Brexit: is there a light at the end of the tunnel?
2019-09-23 When the news of a long extension to Article 50 broke out in April 2019, UK shippers were both hopeful and relieved. The Freight Transport Association (FTA) continued to issue warnings to its members to keep preparing for a potential no-deal outcome, but it felt like the debate could shift and a political breakthrough was still possible. Soon, the political situation in the UK started to change. After three rejections by the House of Commons, it quickly became clear that there was almost no chance of the withdrawal agreement being ratified by Members of Parliaments in its present form.
Boris Johnson’s appointment as Prime Minister on 24 July 2019 was a further turning point. Mr Johnson was appointed on a clear pro-Brexit platform and with a clear promise: to leave the EU on 31 October 2019, come what may. Preparedness started to intensify both within Government and within companies. Unlike his predecessor, Mr Johnson rejected the very concept of a backstop for Northern Ireland, refusing to support any type of agreement that would include one. Attention started to move towards alternative arrangements for the island of Ireland, but with limited progress in the negotiations. At the same time, the message from Government started to change: a no-deal Brexit is no longer ‘highly unlikely’, but a serious possibility that industry needs to prepare for.
So how prepared is the UK? Many simplifications and easements have been introduced in the UK over the last months to mitigate the effects of a no-deal Brexit on industry. Some of these have been recently confirmed, such as the UK’s pragmatic approach towards import controls on day 1, the transitional simplified procedures (TSP) for UK importers or the temporary ENS waiver, but other elements are less clear. The ‘no-deal tariffs’ adopted in March 2019, which would be imposed on products imported into the UK, are likely to change, and we are awaiting ministerial sign-off on additional simplifications that would greatly improve the situation for UK importers. However, none of these easements and simplifications are likely to last forever, and the situation could change quite quickly after the first year.
Exports towards Ireland and the continent are a trickier matter. EU law mandates certain controls – for instance on agri-food products from third countries - and the feedback from both the European Commission and national authorities is that the rules will not be bent, even on a temporary basis. Millions of additional customs declarations will have to be submitted, together with other documents and regulatory formalities, and the expectation amongst the UK shippers’ community is that the rules will be applied strictly. While large companies are well advanced in their preparations, with clear plans in place to comply with their customs and regulatory duties and strengthen the resilience of their supply chains, the situation is less positive amongst SMEs that neither have the financial means, the expertise nor the time to prepare thoroughly, if at all.
The shortage of customs agents able and willing to take up new clients in the UK (especially new traders) is a particular problem in this context. Add to this the many gaps in information provided by Governments and authorities on both sides, the fact that end of October is peak time in logistics, with warehouses booked months in advance, and above all, the lack of certainty not conducive to decisive action and investment and we can understand why warnings of potential disruptions should not be taken lightly.
FTA’s role is both to inform its members and mitigate the effects that a no-deal Brexit would have on their operations and supply chain. Our campaigning efforts have generated positive results with a sharp improvement in the quantity and quality of information provided by the UK Government, additional funding for training, and operational improvements, such as the creation of pop-up advisory and preparedness sites all over the UK and in the EU (150 in total). Whether these efforts are sufficient to mitigate the effects of no deal remains to be seen, but they will definitely improve the situation for our members and their partners. Of course, we continue to hope and push for a negotiated exit from the European Union, which would be infinitely preferable to a no-deal exit, but all the while recommending that our members should prepare for what remains the default legal scenario: a no-deal exit in a matter of weeks.
|About the author|
Pauline Bastidon is Head of Global & European Policy & Brexit at the Freight Transport Association.
FTA is one of the biggest business associations in the UK, supporting, shaping and standing up for efficient logistics. FTA is the only organisation in the UK that represents all of logistics, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers (shippers) whose businesses depend on the efficient movement of goods.