UK Transport and Brexit News & Views – Issue no. 13

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

It’s shaping up to be another dramatic period as votes on the Brexit bill are expected this week. Meanwhile the House of Commons has published a report on the high possibility of ‘no deal’ being reached in Brexit negotiations, creating a stir in the UK media during the weekend. This report points to the fact that, contrary to recent comments by David Davis and Boris Johnson, the UK is not ready for the upcoming negotiations which are very likely to be triggered in the upcoming days. The UK may not be ready, but the EU institutions, EU trade associations and EU think tanks are preparing.  The influential Friends of Europe has even released a guide, written by the former Director General of the European Commission’s DG Trade, providing guidance for Brexit negotiators on both sides of the English Channel.  The message is clear: the UK must be much more specific about it’s Brexit objectives or the vacuum will be filled by an EU plan which will not necessarily be in the UK’s interests.

1. UKTiE hosts launch of major new Brexit initiative for business 
Last week UKTiE hosted a meeting of many of Europe’s leading trade associations to launch a new co-ordinated Brexit network for business.  The initiative, led by the Transatlantic Business Council, includes organisations who have-ongoing activities, contacts and knowledge related to Brexit and who wish to work together in the long term to exchange information by creating a shared platform to compare positions and coordinate efforts as the formal Brexit negotiations launch and continue. The group believes that the cooperation and flexibility of associations will be of vital importance in order to wield influence as Brexit progresses.  Although most leading business sectors were represented, UKTiE was the only specific transport association present. We would like to see more transport associations involved. Please contact us if you would like more information on future activities and events.

2. House of Commons International Trade Committee publishes UK trade options report with recommendations for urgency of planning for new customs arrangements
The report, published on the 6th of March, underlines the need for more clarity regarding the future of the UK outside of the EU, particularly in relation to the Customs Union. Should the UK conclude an FTA with the EU without a customs union, the report states that ‘rules of origin would apply and a customs border would consequently exist between the UK and the EU. This would create trade friction at the border and some UK products might not actually meet the criteria for sale in the EU under rules of origin’. Furthermore, if the UK Government wants Britain to have a customs agreement with the EU without the customs union, it needs to be much clearer about the defining characteristics of such an agreement. In particular, the government should ‘clarify if there will be a significant sectoral aspect to the arrangement they are seeking and whether that would impact on future international trade policy; whatever option applies, the Government must clarify arrangements for customs and border operations, and specify the expected number and intensity of customs checks. Planning for this is a matter of urgency now’. EU decision-makers would welcome detailed submissions on this topic from industry as soon as possible.

3. German railways on track for Brexit boost
There has been talk for many years about introducing a high-speed rail service between Germany and London, a subject which was brought up again in British media last week. Up until this point Deutsche Bahn has not fully committed to this project due their doubts about it being economically viable. However, Euractiv writes that Brexit could provide the demand that would justify the implementation of a regular service, especially if financial service providers and banking powerhouses have to relocate to mainland Europe. ‘There will certainly be a demand for a high-speed train service as a result, as senior executives and bankers will need to shuttle between the two centres’, many of whom would choose rail as their form of transport due to the congestion of airspace for short haul flights in Western Europe and EU emission standards. Euractiv doesn’t even consider the chaos the aviation industry could be in, which we describe in the next section.

4. Airlines’ worst fears are set to come true following Brexit
With the triggering of article 50 slowly approaching, companies across the transport modes are preparing for a lengthy and difficult process as the future of their businesses becomes uncertain. Amongst the most concerned are the airlines. Up until now, aviation has been seen as a special case in the Brexit negotiations. However, recent comments by European Commission’s department for transport and mobility Director General Henrik Hololei have burst the hopeful aviation bubble: according to Hololei, airlines are best advised to develop contingency plans as Brexit will without a doubt have consequences for their operations. According to him, the initial general Brexit deal will limit the freedom of airlines to operate in and out of the UK, affecting landing rights, operating licences and ownership rules. Given that the legal framework underpinning international flights is centred around EU membership and is set to disappear, companies operating in the aviation sector are advised to follow the example of Easyjet – working with the EU institutions and UK Government to ensure the best outcome for their business. The Guardian article on this subject was picked up by several groups on Twitter including Future Transport Wales and Air Transport News.

5. German industry calls for transparency over Brexit negotiations
BDI CEO Markus Kerber outlined the German industry views regarding the upcoming Brexit negotiations and called for the greatest possible transparency over the political process, stressing that it is up to Europeans to design the future of the EU. In the negotiations between Brussels and Berlin, he feels the only way to keep Europe together is to strengthen Europe. Although realistic about the negative economic impact on both sides of the English Channel, Kerber warns against a disorganised process and the dangers posed by the loss of trust following the potentially controversial negotiations ahead. ‘Companies must expect a hard break from value-added networks and sales opportunities by 2019 at the latest. In our opinion, this is leading to enormous economic damage to the United Kingdom- with significant risks of declining industrial production, a rising deficit in the state budget and job loss.’

6. Calls for post Brexit guarantees are piling up on the UK Government desk. Latest on the list – Vauxhall/Opel
Prime Minister May is facing calls to guarantee that Brexit will not harm the Vauxhall/Opel operations following PSA’s (French owner of Peugeot and Citroen) announcement to buy Vauxhall. Greg Clark, the shadow business secretary, said he was cautiously optimistic about the upcoming deal. These guarantees should be similar to those given to Nissan to avoid closure of their factory in the UK.