Mark’s Brexit Week for Transport

Three important and very practical developments this week.

First, Michel Barnier may be bluffing but he made it pretty clear last week that the transitional period has already begun, UK transport must leave all agencies, and that there will be disruption to cross-border trade, even if Britain agrees a trade deal. So the instruction issued by the Bank of England to the financial services sector, requiring action plans to be drawn up for a hard Brexit by the 14 July, (see below) would seem to be sensible precaution for the Boards of all transport companies and organisations that rely on EU regulation, certification, market access or bilaterals.

Second, the Great Repeal Bill will be published this week and will provide transport with the regulatory certainty it needs after the UK leaves the EU. However, as we report below, it is likely to be a framework  and the devil will be in the details. We plan to carefully scrutinize the Bill and make sure that it provides as much regulatory certainty as possible.

Third, UKTiE is holding a Brexit briefing in the House of Lords on Tuesday 5 September at 17:00  to discuss the Brexit Plan for Transport.  We are inviting Ministers, Opposition Spokespeople and industry representatives to discuss the detailed arrangement we need to ensure the best possible Brexit for transport. In particular we will seek clarity on cross modal issues such as plans for new customs procedures, transitional arrangements, the EU agencies, market access and bilateral arrangements. Register your place here.

NB: The EU institutions are about to wrap up for their long summer recess.  We will be covering events over the summer but there will be changes to our schedule of News & Views. We will publish a ‘negotiation special’ on Tuesday 18 July, following the Second Round of talks that will be held here next Monday.  The next publication of News & Views will be Monday 28 August, to coincide with the Third Round of talks.

1. Great Repeal Bill expected Thursday – but will leave transport gaps to be filled
The big news of the week is the expected publication of the Great Repeal Bill on Thursday. It is expected to become one of the most constitutionally significant pieces of legislation in Britain’s history, reversing the 1972 European Communities Act that made European law effective in the UK, and converting all EU legislation into British law and filling any gaps, as soon as Brexit happens.  There are many gaps in the field of transport that will need to be filled, including the status of regulations, the role of the agencies and a whole myriad of agreements, certification regimes, enforcement and legal oversight. One Whitehall insider though cautioned UKTiE against expecting too much detail in the Bill, and said it would provide a framework, but given the Bill is not expected to be debated in the Commons before September, or the Lords until the end of year the Bill must be flexible enough to deal with various potential Brexit deal outcomes.

2. “Barnier says UK transport must leave all agencies completely before negotiating new arrangement
Our intelligence has picked up that Barnier has been telling the transport industry, in private, that they must be prepared to leave any agency that they are a member of. It was made clear that the Brexit agreement will only effectively cover staffing and location arrangements, and will not cover the new relationship with UK transport. Once departed, only then will Barnier countenance an agreement on the new relationship between UK transport and EU transport agencies. We are meeting Barnier’s taskforce in September to put forward the case for an appropriate transitional agreement  that will benefit both sides.

3. Barnier tells UK frictionless trade ‘not possible’ post Brexit
On Thursday, Michel Barnier, the EU’s chief Brexit negotiator, in a speech to the European Economic and Social Committee, warned the UK that frictionless trade will not be possible post Brexit. He said that the UK does not fully understand the EU’s red lines on Brexit. “I have heard some people in the UK argue that one can leave the single market and build a customs union to achieve ‘frictionless trade’ – that is not possible.” See here for the Guardian’s live blog on Barnier’s address to the committee.

4. Reactions to citizens’ rights offer
The Brexit Steering Group of the European Parliament has taken the view that the UK Government’s proposal on citizens’ rights proposal does not provide sufficient legal certainty to citizens. Other leading MEPs have asserted that citizens’ rights should be the core of the negotiations. The Parliament is assuming negotiations on this point will continue until at least the end of the year.  The European Parliament has a veto on the final deal on citizen’s rights and Guy Verhofstadt has said that they will unless the UK improves the offer. He called the offer a “damp squib” and says it completely falls short of the EU’s own offer on citizen’s rights, which he believes to be simple, clear and fair.

5. CBI views that transitional deal is the only way forward
In a lecture at LSE, Carolyn Fairbairn, Confederation of British Industry Director-General called for a transitional deal. “Instead of a cliff edge, the UK needs a bridge to the new EU deal. Even with the greatest possible goodwill on both sides, it’s impossible to imagine the detail will be clear by the end of March 2019. This is a time to be realistic. Our proposal is for the UK to seek to stay in the single market and a customs union until a final deal is in force.” This proposal was supported by other leading business organisations, including executives from Easyjet, Tesco and BT. They and other leading business executives met with David Davies at an informal summit at Chevening on Friday, and called for delaying the UK’s departure.

6. UK Government launches new transport investment plan
The UK Government has launched a new transport investment plan for Britain. The Transport Investment Strategy sets out a new long-term approach for government infrastructure spending — meaning cash will be targeted at projects that help rebalance the economy. One of the big projects will be the creation of a “Major Road Network”. Marie-Claude Hemming, director of External Affairs for the Civil Engineering Contractors Association (CECA) said: “Investment in transport will be central to securing the economy and driving post-Brexit growth. The challenge now is to ensure the Government’s investment plans are implemented as quickly as possible to deliver a transport infrastructure that is fit for the 21st century.”

