Thursday, 20 December 2018

EU offers UK new ‘no-deal Brexit’ road freight option

Will Waters | Thursday, 20 December 2018

Proposals agreed also include regulation to ensure continued provision of air services between the UK and the EU for 12 months

The European Commission (EC) has agreed proposals to allow UK road freight operators to continue to carry goods to and from the EU until the end of 2019 in the event of a ‘no-deal’ Brexit by continuing to recognise UK Community Licences, but with significant caveats.
The EC announced yesterday that it had adopted a proposal for a regulation to allow UK operators to temporarily, for a period of 9 months after the UK’s scheduled withdrawal date from the EU on 29 March, “carry goods into the EU, provided the UK confers equivalent rights to EU road haulage operators and subject to fair competition conditions”. The proposal was part of a package that included 14 measures “in a limited number of areas where a ‘no-deal’ scenario would create major disruption for citizens and businesses in the EU27”, the commission explained. These areas include financial services, air transport, customs, and climate policy.
The emergency measures for air transport include adopting two measures “that will avoid full interruption of air traffic between the EU and the UK in the event of no deal”. It has proposed a regulation to ensure temporarily, for 12 months, the provision of certain air services between the UK and the EU, and a proposal for a regulation to extend temporarily, for 9 months, the validity of certain aviation safety licences.
The EC stressed that these measures “will only ensure basic connectivity and in no means replicate the significant advantages of membership of the Single European Sky. This is subject to the UK conferring equivalent rights to EU air carriers, as well as the UK ensuring conditions of fair competition.
The Commission said it “considers it essential and urgent to adopt these measures to ensure that the necessary contingency measures can enter into application on 30 March 2019 in order to limit the most significant damage caused by a ‘no-deal’ scenario in these areas”. But it stressed that these measures “will not – and cannot – mitigate the overall impact of a ‘no-deal’ scenario, nor do they in any way compensate for the lack of stakeholder preparedness or replicate the full benefits of EU membership or the terms of any transition period, as provided for in the Withdrawal Agreement.
“They are limited to specific areas where it is absolutely necessary to protect the vital interests of the EU and where preparedness measures on their own are not sufficient. As a rule, they will be temporary in nature, limited in scope and adopted unilaterally by the EU.”
It noted that they new measures are in addition to the preparedness measures that have already been taken, and that the Commission “will continue to implement its Contingency Action Plan in the weeks to come and will monitor the need for additional action, as well as continue to support Member States in their preparedness work”.
Commentators have pointed out that the proposals are designed to protect EU member states from the more catastrophic aspects of Brexit if no deal is reached, and are not regarded to be in the UK’s favour. For example, Lloyd’s Loading List understands that the aviation measures only apply to point-to-point air services between the UK and EU member states and will not permit UK-registered airlines to operate flights between EU member states after 29 March in the event of a no-deal Brexit.
The announcements received a tentative welcome from the UK’s Freight Transport Association (FTA) as the first information about the proposals emerged yesterday during the association’s ‘Getting Logistics Ready for Brexit’ conference in London, as providing some very basic rights for UK air freight users and road haulage operators with Community Licences. But Sarah Laouadi, FTA’s European policy manager, said her initial look at the road freight proposal indicated that it made no provision to allow UK operators to perform so-called ‘cabotage’ operations within or between other EU member states and that the EU would retain the right to cancel the arrangements at any time.
Nevertheless, the proposals appeared to provide some basic reassurance for UK-based international road haulage operators and their customers that have feared that a disorderly no-deal Brexit with no transition period would mean that few UK hauliers would be able to operate outside the UK after 29 March. FTA and other freight organisations have been warning the UK and other European governments for many months of the fact that the number of ‘ECMT’ permits available to UK operators will be massively short of the required total.
Until this month, European Conference of Ministers of Transport (ECMT) international road haulage permits looked like being the only available contingency for UK hauliers to mitigate the risk of being barred from operating in Europe after Brexit for journeys between ECMT member countries. ECMT permits allow journeys between member countries, including laden or empty transit journeys and third-country journeys to other ECMT countries that would otherwise be prohibited under certain bilateral agreements.
But the logistics operators and their representatives, and now also the UK’s Department for Transport, expect that the number of applications for ECMT permits will far exceed the number of permits available. British operators will only have access to 984 annual permits for 2019, which will be restricted to the most modern vehicles (EURO VI) – so the Driver Vehicle Standards Agency will allocate permits based on a set of criteria.
The FTA estimates that the expected allocation of permits is likely to cover only 5% of the current vehicle journeys made between the UK and EU.
Applications for 2019’s annual permits opened on 26 November 2018 and close tomorrow (21 December), with the FTA urging operators to apply immediately or risk being unable to travel in the event of a ‘no deal’ outcome.
But delegates at the conference warned that the new proposals from the EC would do nothing to prevent massive disruption at UK ports and other EU ports, and to UK supply chains and logistics operations, in the event of a no-deal Brexit because of the need for customs checks and other border checks of a regulatory nature such as sanitary and phytosanitary checks.
As reported yesterday in Lloyd’s Loading List, the UK is now set to remain in the Common Transit Convention (CTC) after Brexit, simplifying some aspects of cross-border trade for UK businesses exporting their goods to other European countries. Currently a member of the CTC while it is in the EU, the UK has now successfully negotiated membership in its own right after Brexit, the UK government said.
The UK government said membership of the CTC, and its supplementary convention the Convention on the Simplification of Formalities in the Trade of Goods, reduces some of the administrative burdens on traders by removing the need for additional import-export declarations when transiting across multiple customs territories. It also provides cashflow benefits by allowing the movement of goods across a customs territory without the payment of duties until the final destination; countries that are not in the Convention would have to pay each time their goods crossed a border.
Commenting on the development, Pauline Bastidon, head of European policy and Brexit at the FTA, said: “In the event of ‘no deal’, traders making use of the CTC would be able to temporarily suspend the payment of duties and taxes, and to postpone customs clearance formalities until the goods reach their destination, rather than at the point of entry into the customs territory. This will be particularly attractive for UK businesses exporting into the EU.
“While it would not remove the need for border checks of a regulatory nature such as sanitary and phytosanitary checks on agri-food products, the CTC has the potential to reduce checks of a fiscal nature upon entry into the EU. What is now vital for UK business is to ensure that all necessary arrangements for use of the convention are made so that, from 30 March 2019, traders may fully benefit from the facilities offered by the CTC.”

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