Freight and Logistics Associations State Essentials for Government Position in Brexit Negotiations

UK – EUROPE – As Brexit negotiations begin slowly to take shape with the various factions jostling for an advantage the freight and logistics lobbyists are setting their individual stalls out but with a generally collective message to the British government - listen to us as the only ones who really understand the realities of intra community trade. The four leading associations in the country have all been stating their individual and collective cases in the hope that those charged with seeing through a deal realise just how much rides on the outcome, particularly in terms of costs and jobs.

Many in the industry who can recall the original negotiations in the 1970’s will remember the slow awakening to a realisation that the outmoded, outdated procedures we were saddled with then in terms of customs documentation, examinations etc. were able to actually be abandoned in favour of truly free trade. Admittedly the idea was often quite slow to dawn on some sections of the freight community, but when it did, it was embraced with enthusiasm and the produced a possible misconception that things could never revert to the bad old days of carnets and long border queues.

Way back in April the British International Freight Association (BIFA) was expressing concerns about the government’s attitude to customs procedures post Brexit and recently BIFA has published two trade papers, the first dealing with a trade overview and which poses the question amongst many other things asking what will be the most important to negotiations – trade and business or politics, spotlighting issues such as immigration and sovereignty, and the second the modal impacts of leaving the EU and which drills down into questions concerning transport by air, road and sea after the split

The BIFA papers do not just pose the questions but proposes possible answers and such is also the case with a Positioning Paper published this week by the United Kingdom Warehousing Association (UKWA) which covers another vital sector of the supply chain. The document highlights ways in which the supply chain sector can work with Her Majesty’s Revenue & Customs (HMRC) to ensure that post-Brexit excise legislation does not place an unfair burden on legitimate logistics companies involved in the handling and movement of goods such as alcohol and tobacco, and that businesses operating in this important part of the UK economy remain competitive.

The UKWA says the sector its 700 members represent is worth £95 billion to the UK economy with 1 in 12 people employed in the logistics industry with excise duties making a significant contribution to UK government revenues. According to the Institute of Fiscal Studies, and the Chancellors’ Autumn Statement, in 2014/15 the duties levied on fuel, tobacco and alcohol raised £47 billion, comprising 7.2% of the government’s total receipts. UKWA’s chief executive officer, Peter Ward, commented:

“We will present our Positioning Paper to HMRC and the policy makers to help the government understand how the excise supply chain industry works and the impacts that any post-Brexit legislation will have on the sector. Alcohol smuggling and fraud is estimated to cost the Treasury in the region of £2 billion per year in lost revenue and UKWA will continue to co-operate with HMRC to reduce the opportunities for excise fraud in the UK market and close the revenue gap.

“The UKWA firmly believes it is in the national interest that we should co-operate openly and constructively with the policy makers and regulators in this matter to ensure that legitimate logistics businesses are not burdened by impractical legislation. This is another example of where Brexit provides an opportunity to review existing practices and legislation and ensure that post-Brexit the UK retains this critically important commercial activity, safeguarding jobs and a significant contribution to the economy ”

For its part the Road Haulage Association (RHA) last month called upon both the UK Government and EU authorities to focus on doing all they can during Brexit negotiations to ensure that fluidity for lorry movements across UK/EU borders is maintained. The RHA is sanguine about the need for some customs controls post Brexit, no matter how well negotiation proceed. The RHA sees no way Britain can remain in the Customs Union and therefore customs formalities will need to be reintroduced.

The RHA made note of EU Chief Negotiator, Michel Barnier that ‘frictionless trade’ will be impossible following Brexit, a view many in the freight trade will say is coming from an entrenched position which need not be the reality. Many stakeholders on either side will wonder, with the balance of trade currently slanted in favour of the European member countries, whether Mr Barnier is the right man to be arguing for or against them.

The RHA wants assurances for its members that road haulage operators will get a satisfactory outcome to avoid the knock on effects of stringent customs policy which will lead to ‘extra warehouse space rental and increased transport costs’. RHA chief executive Richard Burnett commented:

“Any reduction in service levels through supply chains will be catastrophic and punishing for business and trade. Businesses need to know that they can get the goods they need, when they need them. Any uncertainty over transit times, through ports or over the Irish/UK land border and must be avoided.”

