UK Transport and Brexit News & Views No. 29

Mark’s Brexit Week for Transport

The very public row  between No. 10, DExEU and the Treasury over a transitional arrangement versus an implementation phase (see below) is more than just about semantics or Cabinet Ministers jostling for position.  Which process is chosen and secured will determine whether we can secure a Brexit deal for transport.  My view is that it stems from a basic misunderstanding of Article 50.  The EU are adamant that in compliance with Article 50 the UK will have to leave the EU before they conclude a deal on a future relationship. So we need a  transitional arrangement to ensure existing arrangements continue up until that point. The European Parliament have helpfully argued for a three year period.  It’s hard to read Article 50 any other way and the sheer practicalities of a limited negotiating window mean the detailed negotiations will start, or at least extend, after March 2019.   So the UK has to be clear what it wants and ask for it at the earliest possible stage, preferably when negotiations resume on 17 July.  For our part we’ve been making the case for a transitional arrangement for some time, and will be stepping up efforts ahead of the Brexit & transport hearings which are about to begin in the European Parliament. And let’s not forget the European Parliament is the only organisation that can veto a Brexit deal. So it’s good that Heathrow Airport, Dublin Airport, IAG, Ryanair, TUI Group, & Airbus are in on the first hearing. 

1. Companies to address the European Parliament’s Transport Committee on “Impact of Brexit on Aviation”
The European Parliament’s committee for transport and tourism has announced it will be holding a hearing on the “Impact of Brexit on Aviation” on 11 July. Senior executives from Heathrow and Dublin airports, IAG, Ryanair, Airlines for America, Airbus and the TUI Group will all speak on how they see Brexit impacting their businesses, will put forward their vision for what shape they would like to see Brexit take.See the agenda here.

2. Queen’s speech passes in Parliament
Prime Minister Theresa May has passed her first test in Parliament, and managed to pass the Queen’s speech by 323 to 309. However she was forced to offer a major concession, regarding funding for women travelling to Britain from Northern Ireland for abortions. On the other side of the House Opposition leader Jeremy Corbyn struggled to keep control of his party and sacked three Labour frontbenchers who voted against the party in favour of a Queen’s speech amendment calling for Britain to remain within the customs union and single market. Mr Corbyn’s hard line with those who pushed to remain in the single market and customs union makes a hard Brexit much more likely.

3. Discord between key Brexit Cabinet ministers
Philip Hammond and David Davies seemed to fall out over the terms of Britain’s exit from the EU. The dispute centered on whether Britain will leave both the single market or customs union in 2019, or remain in a lengthy transition period to allow companies to adapt, with Mr Davies saying the former and Philip Hammond the latter. Theresa May was forced to step in: “When we know what the future relationship with the EU will be, we may need implementation periods. But I am very clear, this does not mean unlimited transitional phase: We are going to leave the European Union. That’s what people wanted and that’s what we will deliver.”Today’s Guardian claims a “dramatic change of mood at the Department for Exiting the European Union” with officials supposedly telling ministers they have only two likely choices over post-Brexit arrangements with the EU: “accept political compromises similar to aspects of the European Economic Area (EEA), or settle for a much more limited trade deal such as the recent EU-Canada free trade agreement (CETA)”.  Meanwhile Michel Barnier has confirmed in presentations to MEPs that ‘an agreement on a future relationship between the EU and the UK can only be concluded once the UK effectively leaves the EU and becomes a third country.’

4. Is a new customs union on the horizon?
While leaving the existing EU customs union is a direct consequence of Brexit, civil servants believe that agreeing a new customs union with the EU is not only possible but still compatible with key aims of Liam Fox’s Department for International Trade. Some officials are looking into the idea of joining Efta as a shortcut, as it would allow the UK to have access to its valuable free trade deals but also avoid the EU’s rules on free movement. Privately, officials in Brussels are said to be open to the idea of a wide-ranging new customs union with Britain, as long as it respects existing common market rules and has a dispute resolution mechanism such as the European court of justice.

5. Spokesperson for Commission hints at skepticism over the UK’s citizens offer
Commission spokesman Margaritis Schinas said at the midday briefing last Tuesday “every line, every word, counts and needs to be analyzed,” referring to the British proposals issued on the rights of EU citizens living in the UK. That analysis is ongoing, so he could not give the Commission’s view. “We are doing this because here we are talking about the lives of more 3 million EU nationals. So it is not something that can analyzed à la légère”. However it does seem that the UK’s proposal is being deemed as not enough.

