Wednesday, June 12, 2013

Shipping and Freight Forwarding Groups Will Want to Know What Future the EU Referendum Holds

PM Promises Clear Guidelines as First Report of the Foreign Affairs Committee is Published
Shipping News Feature

UK – EUROPE – This week whilst visiting the new deep water port, London Gateway, currently under construction alongside the River Thames, the Prime Minister David Cameron took the opportunity to address the gathering of journalists and assembled dignitaries, container shipping executives and heads of industry on his governments intentions as regards a referendum regarding Britain’s future place within the EU. In view of a government report* published today and the importance of the UK’s position in Europe with regard to freight forwarding and associated fields it behoves us to report on the matter.

Many readers will view the Prime Minister’s comments at the recent event to either quit the EU or continue having completely revised the country’s role with some cynicism, the promised vote will not take place until after the next Parliament is assembled, by which time the political landscape of the country may well have changed considerably. Despite this, it would do well for the logistics community to consider the possible outcomes as the EU struggles to survive in its present form. Firstly it must be unlikely, whatever the outcome, that any government in its right mind would wish to enter the Eurozone in the foreseeable future but what will concern traders and agents is how the free flow of goods maybe affected if the UK exits Europe as we now know it.

In the spring of 2012 a government committee launched an inquiry because it felt that the Prime Minister’s veto of EU Treaty change at the December 2011 European Council might mark a defining moment in the Government’s EU policy and the UK’s place in the EU, and that the matter therefore required the Committee’s scrutiny. The report was published today and looks at some of the implications of the Prime Minister’s January 2013 commitment that a Conservative Government elected in the 2015 General Election would hold an ‘in/out’ referendum on the UK’s continued EU membership by the end of 2017.

This either/or vote was one of the things Mr Cameron was keen to discuss at the recent Essex event and the report concludes that, given the crisis in the Eurozone and rising popular disaffection with the EU, it would be hard for others in the EU to argue that change is not required. One of the key conclusions which may affect shippers is that, if the UK were to leave the EU, the current arrangements for relations regarding trade, which are maintained by Norway or Switzerland with the community, would not be appropriate for the UK. However, it agrees with the Government that, if it is in the UK’s interest to remain in the Single Market, the UK should either remain in the EU, or launch an effort for radical institutional change in Europe to give decision-making rights in the Single Market to all its participating states.

Those of us who are old enough to have voted in the original ‘Common Market’ referendum of 1973 will recall it was not for anything approaching what we now know as the EU. Britain had been desperate to hold a leading role in Europe since the war and it was the rigidity of French leader General de Gaulle which proscribed entry at an earlier stage. Within a few years of eventual entry the mountain of documents required to ship goods to and from the Continent had filtered through various T document systems to become the relatively paper free import/export system we enjoy today.

This status quo, minus the raft of other bureaucracy, it appears is something approaching what the current PM wishes for the future but opting out of the EU means losing position in the European Parliament. Reforming these particular bureaucrats would mean they would have to reduce their places of work, currently three sites in Brussels, Luxembourg and Strasbourg, whence the whole outfit shuffles off to every few months at great expense, which it would appear is not on the radar of the powers that be who work there. This from the latest European Parliament Secretary General’s ‘Recent Activities’ report:

“The present synthesis presented to the President and the Bureau is the result of an unprecedented collective brainstorming exercise involving all DG’s of the European Parliament. Its aim was to identify structural changes to be initiated in order to prepare the European Parliament for a much more complex and challenging environment in the years to come.”

Not many signs of simplification there then and portents for the future of the EU’s accounts are even worse. In November last year the EU’s auditors refused to sign off the collective accounts for the eighteenth year in succession. Any self-respecting company director will realise the implications of this particularly as the error level has been ‘conservatively’ reported at around 4% of the near €150 billion annual budget.

Whilst not taking a view on the in/out decision to be made, the Foreign Affairs Committee charged with preparing this latest report give an unambiguous verdict on Britain’s current position in Europe stating baldly that the Government’s best overall policy is to remain constructive, engaged and thinking in terms of the EU as a whole, citing as reasons the PM’s vagueness as to his terms for renegotiation, the year or more to initiate any reform following the 2015 result and with the Chairman Richard Ottaway MP concluding:

“Reform and renegotiation in the EU takes time and is often complex and difficult. It is important for everyone in the UK to understand that we are involved in a collective process with 26 other countries (27 when Croatia joins on 1 July), whether we are trying to reform a single piece of EU legislation or leave the EU. In many respects, we are nearer the start of a process than the end. We are going to be discussing these issues for several years, and at this stage my Committee in its Report aimed partly to raise questions and inform the debate.”

It will be interesting to see what the wording of the pre-referendum policy actually is with regard to Britain remaining ‘in Europe’. It is probably fair to say that, at least as far as the logistics and shipping sectors are concerned, keeping open trade lanes much as they are now is actually an essential rather than an option. An ‘out’ vote would necessitate coming to an overall agreement with all countries combined via the EU mechanism or trusting that any mechanisms regarding Single State decision making which the UK would have insisted upon to remain, are in place regardless, so as to nullify any veto which could destroy the retention of simplified import/export procedures.

Should the vote be to remain in Europe how can any government guarantee that the terms they have assured the British people will be those under which the UK remains in the club will be agreed to in the offices and chambers of the European Parliament?

*Anyone with the time has the opportunity to read the report in full in html HERE or in .pdf format HERE. (Don’t plan too much for the rest of the day though).

Photo: You may need one of these Ostrich Pillows if you attempt to read the report at one sitting!