UK Transport and Brexit News & Views No. 38

Mark’s Brexit Week for Transport

The fifth round of negotiations commence today here in Brussels, the last before the European Council meets to decide whether sufficient progress has been made to allow the talks to move on to the future relationship. We already know the answer. So what next?
The Prime Minister has stated repeatedly that the United Kingdom wants a “new, deep and special partnership ” but “the ball is in their (the EU’s) court.” She expects the EU to climb down.
But that’s not how people see things this side of the Channel.  The EU expects the UK to climb down. There were three very significant developments that highlight that alternative view of our partners, in business and internationally.
The first was  Germany’s biggest industry body warning German companies with a presence in the UK that they should be planning for a “very hard Brexit”. The boss of the Federation of German Industries (BDI), Joachim Lang, warned that Britain “is lacking a clear concept despite talking a lot.”
The second was the decision by the US, Brazil, Argentina, Canada, New Zealand, Uruguay and Thailand to reject Britain’s proposed import arrangements at the WTO for agricultural goods after Brexit.
The third is the continuing dispute over what a transitional arrangement will look like. Fundamentally that comes down to whether the UK will still be under the jurisdiction of the ECJ or not during that transition.
How do we help our politicians get out of this Mexican stand-off? Up until now politics has trumped economics in Brexit, but we have to begin turning the tables. Businesses have spoken out but perhaps we need to become louder, clearer, more united. Not least by building alliances with partner businesses and organisation across Europe. That’s exactly what UKTiE will be doing in the coming weeks.

1. 5^th round of negotiations start today, last before EU summit 19 October
The fifth round of Brexit negotiations start in Brussels this week, the last before an EU summit on 19^thOctober that will determine whether there has been enough progress on withdrawal issues to move on to talks about the future EU-UK relationship. Ahead of the round, Prime Minister May will address the House of Commons telling them that the UK can “prove the doomsayers wrong”. She will also be meeting with leading industry figures to try and reassure them about the Brexit process, such as Aston Martin and HSBC. Let us know if you would like a briefing on the state of play after the conclusion of this round of the negotiations.

2. EU does not believe Brexit negotiations should move on to next phase
European Commission president Jean-Claude Juncker has said it will take miracles for the necessary progress to have been met before the summit, whilst the European Parliament made its voice heard with a non-binding motion saying that more needed to be done. These sentiments are being echoed across Europe including by Germany (see below) and Portugal whose foreign minister Augusto Santos Silva said that after Prime Minister May’s Florence speech: “The atmosphere is good, but we still don’t have any concrete progress in the negotiations”.

3. MEP addresses transport industry concerns
In a blog last week titled “Brexit and Transport: Going nowhere fast” Richard Corbett, British MEP, highlighted the importance of the transport sector to both the EU and the UK. He wrote that “the slow pace of UK-EU negotiations could result in chaos in ports and on runways across the UK in eighteen months’ time. But warnings from the transport sector seem to be falling on deaf ears. As far as transport is concerned the government hasn’t even left first gear.” 

4. Transport Minister says he is planning for all contingencies, including no-deal and a transitional deal
Justice Minister Mr Raab told journalists that contingency plans in case the UK has to leave the EU with no deal in place are “well under way” and that there are being kept under wraps “because we want to send the right, positive tone to our EU partners.” Transport minister (and Brexit supporter) Chris Grayling has said that he is now “relaxed” about the proposed transitional period, having previously been against such a deal. He also told BBC Newsnight, that Britain was preparing for a “no-deal” with the EU. The Newsnight host added: “The Department for Transport is responsible for the overall planning and strategy for ports in England and Wales – what are you doing for a no deal option?” he replied that “we’re doing detailed work across all the different options, all the different modes, planning implications of leaving”. Specifically on ports and aviation he said “planes will not be grounded, there will be some challenges but we are looking very carefully into how we are going to handle that”.

5. Holyhead still waiting on certainty regarding Brexit
In Holyhead, a port that processes 423,000 lorries every year and forms a crucial link between Ireland and Wales, industry leaders have begun to worry about the lack of certainty regarding future customs arrangements post-Brexit. Route Manager at Stena Line, Ian Davies hopes for some kind of e-solution to deal with the huge amounts of traffic that go through the port. Irish Ferries warned that more relaxed borders between the Republic and Northern Ireland than between Wales and Ireland could cause a “significant displacement of traffic” from Holyhead to ports in northern England and Scotland. The Welsh Government has received criticism for not working with Irish counterparts on cross-border trade issues but it has responded that it is engaging at ministerial level and is focusing on ensuring Welsh people and industry do not suffer due to decisions taken by the UK government.