6. Logistics association calls on UK Government to clarify its position
The FTA is calling for clarification on the Government’s policy paper on citizen’s rights. For example, further clarification is needed for the “cut off” date for arrivals into the country who have not been resident for five years.  Amid reports that more than one million foreign workers are preparing to leave the UK within five years, FTA’s head of European policy, Pauline Bastidon said “there is still much to be done to ensure that logistics companies are not left stranded”, EU workers currently account for roughly 13 percent of heavy goods vehicle (HGV) drivers and 26 percent of warehouse employees in the U.K.’s freight and logistics industry.

7. The view from Berlin: Japanese bank Nomura moves to Frankfurt
The Association of Foreign Banks expects Brexit to create between 3,000 and 5,000 jobs in Frankfurt. These figures come as the Japanese bank Nomura becomes the latest London-based financial institution to apply for a license in Frankfurt. These types of institutions will require a banking license in one EU country to continue to distribute their services and products to the soon to be 27 Member States. Morgan Stanley is also expected to double their staff in Frankfurt over the coming months.

8. The view from Paris: association of transport and maritime companies debates Brexit
The “Armateurs de France”, an association of transport and maritime companies in France, organised a conference on the effects of Brexit to their member’s activities. One of the issues discussed was the (quite likely) reintroduction of customs, which no matter how they are introduced, will require a huge amount of administrative work, time and even extra investment into infrastructure. However the association does see some possibilities in Brexit: for example, congestion in the main ports could mean more business for smaller ports like Grimsby and Tyneside. Also they are optimistic about the possibility of setting up “free ports” that could create 86 000 jobs along the Channel.

9. Border worries continue
Charlie Elphicke, Conservative MP for Dover has said that border preparations are vital for the best possible Brexit. Mr Elphicke MP calls for a boosting of the border force with the technology, data and people that will be necessary to protect the UK and its trade. He identifies two great challenges: ensuring customs checks are ready so tourists and trade continue to flow freely, and that security is stronger than ever to fight people trafficking, illegal immigration and the terror threat. From Dover to Northern Ireland, this week Jonathan Powell, former chief of staff to Tony Blair and Senior Good Friday Negotiator between 1997 and 2007 talked to E! Sharp’s Paul Adamson. He poured cold water on the idea that Northern Ireland can avoid a hard border after it leaves the EU’s Single Market and customs union. He believes Northern Ireland will have a hard border of one form or another, and this may have negative effects on the border region.

10. Shippers and Forwarders encouraged to gain AEO accreditation
The Chartered Institute of Logistics and (CILT) is encouraging all companies involved in the supply chain, including both shippers and freight forwarders, to become an Authorised Economic Operator (AEO), in order to ensure the United Kingdom operates frictionless borders post-Brexit. AEO status is an internationally recognised quality mark indicating that an organisation’s customs controls and procedures are efficient and compliant. CILT believes that more companies should do the course in order to gain competitive advantage, recognition for professional competence and trouble free border crossings. Click here for more information on AEO.

11. Meanwhile….the work of the EU in the field of transport continues
Meanwhile, whilst the UK is focusing on Brexit, the work of the EU in the field of transport continues. The six-month Estonia Presidency starts work today and has already launched an ambitious work programme for new policies, Directives and Regulations in the field of transport which, irrespective of Brexit, may affect you.  Priorities include the Low-Emission Mobility Package for land transport and active implementation of the Aviation Strategy for Europe, including the negotiating mandates with third countries and fostering fair competition and level playing field between air carriers in the European Union.  In land transport, the Presidency will focus on access to the international road haulage market and profession, as well as the proposal on guaranteeing road transport workers’ social rights and safety.  Discussions will also be started on road pricing. In aviation, the Presidency will seek to reach an agreement with the European Parliament on the basic regulation of the European Aviation Safety Agency.  In addition, some progress will be made on the upcoming rail passenger rights regulation.  In the maritime field the revised port reception facilities regulation with be discussed and the International Maritime Organisation´s roadmap to address greenhouse gases of international shipping will be considered.
12. UKTiE has also put together the latest timetable for Brexit. We will keep this up to date as the process develops: