UK Transport and Brexit News & Views No. 23

Mark’s Week
The Brexit announcements on both sides of the Channel over the past seven days have once again illustrated the huge gulf  that currently exists between the UK and the rest of the EU. Of course it is election time so we all expect a degree of hysteria, but there are certain clear indications now that even post-election the talks will be tough and complex, and the aims of the two parties are possibly irreconcilable, including – or maybe especially – in the field of transport.  What I find surprising is the completely different view of the same thing depending on which side of the channel you happen to be based.  The UK expects the talks to include issues like transport pretty much straight away, as part of a ‘deep and special partnership’ with the European Union. Meanwhile, the EU agreed last week that transport will only be discussed in December if ‘sufficient progress’ has been made on issues like citizens’ rights. But there are reasons to be optimistic too.  The Conservatives have for the first time talked about the need to ‘give and take on both sides’, whilst Brussels is now prepared to hold informal talks with organisations like UKTiE in parallel with the official talks. In my 20 or so years of experience in EU negotiations (which always seem to reach agreements at 3 in the morning!) they have always been tough but almost always reach a compromise deal. Our challenge is to make sure at even at 3 in the morning, transport is part of that compromise and that the outcome reflects our interests.

1. EU finalises preparations for Brexit negotiations 
Whist the UK has been focusing on the general election the EU has been finalising preparations for the commencement of the Brexit negotiations. They have suggested 19 June as the commencement date . EU 27 Ministers meet today in the General Affairs Council (GAC) to confirm the mandate they are giving to the Commission’s chief negotiator, Michel Barnier.  The EU institutions reaffirmed their position that there will be no discussion of the framework for future relations with Britain before ‘sufficient progress’ has been made on ensuring an orderly withdrawal. Official discussions on issues like transport will be conducted between December 2017 and spring 2018, but only if sufficient progress is made on issues like citizens’ rights. Negotiations will take place in four-weekly cycles, with monthly public reporting of the results to the 27 governments and the European Parliament. The decision to appoint the GAC, and an ad-hoc working group, is key to maintaining the unity and coherence of the 27 and the European Parliament. MEPs last week welcomed the proposals. But informal discussions on transport are likely to commence soon after formal talks begin. UKTiE is scheduled to meet Team Barnier in July.  This will be a crucial kick-off meeting that will seek to determine UK transport priorities as well as shape the new regulatory framework for all transport modes. 

2. Britain’s parties set out their Brexit policies
The Brexit policies of the main parties were published in their election manifestos last week. Prime Minister Theresa May hopes an increased majority for her Conservative government will strengthen her position in the Brexit negotiations. The Conservative manifesto reiterates the principles set out in the Prime Minister’s Lancaster House speech in January, the government’s White Paper published the following month, and May’s letter to the European Council president when she triggered the Lisbon Treaty’s Article 50 in March. The Manifesto says the Conservatives “continue to believe no deal is better than a bad deal”, which has been interpreted by some commentators as the PM seeking a mandate for the ‘no deal’ option.  For transport the manifesto repeats the objectives of leaving the single market and customs union and regarding the ECJ, says UK laws will be made by judges siting in the UK not sitting in Luxembourg.  The Conservative Manifesto has been interpreted in Brussels as the Conservatives firming up their plans for a hard Brexit.

3. How might the future of British transport change post-election?
EuroTransport’s Justin Fox has summarized what the three main UK political parties have proposed for the election in relation to public transport. The Conservative party, who have already heavily invested in infrastructure projects in London such as the Crossrail, have promised to spend more on other regions, in particular the HS2 high-speed line linking London and Birmingham. The Labour party intend to re-nationalize the railways and to continue investment into the HS2 high-speed rail link.  Based on their manifesto from the previous election, Fox believes the Liberal Democrats transport policy will focus on creating a zero-carbon Britain, they also want to devolve power over bus and train services to local authorities.

4. Ireland worries over Brexit impact
Irish Transport, Tourism and Sport Minister Shane Ross has been criticized for not meeting any of his UK or EU counterparts since Brexit. Associations in Ireland are also calling for the appointment of a Brexit minister. Figures from Ireland show that Irish export growth to the UK has slowed considerably. Enterprise Ireland’s CEO Julie Sinnamon said “The fact that the growth of exports to the UK has slowed suggests that the impact of Brexit on Irish companies has already started. Companies cannot afford to wait until the Brexit negotiations conclude.” Meanwhile there have been announcements on how Ireland proposes to deal with customs, with fears that customs declarations will increase tenfold and border posts may be near the actual border.

5. ECJ rules on EU-Singapore trade deal
On Tuesday, the European Court of Justice delivered its ruling on whether the EU-Singapore trade deal should be treated as a “mixed agreement”. The court ruled that the trade deal only needed to be ratified beyond Brussels due to clauses about investor’s rights. There have been mixed views as to whether the ruling will help increase the chances of concluding a UK-EU FTA or not. Steve Peers, professor of EU law at Essex University said “The Court of Justice says all services – even transport – can be ratified by a qualified majority vote, which is potentially quite a big opening for the UK […] It could certainly make things easier.” This means that if Theresa May aims for a slightly less bold and ambitious free trade agreement, it has much less risk of being bogged down in EU national parliaments.  Emma Giddings from Norton Rose Fulbright provides a legal perspective on the possible implications of the ECJ ruling for Brexit.

6. Logistics MD calls for duty free fuel in ports post Brexit
Managing Director of logistics business Europa Worldwide Group Andrew Baxter has put forward a plan for offsetting any increased customs or transport costs post Brexit. He believes that creating a duty-free zone for fuel within UK ports could offset the costs of reintroducing customs clearance. He says this would not cost the UK government anything in fuel tax as all vehicles passing over the Channel fuel up on the continent already. “Introducing duty-free fuel zones at ports would be good for British business with no cost to the exchequer – demonstrating that we are a progressive nation committed to boosting trade and broadening our reach across the globe.”

7. Will UK companies be debarred from EU public contracts?
The UK public sector is reliant on suppliers from the EU27 for, among others, transport and IT services. Richard Bonnar, from Lexology, considers what the options are for the UK to have continued access to public sector marketplaces. He believes the options are a bespoke agreement or that the UK could look into the General Agreement on Procurement under the WTO. “Under the GPA the UK would have continued access to EU27 markets and vice versa, and would have scope over time (if it wanted to) to move away from EU mandated rules to a system which reflected its own preferences.”

8. Brexit poses “big threat” to small airports
At the Airports Council International (ACI) conference Oliver Jankovec, director general of ACI Europe told conference participants that the uncertainty cast by Brexit could slow route development across Europe. For the EU’s regional airports, the UK provides more than 15 percent of their business and they and their communities could be the ones to suffer the most if a solution is not reached soon.

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