Friday, October 18, 2019

How Does the New Proposed Brexit Deal Work and What are the Views of the Logistics Industry?

A Quick Look at Boris Johnson's Latest Proposals
Shipping News Feature

UK – The logistics industry will be watching the result of the debate in Parliament tomorrow anxious that a no-deal scenario can be avoided with regard to Britain's seemingly imminent exit from the European Union.

Just as his predecessor did, Prime Minister Boris Johnson will be returning from talks in Brussels hoping to win over enough previously opposed MPs to have the latest Brexit deal accepted. To do so he will have to gain enough support to overcome the opposition of the 11 Democratic Unionist (DUP) representatives upon whom his majority hangs.

The customs arrangements under the proposed deal will mean a convoluted situation under which, despite Northern Ireland remaining officially part of the UK and applying UK tariffs and being joined to future UK trade deals, the EU-UK border for customs purposes will be in the Irish Sea, meaning effectively Northern Irish trade will be treated under EU customs rules.

HMRC will inspect goods as they move between a UK port and Northern Ireland, if that is their final destination, they will be treated as a domestic movement i.e. tariff free. If the UK authorities determine they are ‘at risk’ of entering EU territory, in other words the Republic, then EU tariffs apply.

Spot any flaws yet? The job of deciding that ‘at risk’ status will be decided during the agreed transition period by a Joint Committee, put in place under the Withdrawal Agreement and which will decide on other touchy matters, such as exemption for fishing vessels flagged in Britain but owned in Northern Ireland who will sell their catch into the EU tariff free.

The signs are there that all this aims to see a more intelligent and refined EU-UK trade deal when the dust settles. Britain signed up originally for a Common Market, something we can find nobody disagreeing with. The complications of politics is what has led to this abysmal situation and it seems, with the key component of the new deal being a border free Ireland, most in the logistics game will accept it as a ‘least worst’ option. The UK Chamber of Shipping commented:

“We broadly welcome the agreement reached by the European Union and UK Government. This deal provides the basis for a negotiated settlement with a transition period, something we have long called for.

“We recognise that much still needs to be agreed though as part of any future trade deal. We will continue to work closely with the UK Government, and the EU, to ensure our world class shipping industry can continue to trade freely with our European partners.”

The deal then is essentially that as agreed with Theresa May plus the additional details mentioned above. The vote is crucial because, should MPs reject it, it is likely that we shall see another 3 month extension. If accepted the transitional arrangements will be in place until December 2020. James Hookham, Deputy CEO of the Freight Transport Association (FTA) said:

“FTA has been very consistent in wanting to Keep Britain Trading by making sure that the logistics Industry can deliver whatever political solution for Brexit prevails, with or without a deal. It is clear that there is not time now to prepare for a no-deal Brexit on October 31st: there are many unanswered questions about how our borders should work, and no time to implement the answers even if decisions could be reached on important policy issues. Therefore, at this stage, leaving with a deal and the accompanying transition period for answering important questions and being prepared for the changes, is far preferable to a no deal Brexit on October 31st.

“While there is still a chance of a No Deal Brexit we urge Government to continue to respond to the critical questions and issues raised by FTA in our Logistics Dashboard. With big questions unanswered, and no time to prepare, The Logistics Industry is not ready for a no-deal Brexit on October 31st, and the impact on trade would likely be very significant. We will review the proposed deal carefully, and seek any clarifications and changes required by the Logistics Industry to deliver a successful Brexit.”