJ, ‘UK citizens will have no more of a right to holiday, travel and study in EU countries than tourists from Moscow or students from Mumbai’ even in a transitional period. And on customs he is even more blunt ‘Britain will be leaving the customs union. As a result, European leaders are preparing for customs controls to be introduced from Brexit day in March 2019.’

3. Internal Commission memo tell staff to prepare to poach British business and cut the UK off
The Financial Times has published an article based on an internal commission memo, where EU officials instruct staff on how to prepare for Brexit. In rather unforgiving terms, they encourage their staff to persuade British business to move to the EU, and to tell agencies to prepare to block the UK out of sensitive databases on day one. They want the Commission and other agencies to keep in mind that the UK may be a third country within two years. Brussels has already begun freezing the UK out of the Galileo satellite navigation system project which could have been worth up to €400 million to UK companies.

4. Tajani meets Theresa May in London
Meeting with Theresa May in London last week, President of the European Parliament, Antonio Tajani has stressed that “Citizens deserve certainty regarding their post-Brexit future”. He said that defending the interests and rights of their citizens is the Parliament’s number one priority. Tajani also invited the Prime Minister to address the European Parliament, and met with NGOs to discuss their Brexit priorities.

5. Non paper on key element likely to feature in the draft negotiating directives
UKTiE has seen an EU non paper on key elements likely to feature in the draft negotiating directives from the Commission. It is very similar to the Parliament and Council’s stance; putting citizen’s rights as their top priority, with financial settlements second. Some new things they mention are the need to clarify the situation of goods placed on the market before the withdrawal date and other ongoing procedures and the importance of arrangements regarding the Sovereign Base Areas of the UK in Cyprus. Furthermore, although the UK seeks to no longer be under the jurisdiction of the European Court of Justice, the Commission seems quite keen on continuing to use it throughout the negotiations, and if not after, then they want the alternative dispute settlement to be highly based on the ECJ.

6. Ministers want more funds for the shipping industry help it make the most of Brexit
The Sun has reported that ministers and the UK Chamber of Shipping are urging the Government to give more money to the shipping industry to enable it to make the most out of Brexit. This money would mostly be used to train more seafarers. A spokesperson for the Department of transport said: “We want a successful UK maritime industry so our nation is best placed to benefit from the expected doubling in world sea trade by 2030.”

7. Leading law firm produces impact assessment for EU-UK transport and trade
The leading law-firm Norton Rose Fulbright has produced an analysis for transport companies based either in continental Europe or the UK on how to trade with the other. Focused on rail, shipping and aviation, it looks at the impacts of leaving the EU, the impacts of relationships with countries outside the EU and what impacts Brexit might have on environmental, taxation and health and safety laws. It is a welcome attempt to provide some certainty for companies in and outside the UK.

8. UK-China DB cargo train gives hope for new era of rail post-Brexit
A Deutsche Bahn cargo train, facilitated by DP World amongst others, has commenced the return leg of its UK to China journey, reviving the ancient silk-roads. It is being billed as the beginning of a ‘new era’ for UK trade, and it is a physical reminder for the UK not just to secure a good trade deal with the EU, but also with the rest of the world. Philippa Evans, manager of Freight on Rail, hopes to see “more trains of this kind in the future”, but will find it tough unless a solution to the customs conundrum is provided in the coming months.

9. Balfour Beatty calls for more investment in infrastructure across the UK
The infrastructure group Balfour Beatty has called for expansion with a bold post-Brexit aviation policy. The group believes that international connectivity will be more important than ever if Britain wants to make the most of Brexit but fear that “unless work begins on a new runway in the near future, the major airports in the South East of England will be full by 2030, if not before.” They also think other parts of the UK need to improve their connectivity in anticipation in Brexit.

10. Road Haulage policy director speaks to MoneyWeek about Brexit worries
Last week the MoneyWeek spoke to Jack Semple, policy director of the Road Haulage Association (RHA) about Brexit impacts to trucking companies and the economy in general. Although he said that Brexit could be a chance to take another look at the regulations imposed by the EU on the haulage industry, he said most impacts would be negative. He worries that British companies that want to deliver to the EU would have to apply for additional licenses and about the future of the workforce, as 80% of commercial drivers are EU migrants. His biggest concern is the UK leaving the customs union, which could cause untold amounts amount of disruption in terms of extra administration fees and delays.

11. UKTiE have also put together the latest timetable for Brexit. We will keep this up to date as the process develops: