Freight challenges highlighted as Brexit talks begin

19th June 2017

Freight challenges highlighted as Brexit talks begin

As UK-EU Brexit negotiations finally get underway today, the Freight Transport Association (FTA) has repeated its calls for the UK government to prioritise logistics and trade and to “keep an open mind in the talks to ensure freight can continue to move freely throughout Europe”.

Pauline Bastidon, FTA’s head of European policy, today said: “The government must not underestimate the impact of Brexit on the (logistics) industry if not managed carefully. Businesses run on predictability – anything that causes uncertainty creates problems in terms of operating, costing and forward planning. Leaving the EU without a deal and an agreement on a transitional period would be the worst possible scenario.
“We need clarity at the earliest possible opportunity, together with a sensible period of transition and implementation to allow time for businesses and authorities alike to adjust to new arrangements. As negotiations are about to start, we are urging government to keep these important principles in mind and adopt a pragmatic approach when negotiating with the EU’s chief negotiator Michel Barnier and his team.”
FTA highlighted that the logistics industry contributes over £121 billion ‘Gross Value Added’ to the UK economy every year and employs 2.54 million people in the UK, 11% of whom are non-UK EU nationals. “But its value goes far beyond this – logistics is an enabler, making both international trade and local deliveries possible,” FTA stressed.
The association highlighted concerns about a potential ‘no-deal’ scenario, noting that Prime Minister Theresa May has already indicated that the UK will leave the EU without a deal if the government cannot reach a suitable agreement within the two-year timeline, particularly on new trade arrangements. Under this scenario, businesses would suddenly have to face controls, checks and delays at the border with very little time to adapt to new rules and arrangements, FTA noted.

FTA has also warned that any delays at the border – especially around major transport modes such as ports – and additional red tape will jeopardise freight operations, especially those handling time-sensitive and perishable goods, and are likely to add costs which will filter down to the consumer.
FTA’s Brexit Manifesto highlights the organisation’s 10 key ‘asks’ for the government to achieve in the negotiation process. These include the ability to retain EU workers, who are vital to the stability of the UK’s logistics sector, seamless access to the EU market for goods and transport services, and free movement of goods across the Irish border, which FTA believes should be made a special case in the negotiations.

Bastidon continued: “FTA has asked the government to keep an open mind on solutions needed for the post-Brexit period and to reconsider its position on a customs union with the EU. FTA will be monitoring the process every step of the way on behalf of its members and ensuring their voice is heard, in the UK and in Brussels.”
She concluded: “The clock started ticking on 29 March when Article 50 was invoked and it is crucial that the government acts swiftly to get the best possible deal for the UK and to bring much needed clarity to businesses.”

However, some analysts believe hopes of a more-pragmatic approach to Brexit from the UK’s Conservative party after it failed to get a majority in the recent UK national election – as opposed to one driven by political dogma – are unlikely to be realised. Treasury Minister (‘Chancellor’) Philip Hammond, who has argued for a Brexit that “puts business first”, yesterday appeared to accept that Britain will definitely end its membership of the single market and customs union when it departs the EU.
However, Hammond still doubts that a meaningful deal can be agreed pre-March 2019 and insisted that, after leaving the customs union, Britain needed a transitional period lasting “a couple of years as a temporary measure” while it settled a long-term status for UK-EU relations, the Financial Times reported today.

Although Hammond’s version of the “transitional period” has softened compared with what he was pushing for last December, his vision remains different to that of Theresa May and hardline Tory Brexit supporters – who favour a “a clean break” and no “transition period”. They instead have called for an “implementation period” – a period of just a few weeks or months after the Brexit talks end in March 2019 to soften the “cliff-edge” of moving to the post-Brexit arrangements.

Some analysts fear that Conservative ministers and members of parliament will push for this “clean break” whether or not a new trade agreement has been reached by March 2019, although the government continues to argue that it can achieve a trade deal by March 2019.

Theresa May described her idea of an “implementation period” in April: “Once we’ve got the deal, once we’ve agreed what the new relationship will be for the future, it will be necessary for there to be a period of time when businesses and governments are adjusting systems and so forth, depending on the nature of the deal – but a period of time when that deal will be implemented.”

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