Wednesday, April 22, 2020

Government is Missing the Point on Extending the Brexit Transition Period

Freight Interests Believe Political Eyes Are Off the Ball as UK Refuses Delay
Shipping News Feature

UK – EUROPE – As the two sides prepare to reopen the stalled negotiations on the small matter of the Brexit transition period, and in a situation in which a year ago could hardly have been imagined, there are a considerable number of stakeholders within logistics who will look sideways at the UK government's avowed intent not to request an extension.

Not least amongst these is the British International Freight Association (BIFA), whose director general, Robert Keen, argues that the 11 month transition period wasn’t just designed to facilitate negotiations, it was also there to give businesses time to prepare for the future relationship.

Moreover he points out that, whether or not a free-trade agreement is concluded this year, there will still be major changes to the UK’s trading relationship at the start of 2021, such as new customs documentation and procedures, and such things take time. He commented:

”In light of the huge issues involved with a sharp change in trading conditions at the start of 2021, particularly if that were to coincide with another Covid-19 outbreak, we think an extension looks increasingly likely. Our understanding is that there has been very little progress to date on key negotiating points. There has been little meaningful consultation with UK trade regarding the policies and procedures required in order to ensure that trade with the EU can continue relatively uninterrupted post December 31st 2020.

“Trade deals are typically multi-year exercises, but in this case, the UK and EU realistically have until October to agree on terms, allowing time for ratification. And while formal talks are continuing, many of the civil service resources previously assigned to support negotiations have been reallocated to deal with the coronavirus emergency response.

“Even before the pandemic, there were concerns among BIFA members, which are responsible for managing the movement of a large proportion of the UK’s visible international trade, that the 11-month transition wouldn’t leave enough time to prepare for a potential no deal. Now, having had their businesses knocked sideways by the virus, many of our members have furloughed staff whilst they work out how they can keep their businesses afloat.

“It is unlikely that their companies and the clients they serve will have the capacity to increase readiness for a sharp change in trading conditions in 2021. In light of those things and with very little information from government on when restrictions on key sectors of the economy are likely to be lifted, and with the as yet unknown economic damage done to the sector and wider economy, BIFA members are in no position to respond to a second massive shock if there is significant change in the terms of trade with the EU at the end of the year, because the government has stuck to its guns over the transition period.

“We believe that refusing to even consider extending the transition period is very risky and together with a growing chorus of Brexit commentators, think an extension to the transition period remains likely, and it is really only a question of ‘when'. The crisis caused by Covid-19 is delivering much greater understanding of the key role of freight forwarders to the authorities and the wider audience that rely on the commodities being delivered through international supply chains. Now in these very difficult times, it is imperative that that the government acts responsibly and listens to the freight transport sector.”

Photo: Sometimes it is necessary to explain precise details to those who simply cannot understand the concept. (“No Dougal, these are small, but those are very far away”).