UK Transport and Brexit News & Views – Issue no. 12

UKTiE Brexit or 360° members can ask for more information if you wish to explore behind the headlines or require some bespoke analysis. Please contact us if you would like to join.

Mark’s Brexit Week for Transport

‘Given the complexity of the negotiations ahead and the inflexibility portrayed by both the EU and the UK as we gear up for the official 2 year countdown, we should prepare for very difficult divorce negotiations, at least initially. The calls in the past week by several key politicians in the UK, Ireland and elsewhere for realism in the UK approach and expectations from Brexit seem to have gone largely unheeded. As a result, the chances of a bad deal or no deal have probably increased, and it would be prudent to prepare for that risk and to develop strategies on how best to mitigate it. Part of risk mitigation is to prepare for threats, but it should also include identification of opportunities. If we speak with one voice, we are seen as the sector that has solutions and not just problems, and above all the sector that has nurtured a wide coalitions of interests from across Europe who support them. This would allow us to get much closer to our aim of achieving the best possible Brexit for UK transport. Such an outcome won’t fall into our lap, thus one of our priorities is to continue identifying our allies across Europe and to deepen our relationships with them. As part of this process we will be hosting the first of our Brexit roundtables on April 11’. Let us know if you would like to learn more.

1. Businesses told by David Davis to prepare for the ‘possibility’ of a cliff-edge as the EU prepares for ‘no deal’  

According to Brexit Central, Brexit Secretary David Davis has been advising colleagues to prepare for the possibility of no trade deal being achieved with the EU after the two years of negotiations. Such an eventuality would entail reverting to WTO rules for trade with the EU. Tony Lane – a former Head of International Trade policy at the DTI – argues this would be good for the UK.  However for transport there could be unintended consequences, as existing recognition and rights would fall away and new tariffs and rules of original checks would come into play.  Taking this view are John Bruton who argues that ‘no deal’ would be catastrophic for the UK (and Ireland) and the CBI who last week warned that leaving the EU without a deal and reverting to World Trade Organisation rules would open a Pandora’s Box of economic consequences. Meanwhile the EU are contingency planning for the possibility that the UK government may walk out of divorce negotiations with the European Union, once Brussels’ chief negotiator Michel Barnier presents a politically toxic exit bill between €50 and €60 billion and refuses to discuss any future trade relationship until London commits to paying its dues. So however unlikely transport companies and organisations should also begin contingency planning for the possibility of ‘no deal.’  Do you know what the consequences would be for your business, customers and staff?  Has this been placed on your Board’s risk register? Do you have a risk management plan ready? How can you mitigate risks?

2.  UK Rail meets with ministers to put forward views of industry leaders

The Rail Delivery Group, which represents the UK rail industry, met with Minister for Exiting the EU David Jones and Minister for Rail, Paul Maynard, to ensure that the rail industry’s views are reflected in the analysis being undertaken by the Government on the options for the UK’s withdrawal from the EU. Issues discussed included market access, cross-border services, the supply chain, safety, technical standards, trade, customs, research and innovation, and long-term opportunities.

3. Constitutional expert Richard Corbett MEP underlines the Brexit risks posed to aviation deal
In a blog post, Labour MEP Richard Corbett underlined the dangers posed by not reaching an aviation trade deal in the upcoming Brexit negotiations. Within the two year timeline, the UK must ensure it remains in the European single aviation market as there will be no automatic fall-back for the governance of aviation rights and there is no World Trade Organisation framework in this field. As Corbett points out, if no deal is reached there will be no legal right allowing for flights operating to Milan, Munich, Malaga, Marseilles or anywhere else currently covered by the EU-legal framework. In his post, he continues by referring to Prime Minister’s May ’no deal is better than a bad deal’ approach, drawing attention to the fact that in these negotiations the UK is the supplicant, asking for permission to continue to use a vital facility, even though it has decided to leave the club that controls it. This comes in addition to the debate over Gibraltar and the increasingly worrying position presented by the Spanish government vis-a-vis future aviation negotiations. Given all these issues, it remains to be seen whether avoiding the aviation pitfall will be possible in the limited time allocated for negotiations, regardless of how many inter-governmental meetings are held between the UK and Gibraltar to reassure of Whitehall’s commitment to the Rock. UKTiE plans to meet Richard Corbett MEP shortly to discuss his key role co-ordinating the negotiations on behalf of the European Parliament. Let us know if you wish to join us.