7. Seanad Brexit committee publishes recommendations for transport post-Brexit
The Irish senate has published a report on Brexit, with several pages dedicated to transport. The transport section includes an analysis of the problems and potential solutions for the Common Travel Area, Rail Services, Bus Services, Aviation and Ports and Freight. Some of the solutions suggested are new legislation that closely resembles existing one, and serious investment into new infrastructure, in particular for ports. Freight Transport Ireland criticized the report for excluding recommendations for road transport.

8. FTA lauds government commitment to securing duty free access
According to the Freight Transport Association, the government’s commitment (announced on 26 June 2017) to securing existing duty free access to UK markets for 48 of the world’s developing nations will ensure that British manufacturers and retailers can continue to trade efficiently and profitably.  The association says that these agreements should ensure that the price of household items, ranging from textiles to tea, can be maintained at pre-Brexit levels.

9. Bank of England calls on financial institutions to plan for the worst
Hundreds of firms in financial have until Friday 14 July to submit action plans of up to 20 pages telling the Bank of England how they intend to cope with a hard Brexit. They must  spell out plans that would allow them to keep operating in the “most adverse potential outcomes” : the UK leaving the EU without a trade agreement, no implementation period, no co-operation over regulation and no so-called mutual recognition, which allows products to be sold cross-border. Andrew Gray, head of Brexit at PricewaterhouseCoopers said: “While they are having to plan for hard Brexit, they don’t want to overcommit and spend money they absolutely don’t have to”. However some banks such as Deutsche bank and Nomura are already planning on moving to Frankfurt.

10. Good news and bad news from Hamburg
Theresa May received a boost at the G20 conference, with several countries, in particular the US, highlighting the prospect of a trade deal with the UK. However German industry has this week warned May that its priority is to protect the single market, not a good trade deal with the UK. Ingo Kramer, president of the confederation of German employers’ associations (BDA) said: “The UK will remain a very important partner for us, but we need a fair deal for both sides respecting this principle. The cohesion of the remaining 27 EU member states has highest priority.

11. The view from Paris: Prime Minister starts bid to poach business from London
As the Brexit negotiations begin, more and more cities are telling UK businesses why they should go to their city post-Brexit. Germany has been ahead of the game, but France has now gotten involved. On Friday, the French Prime Minister, Edouard Philippe offered “gifts” to financiers considering moving to Paris, most of them tax related. Although this decision was warmly greeted by representatives of the Ile-de-France region, several NGOs are not impressed with the tax breaks offered. Mr Philippe said “The progression of Paris is directly linked to the decline in London”

12. The view from Germany: Bavarians call for fair negotiations, UK third biggest market
Bavaria’s Finance Minister Markus Söder (CSU) has appealed for fair Brexit negotiations at a meeting with his British colleague, treasurer Philip Hammond. “Bayern does not want a punitive brexit, but a reasonable one,” Söder said. In the negotiations on the withdrawal of the country from the European Union, there should be no losers, he warned. Söder pointed out that Britain is currently the third largest market for Bavaria after the US and China, especially for the auto industry. However, he warned against moving to a deregulation on the financial markets and of a tax breaks in Great Britain. “There should be no Panama for the UK,” Söder warned.

13. The view from The Netherlands: Brexit is going to bite Dutch companies on customs
The departure of the UK from the EU is going to affect the Dutch economy in the customs area. The increase in cross-border transactions will not only affect Dutch customs authorities but also Dutch companies will be hard hit according to a recent publication. Today, the Netherlands, as a key EU-logistics hub, already accounts for around 1/3 of all customs clearances in the EU. With the UK becoming a third country, experts estimate that due to Brexit there will be at least 7 million more customs clearances to be processed. All of this will lead to an increased need for more officers and staff for customs enforcement. At the same time, Dutch companies need reconsider their customs processes and evaluate how they will handle these changes.

14. Northern Ireland or north of Ireland?
Following the rejection of an amendment by Sinn Fein MEPs for special status for “North of Ireland”, Sinn Fein MEP Matt Carthy said: “We are engaging with hundreds of political representatives and officials from across Europe in order to gather further support for special status for the north within the EU and will continue to do so.” In a speech that was applauded by MEPs, James Nicholson MEP said “There is no such entity as ‘the north of Ireland’. It is the United Kingdom of Great Britain and Northern Ireland and if you want to refer to Northern Ireland you refer to it as ‘Northern Ireland’.

15. 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
  • 11 July 2017 – TRAN hearing “Impact of Brexit on Aviation”
  • 17 July 2017 – Second round of talks begin, attention is likely to turn to the Brexit bill and the rights of EU citizens living in the UK.
  • 28 August 2017 – Third round of talks
  • 5 September 2017 – UKTiE Transport & Brexit event in the House of Lords, London,  ‘A Brexit Deal for Transport’, 17:00-18:00
  • 7 September 2017 – UKTiE meets with Team Barnier (TF50) to commence discussions on transport and Brexit
  • 18 September 2017 – Fourth round of talks
  • 24 September 2017 – German Federal election
  • 9 October 2017 – Fifth round of talks
  • 30 October 2017 – UKTiE  & Norton Rose Fulbright Summit: Customs arrangements after Brexit.
  • 28 November 2017: UKTiE Annual Forum
  • 30 September 2018 – Date by which EU’s chief Brexit negotiator, Michel Barnier, wants to conclude the terms of Britain’s exit from the Union.
  • 30 March 2019 – Britain formally exits the EU, following ratification of Brexit by all other member states and the European Parliament.
  • June 2019 – European Parliament election
Mark Watts
UK transport in Europe (UKTiE)

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