UK Transport and Brexit News & Views No. 52

Mark’s Brexit Week for Transport

This week a widening gap emerged between the UK’s and EU’s respective visions of the proposed transitional arrangement.  The dispute centres around the rights of citizens who arrive in the UK during the transition, but also extends to the need for the UK to maintain regulatory alignment, whilst being excluded from the EU’s decision making institutions, including the transport-related EU agencies.  It’s vital we square that circle in the coming weeks because the deal must be finalised by September, if there is to be time for Member State and European Parliament ratification.  My advice is to grab what we’ve been offered, and seek to build on it over the coming months, such as making the case for on-going participation in bodies such as the EU transport-related agencies, which is being offered on a case-by-case basis, rather than wasting valuable time on the theatrics.

I’ve also detected a noticeable rise in the number of companies and organisations getting ready for a hard Brexit, which is driven by this widening gap, and the realisation that a future relationship is unlikely to be agreed in 21 months after Brexit, let alone by September this year. Some feel they are obliged to prepare for this as a matter of good governance, but an increasing number believe it is in their business interests to adapt. The lack of clarity on the UK side is partly responsible, but also is the fact that a future trade deal will be treated as a mixed agreement under the Treaty, and consequently requires the ratification of all of the EU’s 38 national and regional Parliaments, therefore adding significant time pressures.  There are also growing EU demands for a Brexit ‘level playing field’, with any trade deal being linked to regulatory compliance, including compliance with the EU’s competition, state aid, environmental and social policies, which adds a further major complication. 

Consequently, UKTiE has been busy making the case that for a pragmatic and speedy solution that is in everyone’s interests.  Next week we will attend a meeting of the Brussels Informal Brexit network, which we currently convene, of over 50 EU businesses and trade bodies.  We are also be meeting the Director-General of DG Move Henrik Hololei  in the European Parliament on 27 February, to discuss current and future EU transport regulations.   It’s my firm view that whether we are in or out of the EU, or somewhere in between, existing and new EU transport regulations will continue to apply in the UK. It’s therefore absolutely essential we find a new way of influencing them when we have no representation in the Commission, Council or Parliament, in just over a year from now.  If you would like to attend our meeting with Hololei then please join us.
 
1. Liam Fox ‘No customs union with EU after Brexit’
In a move that has seemingly reignited the debate over the future of a UK-EU customs agreement, Liam Fox has said that “It is very difficult to see how being in a customs union is compatible with having an independent trade policy because we would therefore be dependent on what the EU negotiated in terms of its trading policies and we’d be following behind that”. Fox further added that ” We have to be outside of that to take advantage of those growing markets. One of the reasons we are leaving the European Union is to take control and that’s not possible with a common external tariff”. His comments have gained particular traction given the stated position of the UK government to seek some form of customs arrangement with the EU, something that would protect ‘frictionless’ trade between the UK and the EU. Any discussion on future customs arrangements is bound to be of particular interests to businesses as a whole but is also important for the transport sector as much of the sector rests upon the ‘frictionless’ supply chains that allow for necessary goods to move between the EU and the UK. Would you like to help us make the transport sector a priority in the Brexit negotiations and to make the case for a transition? Join us to find out how.

2. ICYMI -The European Council adopted supplementing negotiating directives for transition
At a meeting on Monday, the Council, meeting in EU27 format, adopted supplementing negotiating directives for the Brexit negotiations, which detail the EU27 position regarding a transition period. These directives have now provided a mandate for the European Commission to begin discussions on a transition period. The directives include that the transition period should last until 31 December 2020 and that the whole of the EU acquis will continue to apply to the UK as if it were a member state. What this means is that all existing EU regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures will also apply, including the competence of the Court of Justice of the European Union without the UK retaining any institutional representation within the EU. If you would like a full report from us on the transition directives and on possible sticking points between the EU and the UK on this matter, then please contact us.

3. Legal expert raises legal concerns over transition deal
Although much of the discussion has centered around the political nature of the Brexit negotiations, Michael Dougan, Professor of European Law and Jean Monnet Chair in EU Law at the University of Liverpool, has expressed some legal concerns regarding a transition deal. He has written that “Transition is not just about politics. The EU27 have said that any deal must also be “legally possible”, but there are some tricky legal issues to deal with. For example, Article 50 adopts the fundamental premise that the EU treaties will cease to apply to the UK at the moment of its withdrawal, when it formally becomes a third country. However, the plan is for an ambitious transitional agreement based on the wholesale extension of EU law to the UK as if it were still a member state”. Professor Dougan also admits that the only possibility of a definitive answer would rest with the ECJ but time constraints make waiting for a judgement unrealistic. Although political in nature, these negotiations may fundamentally rest on legal matters such as the possible contestation surround the legal basis for a transition agreement.

4. RyanAir to roll out ‘Brexit clause’ in forthcoming tickets
RyanAir has confirmed that tickets for its 2019 summer flights will include a clause explaining flights are “subject to the regulatory environment allowing this flight to take place”. The aviation industry wants clarity over Britain’s position in the open skies agreement, which allows for transatlantic flights between the US and EU countries, after Brexit. Ryanair’s chief marketing officer, Kenny Jacobs, said “nothing has changed” from the airline’s perspective, with Britain still leaving the EU in 2019 and “still no alternative to open skies” at present. RyanAir’s announcement comes in the wake of Thomas Cook who, just last year, included a clause confirming it will not be liable to pay compensation or reimburse expenses for delays caused by “airspace closures”, though it will still refund tickets. These moves suggest businesses preparing, however reluctantly, for a hard Brexit scenario which neither negotiating side may want but one that both sides may inadvertently fall into. What is your business doing to prepare itself for Brexit? Contact us if you would like to know more about the exposure you may face from a ‘No-Deal Brexit’.

5. UKTiE Supported by IDA Group
UKTiE’s work is supported by IDA Group. IDA Group is a highly specialized consultancy for governmental affairs, reputation management, trade and funding. They share the belief in effective dialogue built upon trust and mutual understanding. Their diverse team of experts includes seasoned diplomats, politicians, journalists, lawyers and designers, supported by a global network of trusted partners, can help create measurable impact for your business. You will find more information on IDA Group and what services they can provide you with here.

6. The view from France- Brittany reinforcing links with Brussels ahead of Brexit
According to Loïg Chesnais-Girard, President of Brittany’s regional council, the region of Brittany has great cause for wanting to reinforce its links with Brussels and the European Union ahead of Brexit. The region is seeking to build up a network in Brussels to make itself increasingly felt at the European level, an objective that has found more momentum in light of Brexit. This move is one that should be employed by the UK ahead of Brexit, creating a network of like-minded partners at the European level in order to help maintain influence  over a decision-making process it will be affected by without holding any institutional representation. Are you concerned about losing influence in Brussels post-Brexit? Then contact usto see what you can do to maintain a presence here.

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