6. FTA Joins a Welsh working group to ensure efficient logistics after Brexit
Welsh Economy Secretary Ken Skate has formed a working group to explore the impact that the UK leaving the EU will have on the business sector in Wales. The Freight Transport Association is one of the members. Transport & Logistics online reports that “the FTA being included as a part of this new working group is essential recognition of how vital the efficient operation of the supply chain is for the future prosperity of Wales as well as the UK as a whole.”

7. Pall-Ex sees shortage of labour as the biggest threat for hauliers from Brexit
Motor Transport interviewed Managing Director of Pall-Ex, Kevin Buchanan, about Brexit. Mr Buchanan said that Pall-Ex is well placed to deal with any short-term consequences from Brexit. However he does foresee one problem: “The biggest challenge we face is a labour shortage. This has all largely been about immigration. But what people forget is who is going to pick your fruit, who is going to drive your trucks? We all know that one of the most under-respected roles in our society is the driver that drives the goods around and gets them to their destination. We don’t think about it; we take them for granted,”

8. View from Berlin: BDI stands behind the EU strategy on Brexit 
While it is true that the UK is a very important market for Germany, it has been made clear that German industry is 100% behind the EU’s position and will not push for any special deals. Speaking in Berlin on Thursday, CEO of the BDI, Joachim Lang said that German companies with a stake in the UK should prepare for a Hard Brexit, based on findings by the BDI’s task force and what they see as a lack of substance in the UK negotiating positions to guarantee a deal will be made. The BDI does not expect the EU Summit in October to approve moving on to talks on the future UK-EU relationship and instead hopes it may be approved in December. Mr Lang also criticized many Brexiteers belief that future trade deals will be accomplished quickly, he said the only way the UK would enter into a trade deal within the next few years would be to accept the CETA agreement as a blueprint which the UK has said clearly they do not want to do. Richard Tice, co-chair of Leave Means Leave responded to these comments saying that is not the UK’s fault that talks have been delayed and that the BDI should be pressing German chancellor Angela Merkel to get the EU “to stop blocking trade talks”.

9. Trucks leaving the UK empty
Owner of International transport and logistic company, Ju-Tra Logistik, Achim Juncker, has told German press that he has already revised the plans of his drivers, recalculated their working hours, calculated their new routes and now sends fewer trucks to the UK. It used to be ten 40-toners a week, says the entrepreneur, and now there are only four or five. He also said that many customers have decided to leave the UK and many of his trucks now return to Germany empty. He said that German companies are expecting a Hard Brexit and they are already looking for new customers and suppliers.

10. The view from Dublin: Impact on Irish transport sectors
Top think tank in Dublin, the Institute for International and European Affairs (IIEA) has published an article on the Implication of Brexit for Ireland’s Transport Sectors. It particularly focuses on the freight and aviation sectors as they believe they will be the worst affected. Their conclusion is that there should be the “least amount of change in the trading environment in which Ireland operates and flourishes” and this must be done through the Irish authorities continuing to participate to the fullest extent in the negotiations and also by individual government departments to continuing to engage widely and fully with their sectoral stakeholders, something they say the Irish Department for Transport has done adequately.

11. Transport & Environment calls for the environment to be at the heart of Brexit
A new report by T&E has concluded that any preferential access for the United Kingdom to the EU’s internal market must be conditional on the UK agreeing to respect EU environmental standards and climate targets after Brexit. The report, Putting the Environment at the Heart of Brexit, says Britain must not be allowed to gain any advantage through “environmental dumping”. T&E’s director for trade and regulation, Cécile Toubeau, said: “While the current EU-UK negotiations have focused on the European Commission’s primary aim of citizens’ rights and business stability, the environment cannot remain an afterthought. It needs to be placed at the heart of negotiations.” 

12. Zeebrugge prepares for Brexit trade shock
In Zeebrugge, which does 45% of its trade with the UK, there is growing concern about the impact of the worst-case scenario.  Port chief executive Joachim Coens believes the port can handle doing new customs checks and that they are more concerned with what the resumption of WTO tariffs will mean for the port and more importantly  to their producers and exporters.  Zeebrugge is currently fast-tracking the development of apps and scanners to reduce paperwork and is developing a UK-specific programme for every stage of the logistics chain, which would allow goods to clear customs even when lorries are miles from the port. 

13. International trade heavyweights reject Britain’s proposed import arrangements
The US, Brazil, Argentina, Canada, New Zealand, Uruguay and Thailand have teamed up to reject Britain’s proposed import arrangements for crucial agricultural goods such as meat, sugar and grains after Brexit.  The big food exporters wrote  an unusually sharply worded letter of complaint dated September 26 to the U.K. and EU representatives at the World Trade Organization over the terms of such an arrangement. The countries were particularly aggrieved that they had not been consulted and stressed that no calculation of Britain’s tariff-rate quotas could be agreed at the WTO “without our agreement.”

14. UKTiE has also put together the latest timetable for Brexit. We will keep this up to date as the process develops: