UK Transport and Brexit News & Views No. 28

Mark’s Brexit Week for Transport

A week into the negotiations and we are still waiting to hear the Governments’ plan for transport. But I’m still not sure if there is one.  How can we secure the best possible Brexit for transport if we do not clearly set out our demands at the start of the negotiating process? The Queen’s Speech had 8 pieces of Brexit legislation: Repeal bill, immigration, customs, trade, agriculture, fisheries, nuclear, sanctions, but none of them will directly deal with transport.  It’s true the customs and trade plan may help, but that leaves a lot of potential gaps the Great Repeal Bill may not cover, and our EU partners are really expecting a lot more detail now. Almost every meeting I attend in Brussels I get asked the same question: ‘what does the UK want for transport?’ As we know nature abhors a vacuum so that gaps is being filled by our competitors.  The UK industry has solutions, but given the fragmentation of the industry the demands are at best disjointed or at worst contradictory.  As an industry we really need to co-ordinate better by developing a single transport plan for Brexit, and prepare the groundwork here in Brussels with the EU27 and the European Parliament, so when the politicians eventually get round to transport we have already built a consensus. And surely UKTiE is the perfect vehicle for that.

1. Talks commence in Brussels but negotiations on transport are yet to begin
The formal Brexit negotiations were kicked-off on Monday last week and Britain is either caving in or off to a promising start depending on which side of the ever widening Brexit divide the commentator sits.  It was announced that discussions will focus initially on the areas of citizens’ rights, the “financial settlement”, other separation issues and issues relating to the Irish border. Only once “sufficient, concrete progress” on this phase has been made (unlikely to be earlier than October), will negotiations enter the next stage, covering the future trading relationship, which will include transport. David Davis speaking after the talks said: “It’s how it finishes that matters. The UK has been crystal clear in our approach to the negotiations, the withdrawal process cannot be concluded without the future relationship also being taken into account. They should be agreed alongside each other, this is completely consistent with the Council’s guidelines which state nothing is agreed until everything is agreed.” As Brexit Central pointed out “There’s no question that the issues relating to the Irish border are tied up in the future trade and customs deal as much as being a separation issue.”
2. Today Theresa May to brief the House of Commons on U.K. proposal for EU citizens who want to stay in Britain after Brexit.
On Thursday the Prime made what was supposed to be a “big and generous” offer on EU citizens’ rights in an attempt to start the negotiations off on the right foot. Unfortunately here in Brussels the result was that U.K. prime minister left the EU27 more annoyed than they were before she arrived. Headlines in the EU media such as ‘May’s rights offer falls flat on its face’ reflected the general view that it did not quite go to plan. Part of the problem was the lack of detail, and today’s official 15 page proposal will give Brexit negotiators time to digest the document before their next meeting on 17 July.

3. Government edging toward accepting a transitional arrangement – but still no plan for transport
David Davis has admitted a transitional deal could see the UK effectively stay in the EU until 2021. Britain’s Brexit Secretary David Davis confirmed that a one-to-two-year transition is likely, echoing Philip Hammond’s calls the previous week. More on the Davis interview in POLITICO’s Sunday Crunch. A transitional arrangement is a demand UKTiE has made since the referendum because two years is simply not enough time to put in place satisfactory arrangements for sectors like transport, and avoid a cliff edge. This announcement is welcome news, but what is lacking is a clear plan from Government on what transport deal we would like. Indeed that remains one of the major concerns and was touched on by Chris Patten, Chancellor of Oxford University, who said ‘truth is there isn’t a plan. I think we’re in a real mess, a real dog’s breakfast of a situation.” Watch.

4. Brexit and the future of the Irish border
Bruegel had previously reported that Northern Ireland, as such a small portion of the UK, would struggle to make its voice heard during Brexit negotiation. The election results and the Conservatives new found dependence of the DUP may mean that Northern Ireland gets a more attention. The DUP’s manifesto included things such as the preservation of the Common Travel Area, the avoidance of internal borders, and a comprehensive free trade and customs arrangement with the EU. Although there may be more attention to Northern Ireland’s plight, a solution is not necessarily any easier to find, with even David Davies commenting: “How on earth do you resolve the issue of the border with Northern Ireland and the Republic of Ireland, unless you know what our general border policy is, what the customs agreement is, what the free trade agreement is, whether you need to charge tariffs at the border or not? […] You can’t decide one without the other.”

