Mark’s EU Week for Transport
The good, the bad and the ugly
So we have a new deal, and after the Letwin amendment successfully passed the Commons by a majority of 16 we have a little bit more time to scrutinise what the new Withdrawal Agreement and the Political Declaration mean for transport.
As always, these are my own views, but for transport I would argue it is good, bad and ugly.
The Good: the deal ends the uncertainty, at least for now (see bad below), transport will continue to be regulated as of now, and the movement of good and persons will continue in a frictionless manner. I know it sounds counterintuitive but the transition period extends our EU membership, it does not end it. The EU will treat the UK as if it were a Member State, with the exception of participation in the EU institutions and governance structures. The transition period will help in particular administrations, businesses and citizens to adapt to the withdrawal of the United Kingdom. Key issues such as the financial settlement, citizens rights, and governance are fully addressed. The United Kingdom Government also sought amendments to the Political Declaration approved on 25 November 2018 with a view to reflecting the different level of ambition of the United Kingdom Government for the future relationship with the Union, but the commitment to a level playing field for on state aid, competition, social and employment standards, environment, climate change and relevant tax matters, in addition to sectoral deals on road, rail, sea and air transport, remain.
The Bad: the deal only ends the uncertainty until the 31 December 2020. So in just over 14 months away, when we could see a repeat of the no-deal debate and negotiations all over again, with the risk the UK leaves with a no-deal Brexit. In the meantime we have to comply with EU rules, existing and new, with no participation in the EU institutions, including the EU agencies, and are governed in terms of EU law by a Joint Committee which meets in secret, and is ultimately accountable to the European Court of Justice. The transition period can be extended by the Joint Committee for up to 2 years, and potentially more. Vassalage? Well, probably as close as you can get. Meanwhile, the level-playing field provisions in the Political Declaration are non-binding, and the degree of frictionless access after the transition ends will be determined by the degree to which we align. So everything is still to play for, and yet we’ll be a third-country needing the backing from European Council and the European Parliament, but also the unanimous approval of 38 national and regional assemblies across the EU as well, and yet much of our leverage, including the £39 Billion, will have been lost.
The Ugly: the deal divides the United Kingdom, disrupting UK trade and travel because we are required to build a border down the Irish sea. Northern Ireland effectively remains in the EU, at least in respect of the EU Single Market, Customs Unions and VAT, and not just for the transition period, but quite possibly forever. A complex NI-GB border regime yet to be devised, will be imposed, overseen by the EU, ad yet Northern Ireland or indeed the UK we will have no direct say. Let’s not forget that combined Northern Ireland/GB trade is 4.5 times Northern Ireland/Republic of Ireland trade and at least 68% of overall NI port traffic is direct NI-GB. So from a transport, trade and business point of view this new intra-UK border could be damaging and hugely costly for the whole of the UK. Politically I’m just not sure how sustainable that will be, with a review not foreseen for another 9 years things could turn ugly. And let’s not forget, that unlike the backstop, this system would not be replaced by a new free trade agreement between the UK and the EU.
The key challenges for UK transport will be three-fold.
Firstly, how we have a say in the way we are regulated when the UK Government are excluded from the EU decision-making institutions during the transition period which could last for 14 months, or forever. And the means UK transport talking directly to the EU.
Second, how we ensure the border down the Irish sea, effectively managed by the EU, is as frictionless as possible. And that means UK transport talking directly to the EU.
Third, how we ensure we secure a comprehensive FTA, robust sectoral agreements, and high levels of regulatory alignment, some form of EU agency participation, to have a say and minimise friction at the borders. And that means UK transport talking directly to the EU.
So the UK transport industry has to start planning now on how best to work with the UK Government during the transition, but also how best to work directly with the EU. And I’ve always believed that works best when we work together.
This week’s song of the week, is The Good, The Bad and The Ugly theme song by Ennio Morricone.
1. October 31st departure, dream or reality?
The excitement has begun to subside following a Brexit deal agreed between the EU and the UK, due to the Brexit reality bringing everyone back down to Earth following Saturday’s session in the UK Parliament. The passing of the Letwin amendment on Saturday was perfectly described by CNN International, “in a twist befitting of a national crisis that finds new and unexpected ways to re-energize itself at each turn, the PM was dealt a crushing blow.” Following this, the Government pulled the vote on the deal and, despite promises to the contrary, Boris Johnson sent a letter of extension to Donald Tusk, President of the European Council, which will now be considered by the EU heads of state. While the Government continues to push for a departure by the end of next week, the reality remains that a tight timetable as well as the unlikelihood of a straight up and down vote on Johnson’s deal leave an October 31st departure looking increasingly unlikely.
2. UK pays £87m for no-deal Brexit ferry contracts
The BBC reports that the UK government has awarded £86.6m of contracts to ferry companies to transport medicines in the event of a no-deal Brexit. This will surely attract some interest due to the Government’s previous and controversial dealings with Seaborne Freight. These no-deal Brexit contracts have been awarded to Brittany Ferries, DFDS, P&O and Stena Line will be able to deliver those supplies from 31 October. The contracts are aimed at making sure deliveries of vital products continue, if the UK leaves the EU without a deal.
3. British businesses say new Brexit deal worse than May’s agreement
The Guardian reports that British companies have expressed concerns that Boris Johnson’s Brexit deal could leave industry worse off than under the previous agreement with the EU. Businesses, investors and economists being almost unanimous in favour of the UK securing a withdrawal deal with the EU to avoid a no-deal Brexit, the new deal gives greater scope for regulatory divergence which would make it more difficult for British companies to sell to their biggest export market. The revised declaration also abandoned a commitment to avoid rules of origin checks, potentially adding significant barriers to trade, which could affect industries reliant on frictionless imports, such as the automotive sector. Carolyn Fairbairn, the director general of the Confederation of British Industry, said “business has serious concerns about the direction of the future UK-EU relationship” and the deal remained “inadequate” on services.
4. EU gets serious on Belt and Road initiative?
Following UKTiE Coordinator Mark Watts’ new blog and vlog this on China’s Belt and Road Initiative, which highlighted the big debate over how Europe should respond. The Financial Times now reports that later this week the EU’s own Belt and Road will be revealed later this week when a ‘Wise Persons’ group tasked with finding some answers present their findings to EU27 ambassadors and finance ministers. The experts have been asked to examine whether the EU’s two major lenders — the European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD) — are fit for purpose to serve as Europe’s 21st-century international development bank.
5. UKTiE has also put together the latest timetable for Brexit. We will keep this up to date as the process develops:
- 29 March 2017 – A50 triggered.
- 5 April 2017 – European Parliament adopted Brexit guidelines.
- 22 May 2017 – Brexit negotiating directives approved by Council.
- 19 June 2017 – Negotiations formally began.
- 23 March 2018– European Council agreed guidelines on the future trading relationship.
- 23-26 May 2019 – European Parliament election.
- 17-18 October 2019 – European Council summit
- 31 October 2019 – The UK will formally leave the EU. (tbc)
- 01 November 2019 – Start of new European Commission mandate. (tbc)
- 31 December 2020 – End of Transition Period (tbc).
UK transport in Europe (UKTiE)