A leading logistics expert has warned businesses trading with the EU to brace themselves for a period of disruption if the UK leaves the bloc without a withdrawal agreement.
David Johnson, managing director of Leeds-based Tudor International Freight, said with less than six months until the UK departs on 29 March next year, the prospect of it leaving without a deal was very real.
The reasons included major remaining differences of opinion on issues such as the Irish border, not just between Prime Minister Theresa May and the EU but within the Conservative parliamentary party and even the Cabinet. In addition, time was now very short, as any withdrawal agreement would have to be in place before the winter if it was to be ratified in time.
Mr Johnson said: “The temporary disruption a ‘no deal’ Brexit would cause EU traders has now been laid bare by the government in a series of technical notices it has released. These contain the stark advice that hauliers should consider alternative modes of transport for moving goods between the UK and EU.
“This is because operator licenses for lorries issued by UK authorities, which are unlimited in number, are currently effectively valid across the European Union, thanks to our EU Single Market membership.
However, if we leave without a deal, UK operators could be forced to obtain European Conference of Ministers of Transport permits to enter the EU instead.
“The government has warned it may not have time to renegotiate these arrangements before any ‘no deal’ outcome takes effect and says it expects demand for the permits will ‘significantly exceed’ the limited supply. The number of permits the UK can currently issue equates to five per cent or less of the industry’s requirements.”
Mr Johnson added that the technical notices made no specific mention of plans for freight movements between the UK and Republic of Ireland, in the event of a “no deal” Brexit.
He said: “The government’s documents also accept that planes could be grounded if we leave without a deal. Currently, under a wide range of EU legislation, airlines registered in one member-state can operate in another without seeking advance permission, but this would cease to apply to the UK if there was no withdrawal agreement.
“The government has said it intends to provide permission for EU flights to continue landing at British airports and expects our European partners to reciprocate, but they haven’t yet said they’ll do so. Failing that, the government says it will try to negotiate a temporary deal with the EU to keep planes flying or bilateral agreements with all European countries, but these will obviously take time to conclude.”
Mr Johnson said even if a withdrawal agreement was reached, businesses trading with the EU could be waiting many months for certainty about the long-term arrangements. He said it was now almost certain that detailed talks on the future trading relationship would only reach a conclusion well into the envisaged transition period, due to end in December 2020.
He said options for such an agreement included the UK remaining in the EU’s Single Market by joining the European Economic Area, signing a Canada-style free trade deal with the bloc, or concluding a bespoke arrangement, such as that envisaged in the Prime Minister’s Chequers proposals.
Mr Johnson said: “It’s becoming increasingly clear that there are essentially two regimes that could apply to businesses trading with EU countries after next March, at least in the short-term. One is the disruption of a ‘no deal’ outcome, including barriers to trade, such as tariffs and other obstacles. The other is business-as-usual, following a withdrawal deal, while traders wait, perhaps many months, for confirmation of the agreed future arrangements. Neither situation is ideal, in our view, but we regard the latter as far preferable to the former for affected traders.”