5. Brexit and the future of the cruise industry
Tim Reardon, policy director for Taxations, Ferry and Cruise for UK Chamber of Shipping writes that the travel business is working on the assumption that life will continue on as usual after March 2019. “Such an approach is based in part on the fact that Brexit will make no difference to where ships may go or to the services they may offer. The regulatory frameworks of the UN and the OECD, which bind both the UK and the countries of the EU, ensure that there will be no dislocation to itineraries. […] In part it is also based on the reality that civilised countries do not make cruise visitors unwelcome.” He writes that there may be some changes in terms of border and customs controls, some of which could be positive for the industry such as being able to reclaim VAT on purchases.

6. New study provides wake up call for German industry
Allister Heath wrote in the Telegraph that Germany is waking up to the impact of a hard Brexit. He writes that a hard Brexit, characterised by the introduction of WTO tariffs on impacts, could be as “catastrophic as the impact of the financial crisis, lead to a massive reduction in its trade surplus and huge, politically traumatic job cuts in its core industry”. This prediction is based on the message from a devastating study from Deloitte’s German unit. The study will hopefully encourage all sides to get real about the need to retain free trade post-Brexit.

7. Growing cross-party demands to retain Single Market membership
Last week we wrote about how Philip Hammond and Amber Rudd are calling to remain in the single market, at least transitionally. In the past week London Mayor Sadiq Khan, outgoing Liberal Democrat leader Tim Farron and a group of over 50 Labour MPs and MEPs joined this group. The Mayor of London said the election results showed that: “The Brexit goalposts have been moved. The government must now listen to the will of the people by putting aside ideology and negotiating a sensible Brexit that ensures continued membership of the single market.” Over the weekend the TUC also issued a statement supporting Single Market membership.

8. On customs
Trade Minister Lord Price used an interview with Andrew Neil to address some of the concerns about the UK leaving the customs union.  In contrast Next boss Lord Wolfson, the chief executive of Next, has warned that failing to secure a “smooth” departure from the EU could result in “years of economic decline” for the UK. The retail boss, who voted in favour of Brexit, said he still believed it would boost trade and the British economy if we ‘slow down and make sure we get there safely.’ But the reaction from a UK ’ally’ provides a reality check on the internal UK Brexit debate, with Mark Rutte the Dutch PM warning of UK economy will be ‘hit hard’ if it leaves the Customs Union, but he rules out any deal if the UK does not respect the four freedoms.

9. The Queen’s speech
On Wednesday the Queen gave her speech at the official start of the Parliamentary year. Her speech was very much dominated by Brexit and contained several promises to funnel investment into major transport infrastructure to help Britain boom after leaving the EU. “Legislation will be introduced to ensure the United Kingdom remains a world leader in new industries, including electric cars and commercial satellites. A new bill will also be brought forward to deliver the next phase of high-speed rail.” The Department for Transport is expected to unveil more detailed plans to boost infrastructure this week.

10. SMMT warn of the risk of permanently damaging Britain’s car industry
Mike Hawes, chief executive at the Society of Motor Manufacturers and Traders told reporters at a press conference: “We need to government to publicly seek an interim arrangement where the U.K. remains in the customs union, and ideally in the single market, for the duration of negotiations. Defaulting to WTO tariffs and customs barriers would damage our industry permanently, disrupting supply chains and jeopardizing competitiveness.” SMMT also wants the EU to count its car components as British in the final arrangement. “As a part of negotiations, the U.K. should be seeking that diagonal cumulation, whereby European content counts as U.K., and vice versa”

11. Facing Brexit, the UK’s ‘island nation’ dependence on shipping and seafarers is set to grow
This week is Seafarers Awareness week (24 – 30 June), an annual campaign by the maritime welfare charity Seafarers UK to raise awareness about the UK’s ongoing dependence on seafarers. Commodore Barry Bryant, Director General of Seafarers UK, commented: “As so often in our history when facing political and international pressures, our relationship with the sea provides the strong and enduring stage from which our island and its people can make their mark, whether in trade, defence or diplomacy. Our unique situation and the quality of our maritime offerings in seafaring people, port and supply chain operations and financial services remains second to none and give us a strong negotiating hand.”

12. Planemakers face Brexit on a wing and a prayer
Brexit could throw a spanner in the works of Britain’s successful aviation industry.  There is no guarantee that Britain will remain a full member of EASA once it leaves the EU. Warren East, chief executive at Rolls-Royce said ““The associate membership that exists for other countries is all very well and good but actually they don’t make engines. It’s not quite good enough for us because we need to be able to influence the standards as well and have some input.”

13. On a lighter note
Theresa May and the Holy Brexit Grail: A video mash-up by the Australian Broadcasting Corporation.

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