The Freight Transport Association (FTA), the last of our four big lobby groups have this week taken the case for one part of the British Isles. Following publication of the results of the National Assembly for Wales’ somewhat gloomy inquiry into the implication of Brexit for Welsh Ports on August 4, the FTA has called for the Assembly to keep the pressure on the national government to ensure that trading relationships and customs arrangements at Welsh ports are at the heart of the ongoing Brexit negotiations.

The question of border controls in the island of Ireland are one of the unpredictable elements in the Brexit situation and both the RHA and FTA have commented on this. Anyone who knows the Irish will realise that they will find a way to do business no matter how things turn out and, having given evidence in front of the Inquiry earlier this year, Ian Gallagher, FTA’s Head of Policy for Wales, said he was pleased that the committee had noted the FTA’s concerns over the need for the maintenance of so-called frictionless trading arrangements between the mainland and both Northern and the Republic of Ireland.

However, as Mr Gallagher points out, it is imperative that the Welsh administration takes urgent steps to ensure that business is not unfairly penalised by a lack of adequate planning to ensure that trade continues to flow through Wales to and from the mainland, Northern Ireland and the Republic of Ireland. He observed:

“The committee’s findings are a great starting point, but they are only that and there is much work to be done. Approximately 55 million tonnes of trade travelled through Welsh ports in 2015 and any delays caused by inadequate customs provision could be catastrophic for the businesses on both side of the Irish Sea which rely on this transport link. Transport and logistics are the lifeblood of the Welsh economy, and its relationships with Ireland and the rest of the British mainland. It is vital that pressure is maintained on central government to ensure that the needs of the logistics sector are taken into account during the ongoing Brexit negotiations, to protect Welsh trading relationships and ensure safe and timely passage of goods to their end user.

“To ensure that Wales and the rest of the UK can continue to trade effectively with Northern Ireland, the Republic of Ireland and the European Union, it is vital that delays in port areas are kept to a minimum following Brexit. The needs of the freight sector must be paramount if trade is to continue without time delays or increased costs. All parties need to consider the consequences of the potential reintroduction of border checks on goods, not just for Wales but the UK and the rest of Europe.”

For its part the RHA point out that at the end of March 2019, when the UK leaves the European Union, the border between Northern Ireland and the Republic of Ireland will be the only land border between Britain and the European Union and this has led RHA Director of Policy, Rod McKenzie, to comment:

“Will this mean passport checks? Currently, this seems unlikely, the EU has already indicated that in the final deal it would like to see a codified version of the 1920s common travel agreement, which means passport-free travel for Irish and British citizens between the two islands. Since the Good Friday agreement ended the Troubles almost 20 years ago, the border has become invisible. However, as the UK has said it will leave the EU internal market, it is inevitable that there will be customs controls imposed.

“Automating customs controls so that goods can move without delay at the land border is essential, achieving this will be difficult. The RHA is urging the Governments to reach an agreement for customs formalities to be done away from the border itself. This will be possible, but will need a significant investment in time and money for companies moving goods over the border. We need an implementation period to give time to customs and businesses the time to put in place the systems to manage any new system.

“Any agreement must ensure that Ireland does not become a back door for unauthorised migrants, desperate to reach the UK. The journey between Northern Ireland and the Republic is only a matter of metres and represents no deterrent at all. Controlling the movement of goods will be a challenge for everyone crossing the border.”

Indeed this intense desire on behalf of the Irish to maintain a strife free relationship with the UK and thus onward to the rest of the EU (and of course reciprocal trade in the opposite direction) is a useful card in the hand of the UK negotiating team if only they possess the diplomatic wiles to use it.

When one analyses the situation from a neutral point of view there is no profit whatsoever in drawing back from the original precept which the British people voted for four decades ago, a Common Market, purely a trade deal which was welcomed by all and which has proved a successful link between trading partners when unencumbered by politics and based around agreements common to all.