Summary
Concerns are growing over the lack of progress on the practical steps required to maintain a smooth flow of mutual EU27/UK trade if no transitional agreement is set in place. These include:
- the need to address the physical constraints on the development of import control infrastructure in Dover harbour;
- the inadequate computerised trade data management systems;
- the absence of clear recruitment and training programmes in government agencies concerned with cross border trade inspection services;
- the absence of alternative licensing and permit arrangements for freight operators involved in UK/EU27 trading operations.
In this context a two year transition period is seen as essential. While a two year transition would defer the worst consequences of a ‘hard’ Brexit, these constraints will still need to be addressed. If they are not effectively addressed these systemic shortcomings could potentially have knock-on effects on the smooth functioning of the direct ACP-UK export trade.
According to the former head of exports at the Agriculture and Horticulture Development Board, Jean Pierre Garnier, the UK food industry is getting increasingly concerned about the lack of effective preparations for the consequences of the UK’s withdrawal from the EU on the 30th March 2019. Serious logistical challenges are likely to be faced at the UK’s main continental shipping terminal, Dover (1).
Currently the Dover transport corridor ‘handles more than four million commercial movements every year’ but lacks the physical space to accommodate the future controls which would be necessary if the EU27/UK trade was subject to the same trade treatment as any other 3rd country (1).
In terms of the technology required to facilitate trade in the absence of a EU27/UK trade agreement which replicates the current trading arrangements, the number of customs declarations will rise from 55 to 255 million with ’30 of the 85 extant computer systems’ needing ‘to be replaced or upgraded’, with no prospect of this process being completed before April 2019 (1).
UK government departments and agencies will also need to recruit and train thousands of new staff to carry out the new controls which will be required post-Brexit. According to the Parliaments’ Public Accounts Committee ‘the government has struggled to effectively forecast demand and its workforce requirements at the border and recruit, train and retain staff’. Since trade is a two-way street the reluctance of the French government to direct public investment to strengthening customs controls at channel ports will further complicate matters (1).
A ‘hard’ Brexit could also give rise to a situation where ‘the EU will no longer recognise UK-issued licences after Brexit and could ban all drivers and vehicles without an alternative agreement’. According to reports in the Guardian in February 2018 an EC notice issued in January 2018 highlighted how in the absence of specific agreement ‘a driving licence issued by the United Kingdom will no longer be recognised by the member states’. This could create further complications in terms of freight movements between the UK and the EU27 (2).
| ‘British businesses have heard enough talking – what’s needed now is a concrete solution to enable all those involved in moving goods and services across the UK’s borders to plan with certainty for a post-Brexit future…. The time for discussions is over – what the country’s businesses need now is action, to keep Britain trading without penalty or hindrance.’
James Hookham, Deputy Chief Executive of the Freight Transport Association |
While the UK government hopes new licensing and permit requirements for drivers and hauliers can be avoided it is looking to establish alternative arrangements through the haulage permits and registration bill which is currently being rushed through Parliament. This would fast track accession to the 1968 Vienna Convention which deals with cross border recognition of driving licences and freight permits. However the administrative capacity to issue the required international driving permits (IDPs) could be seriously over-stretched by a sudden surge of applications. According to the deputy chief executive of the Freight Transport Association ‘the extra time and hassle if you have a fleet of several thousand trailers would be tremendous’.
In addition there is the challenge posed by the limited number of travel permits available to British drivers under the Vienna Convention. According to reports in the Guardian, ‘under existing international treaties there are between 103 and 1,224 permits a year available to deal with more than 300,000 journeys by 75,000 British trucks’ (2).
Sectors such as the meat sector will face further challenges arising from the need for new veterinary controls, ‘export health certificates for all single consignments’ and rules of origin documentation if EU27/UK trade were subject to the same trade treatment as any other 3rd country. The absence of a computerized system for the issuing of export health certificates will further complicate matters in the meat sector (1).