4. Labour shadow transport minister calls for collective action from freight operators’ on Brexit

Labour MP Rob Flello called on industry to act together on their approach to Government to put forward their position on the Brexit negotiations. “All government departments are going to be log-jammed for years to come unravelling the legislative implications of Brexit,” said Flello. Freight operators were urged to act “loudly, clearly and collectively” in any approach to government ahead of Brexit negotiations.

5. Study: Dutch transport and logistics companies are starting to feel Brexit already

Research carried out by logistics association evofenedex research revealed that a quarter of the companies that import from or export to the United Kingdom are already hampered by Brexit. This is because their British partners’ investment decisions are being delayed. Nearly three-quarters of more than one hundred enterprises surveyed foresee difficult customs procedures, while almost half foresee higher import duties. The companies hope that after the departure negotiations, companies will want a level playing field with simple customs rules and efficient flow of goods.

6. Liam Fox: Trade barriers for political purposes are economically dangerous
Trade barriers put up by the EU between them and Britain for political purposes would be “economically dangerous”, Liam Fox, the UK’s international trade secretary, said on Wednesday. In a speech that had as its core theme the need to maintain “fair, free and open trade” across the world, [Dr] Fox warned EU governments not to impose trade barriers on Britain as a form of punishment. “Any new impediments to trade and investment in Europe will not only be politically irresponsible but economically dangerous — and not just for Europe but for the wider global economy,” he said. “We do not act in a political vacuum and there are economic actions that have global implications.”

7. Internal Market and Transport Committees hold Brexit hearings
The two powerful European Parliament committees held hearings last week to discuss the potential impact of Brexit on individual sectors as well as the economic consequences of increased border checks. The Internal Market debate focused on several key areas –  economic effects, foreign direct investment, sectorial issues, public procurement, customs union and the internal market, services and freedom of establishment. A note of the hearings and analysis is available for UKTiE Brexit Members, please contact us for more information. 

8. The effects of a Hard Brexit are triggering alternative plans for industry
According to a recent article by Global Handelsblatt, the UK’s determination to abandon the Single Market no matter the consequence is already starting to show its effects on the transport sector, namely jeopardising its hopes of becoming a manufacturing centre for electric cars. The uncertainty posed towards industry has recently persuaded automaker BMW to draw up news plans to manufacture its electric Mini compact in Germany instead of the UK, as it ‘does not make sense to invest in a plant that will soon be out of the Single Market’.

9. The Economist pours cold water over PM’s dreams
According to a recent Economist piece, even if Britain leaves the Single Market, it may not achieve the overarching end goal of the British PM to escape the jurisdiction of the European Court of Justice. The article concludes that today’s economic reality and world dynamic requires an umpire for every trade relationship.

10. Sir John Major calls for reality check in the Post-referendum-Pre-Brexit period
Sir John Major, former Conservative leader, although insisting he has no desire to get involved in politics at this stage, made a strong call for a reality check ahead of Brexit negotiations. According to Major, voters continue to be misled by politicians who present the future of ex-EU Britain in overoptimistic and unreal fashion: ‘obstacles are brushed aside as of no consequence, whilst opportunities are inflated beyond any reasonable expectation of delivery’. In his first public comments since the vote, the former prime minister is calling for a reality check, sounding alarm bells about the tone of the current debate and the Brexit ‘cheerleaders’ contempt towards remainers’ , whilst doubting Number 10’s handling of the process so far. Major is not the only one taking this view – Sir Ivan Rogers, former ambassador to the EU, told the Brexit select committee last week that this process could take over a decade and that the road to a satisfactory Brexit would be arduous. In fact, reading between the lines presented, we discover that Rogers believes that such a ‘satisfactory’ deal may not be achievable at all. Coupled with recent comments by the UK government lawyers that Britain can leave the EU without paying the multi-billion pound divorce settlement, as there is no law or treaty to compel Britain to make payments after Brexit, the difficult negotiations are already off to a very bad start.

Mark Watts
Co-ordinator
UK transport in Europe (UKTiE)

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