With the deadline to agree on a Brexit deal only six months away, several companies and organisations are scrambling to decipher what a No-Deal Brexit may mean for them and the future of the UK.
The Treaty of the European Union was set in motion on 29 March 2017, giving the UK government two years to negotiate the Withdrawal Agreement with the EU, according to the UK Government Department for Exiting the European Union. If an exit deal is not reached by 29 March 2019, the effects could be devastating.
In a statement issued by the Freight Transport Association (FTA) following the publication of the first papers on the action plan of a No-Deal Brexit, FTA’s European Policy Manager Sarah Laouadi said a lack of agreement would be “disastrous for logistics.” She continued, “While preparing for every eventuality, including a no-deal position, is a sound strategy, it should not be the end game which negotiators accept. There are clear problems which could face our supply chain if agreements cannot be reached including customs and border arrangements, the continuity of trade agreements and vehicle permits, as well as the continuation of business access to EU workers. Solutions for these areas are key to the continued success of British business, both at home and abroad, after 29 March 2019.”
The FTA has released an eight-point plan documenting the necessary steps to keep the UK logistics industry moving in the event of a No-Deal Brexit. The eight points include:
- Transition and implementation period
- Borders, other types of checks and trade facilitation
- Road transport market access arrangements
- Driver licenses and qualifications
- Type approval for new vehicles
- Access for other modes of transport
The document, provided by Laouadi, explains the urgent priorities necessary to keep UK/EU trade successful following Brexit. Industries in the UK and EU-27 both need assurances and predictability when it comes to the terms and time limits of the transitional and implementation period, according to the document. There will be a period of adaptation for new requirements which should be in place until the end of 2020.
When it comes to customs, the UK and EU should negotiate a total security and safety waiver and a Mutual Recognition Agreement for the Authorised Economic Operator (AEO) status, which would allow accredited companies to benefit from the reciprocal easements on the other side, the document outlined. The goal is to act as “One Government at the border,” it continued. “The UK Government should provide urgent clarification to the industry about what customs model businesses should plan for and what businesses who are new to customs activity need to do to prepare,” the document explained.
As far as borders and checks, the FTA document implores the UK and the EU to negotiate a mutual recognition agreement recognising the validity of product conformity checks on either side and remove the need for import controls at the customs office of import. Additionally, the document said the UK and EU should negotiate a sanitary and phytosanitary agreement, and there should be no tariffs or quotas for trade with the EU.
A comprehensive land or road transport agreement should be reached by the UK and the EU, according to the FTA document. This agreement should ensure the free passage of commercial vehicles similar to the current terms. It should be based on a mutually recognised operator licence and have no additional costs, administrative burden or restrictions, the document stated.
The UK and the EU will need to reach an agreement on the continued recognition of driver licenses and qualifications, such as driver Certificate of Professional Competence (CPC) and transport manager CPC prior to the Brexit Withdrawal Agreement, according to the FTA document. In addition, an air transport agreement must be a priority for the exit team. The agreement should contain information on aviation security and safety while protecting the connectivity of the UK and the EU. The document also outlined the need to continue the existing conditions of access for cross-border rail freight.
The final point of urgency in the document regards the potential for a skills shortage. Currently, 14% of HGV (Heavy Goods Vehicle) drivers, 25% of warehouse workers, and 19% of forklift drivers in the UK are EU nationals, according to the FTA document. An agreement will need to be reached ensuring workers from the EU will still be allowed to work in the UK, including seasonal workers, the document explained.
“In terms of preparedness, companies should really assess their direct and indirect exposure and have contingency plans ready in case of no deal. When to trigger these plans is a business decision for each company,” Laouadi said.
Some sectors will be more affected by a No-Deal Brexit than others. According to the Global Supply Chain Risk Report, published by Cranfield School of Management and Dun & Bradstreet, the retail sector in the UK is a point of concern. The report also points to the retail industry’s high financial risk of 24.1%. As reported by the British International Freight Association, Dun & Bradstreet’s Head of Product Development – Supply & Compliance, Chris Laws explained, “The data continues to show a variance in supply chain risk across different industry sectors. With an increasingly complex and uncertain environment, businesses that analyse and monitor their supply chain closely can take steps to identify and help mitigate risk to protect their business and plan ahead.”