Against this background large sections of the UK food industry view a two year transition period as essential. Unfortunately this could jeopardise by the UKs’ approach to the EU’s prerequisites for a transition period to be set in place (3). This is particularly the case if the ‘hard’ Brexit wing of the Conservative Party gains influence.
| ‘it is not our policy to stay in the customs union. It is not our policy to stay in a customs union’
Downing Street Spokesperson, 4 February 2018 (4) ‘without the customs union, outside the single market – barriers to trade and goods and services are unavoidable’ Michel Barnier, 5 February 2018 (5) |
Concluding a time limited transition period is not the only issue faced, with the atmosphere for the conduct of negotiations on a long term trade agreement also being critical. According to the UK Trade Policy Observatory it will be ‘fiendishly difficult’ to conclude and ratify a new long term trade agreement in the 21 months which the current transition period proposals would create. This is seen as ‘a very short time to address all the complex issues and the demands for new infrastructure’ (1).
| Comment and Analysis
The constraints on UK/EU27 mutual trade under a ‘hard’ Brexit scenario could have important knock-on effects on direct ACP-UK trade, the need for which is likely to expand under a ‘hard’ Brexit scenario. For example the shortage of trained staff in a host of UK inspection and documentation agencies where the workload will increase exponentially under a ‘hard’ Brexit scenario could constrain the development and expansion of UK control capacities related to increased direct ACP horticulture and floriculture exports to the UK. This expansion of direct exports to the UK from some ACP countries in preparation for Brexit is already underway (see companion article ‘Hard’ Brexit Could Create Fruit and Vegetable Shortages in the UK’, 23 November 2017). This is likely to increase further as the prospect of a ‘hard’ Brexit looms larger. Given the likely congestion at channel ports under a ‘hard’ Brexit scenario ACP exporters trading horticulture products to the UK market via initial ports of landing in Holland and Belgium will need to identify alternative, cost effective, direct routes to UK markets. While an agreement on a transition period would defer for 21 months the worst knock-on effects of a ‘hard’ Brexit, the logistical challenges faced under a ‘hard’ Brexit scenario are such that disruption could stretch well into the medium term (e.g. until 2025). Early action by individual ACP exporters to secure alternative direct routes to UK markets which are less vulnerable to traffic disruptions than channel and East Anglian ports, could well yield important benefits for the ACP companies concerned in terms of reliability of delivery and the freshness of products delivered to retailers. This is something which individual ACP exporting companies should begin to explore with their current freight forwarding partners, who themselves will need to have in place contingency plans for various Brexit scenarios. ACP companies collectively could also usefully initiate dialogues with UK bodies such as the Fresh Produce Consortium and the British Retail Consortium aimed at ensuring the concerned UK government agencies have the human resource capacities to handle an increased volume of direct imports for horticulture and floriculture products from ACP countries. Given all the attention being paid to the capacity constraints on channel port routes this is an area of UK government planning which could easily be neglected. |
Sources:
(1) Globalmeatnews.com, ‘Is the UK prepared for Brexit’, 24 January 2018
https://www.globalmeatnews.com/Article/2018/01/24/Is-the-UK-prepared-for-Brexit
(2) The Guardian ‘No-deal Brexit would trigger wave of red tape for UK drivers and hauliers’, 8 February 2018
https://www.theguardian.com/politics/2018/feb/08/no-deal-brexit-would-trigger-wave-of-red-tape-for-uk-drivers-and-hauliers
(3) The Guardian, ‘New demands threaten transition says Barnier’, 13 February 2018
https://www.theguardian.com/politics/2018/feb/13/brexit-weekly-briefing-new-demands-threaten-transition-says-barnier
(4) The Independent, ‘Downing Street says UK is ‘categorically leaving customs union’ as Theresa May seeks to quell Brexit dissent’, 4 February 2018
http://www.independent.co.uk/news/uk/politics/brexit-latest-downing-street-uk-categorically-leaving-customs-union-theresa-may-jacob-rees-mogg-a8194391.html
(5) The Guardian, ‘Barnier: trade barriers ‘unavoidable’ if UK leaves single market’, 5 February 2018
https://www.theguardian.com/politics/2018/feb/05/barnier-new-trade-barriers-unavoidable-if-uk-leaves-single-market