Preparations by the UK to guarantee the transport of goods after the Brexit, on March 29 (Nº2)

Read the first installment of this report

Barcelona, February 21, 2019.- No official or private department, neither in the United Kingdom nor in Europe, knows exactly what will happen next March 29 with the Brexit and the freight transport sector. In the first part of this report we publish a simple summary of the possible consequences. And here we finish it. Each professional, each company, each government, each company or multinational must invest individually how the historical fact that the UK leaves the European Union in the coming weeks will affect it.

The information has been obtained from an Analysis published by The House of Commons Library:

  • 63 statutory instruments still to be introduced by the Department for Transport by March 2019, on top of 64 business-as-usual statutory instruments, as at April 2018.
  • The Channel Tunnel is governed by an Intergovernmental Commission that was established under the Treaty of Canterbury. The Channel Tunnel Group (Groupe Eurotunnel/Getlink) is responsible for the operation of the tunnel until 2086, under a concession agreement. These are matters of international law and would be unaffected by Brexit. However, the Tunnel is the UK’s only surface transport link to mainland Europe and as such a different set of legal requirements apply due to the international nature of the travel it facilitates. For commercial and technical reasons it is therefore unlikely that the Tunnel and the HS1 (Channel Tunnel Rail Link) line would want to see any change in the application of EU law and TSIs (see section 4.1). There would be a continuing need for operational rules to be consistently applied both sides of the Tunnel. This in turn likely means that where HS1 interacts with the convention rail network (e.g. Ashford) there will need to be operational and legal coherence.
  • In a no-deal scenario, clearly UK-EU trade will be impacted if we enter a regime where we have both border checks and tariffs that did not apply before. Our members are multinationals and SMEs. A multinational with an office in the EU and in the UK clearly has more resource with which to manage that situation. For SMEs, it will be very hard to get to grips with a new administrative system to import and export when hitherto they have never had to do that, so there is concern about that. There is concern about the impact of tariffs on competitiveness. We still have insufficient detail about what the regime is going to be. Everyone is working on the assumption that it will be the WTO most favoured nation tariffs. That is an issue. We have the immediate issue of standards. On 29 March next year, as a member state, we will work to European technical standards for interoperability. Come 30 March, the EU will not recognise the standards in the UK because they will not be called TSIs. There is a further complication. The current approach of the Department for Transport is to transpose those standards into UK law, but it will have to name them differently. For argument’s sake, let us call them UK technical standards. Although that language would mirror the EU standard, there will not be mutual recognition of it on day one. There will be legal and regulatory implications for EU-based businesses in the UK. There will be export-import implications around the standards. There is a lot of uncertainty about what the immediate impact will be. 
  • The UK has the second largest ports industry in Europe collectively handling almost 500m tonnes annually and directly employing around 120,000 people. The British Ports Association (BPA) explains: The main markets for ports are unitised trade (which can be broken down into container (Lo-Lo) and roll-on roll-off (Ro-Ro traffic), and bulk trade, most of which is comprised of oil, liquid products and dry cargo such as aggregates. The main expansion over the past 20 years has been the growth of unitised traffic, reflecting changes in the UK economy which is heavily import dependent, especially for high-value finished goods. At present, over 90% of UK trade is handled by ports and the EU is the UK’s largest trading partner. However, the UK ports sector, being largely privately owned and competitively run, is very different to those of many other EU Member States. Consequently, it has long had concerns about public subsidy in other EU countries distorting competition, particularly between the larger international ports. Oxera has said that changes to the costs of trade with the EU27 are “likely to affect the volumes and patterns of freight activity at ports, while the need for new customs checks on imports and exports is likely to cause considerable congestion at UK and mainland European ports”. It suggested that any negative impact could be mitigated through EEA membership or free trade agreements, although delays in negotiations could mean a significant period trading under WTO agreements.273 There have been several warnings that post-Brexit customs checks could be ‘catastrophic’ for UK ports and lead to a reduction in the volume of trade. In a February 2018 article David Dingle, chairman of Maritime UK, said that the industry’s biggest concerns were for Dover and Holyhead due to “new customs requirements that could cause particular challenges for roll-on roll-off ferry ports which handle tens of thousands of HGVs travelling between the UK and the EU each day”. However, he said that there “is a wider problem, which stems from the lack of recognition of the importance of our ports and the areas around them in the planning system”. Even if the economic benefits of ports themselves are recognised, once you leave the port gate, you find right away that connectivity to the main markets, and to the other ports, is poor: there is not enough capacity on our rail network, too few lanes, roads and bypasses on our motorway network, and difficult.

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