Trade associations warn of big disturbances in the event of a “cliff-edge” withdrawal.
The European Shippers’ Council (ESC) is calling for a transitional period allowing governments as well as companies to finalize their preparation at least until December 2020 to prepare for the U.K.’s withdrawal from the European Union.
“The moment when the U.K. will leave the EU is less than 100 days ahead of us. Until now there is no clear picture on how all parties involved will have to deal with the situation after March 29, 2019,” said the council that represents the interests of manufacturers, retailers and wholesalers this week. Members include national shippers associations from various European countries, commodity trade organizations and individual businesses.
The start of the transition period depends on a vote in the U.K. House of Commons in mid-January, and ESC said, “If the present withdrawal agreement does not pass the vote, a cliff-edge scenario will be the most likely one. Preparation after this date will be nerve-breaking. In this case, producers and traders give no guarantee that the goods will reach their clients in time and in a good condition.
“Such a scenario will impact the welfare of the inhabitants of the U.K. and EU 27 heavily,” the council said, noting that large amounts of medicine and food are exchanged between the U.K. and the 27 countries that would remain part of the European Union after BREXIT.
“Although many companies have already invested a lot in preventing chaos, the preparation made so far can never completely prevent big disturbances in trade. The capacity of warehouses in the U.K. has already been used completely, and it is nearly impossible to rent addition space in warehouses for emergency stocks. At the same time, providers of logistics services and automation are also completely booked for the period around Brexit.”
ESC said, “The only solution that shippers see is an orderly move into a transitional period allowing governments as well as companies to finalize their preparation at least until December 2020. Hopefully, the EU 27 and the U.K. will, in the meanwhile, be able to negotiate a free trade agreement allowing trade in goods and services as free as possible.”
The Freight Transport Association (FTA), which represents the interest of the shipping and logistics industry in the U.K., has said European Union contingency plans for a “No Deal Brexit” released two weeks ago “do not alleviate the U.K. logistics industry’s concerns.”
“The plans only provide limited facilitations, confirming that leaving the EU without an agreement in place will have serious consequences for logistics, and in turn, integrated supply chains and the EU and U.K. economies.”
Pauline Bastidon, FTA’s head of European policy and Brexit, said, “The EU’s very limited no-deal contingency plans will not allow trade to flow freely between the U.K. and EU, confirming expectations of border delays, supply chain disruptions, significant additional red tape for traders and operators alike, and restrictions to transport. While FTA is pleased to see the EU27 is taking steps to ramp up no-deal contingency planning, their proposals fall short of what would be necessary to allow our industry to keep the supply chain intact and trade moving.
“Member states are simply told that they will have a duty to enforce the full customs and regulatory regime on day one of a no-deal Brexit. No consideration is given to a potential ‘light-touch’ approach in the short term; considering the level of preparedness of infrastructure at the borders (on both sides), taking such an approach is likely to be a recipe for disaster,” she added.
Last week, House of Commons leader Andrea Leadson said if British lawmakers rejected the Brexit plan negotiated by Prime Minister Theresa May, that she was looking to find an alternative.
She told BBC radio, “A managed no-deal where we collaborate with the European Union … would be an alternative solution that the European Union … might well find is also in their interest.”
James Hookham, FTA’s deputy chief executive officer and secretary general of the Global Shippers Forum, said a managed no-deal Brexit “is more to do with semantics than actual actions and would leave the U.K.’s logistics industry carrying the can for political failure to negotiate an effective withdrawal agreement.”
“No deal would be disastrous for U.K.-EU logistics and the wider economy as a whole. Playing with words, by creating a new type of no-deal concept, ignores the very real issues which such a departure from the EU would create. The U.K.’s supply chain is the blood in the veins of the U.K.’s economy, keeping schools, hospitals and businesses stocked, shop shelves full and retailers provided with the goods they need to prosper. Negotiators on both sides need to keep working to ensure that Britain and the EU keep trading smoothly, without descending to wordplay and semantics to cloud the very real issues which industry still faces in making Brexit a success.
“A managed no-deal outcome is an idea contrived by politicians to shift the consequences of a no-deal departure from the EU onto the very people whose lives depend on the smooth movement of goods and services to keep Britain trading. This concept is a deflection of responsibility by the politicians responsible for the country’s future success onto the businesses which will be most affected by their failures,” Hookham said.
“Solutions are still required for customs and border arrangements, the continuity of trade agreements and vehicle permits, access to EU workers and other key areas which keep the U.K.’s supply chain working efficiently to support British business, industry and commerce. It is simply unacceptable that politicians seem happy to set up the logistics sector as scapegoat for future problems across the nation’s economy, which could be solved if government continued to talk to its EU counterparts to find workable answers to keep trade moving,” he added.
Shippers want clear guidance on Brexit
