BREXIT UPDATE

By: Peter Rodwell, UK Customs and Compliance Manager

June 27, 2019

New UK leadership

Over the last two weeks the conservative members of parliament have been voting to elect a new leader, who will also be the new Prime Minister of the United Kingdom. Under normal circumstances, leadership battles are fought based on party policy such as economy and health care, however, in these extraordinary times it seems the only real issue of interest is Brexit. Can the new leader deliver a clean separation from the European Union?

The final phase of the leadership selection will be in the hands of the 160 thousand that form the conservative party membership. Each member has one vote which follows the candidate campaign and meetings where they outline the case for leadership, referred to as “Hustings”. The winner and new leader will be announced on July 24, which only gives the new PM a little over three months to come up with a plan for departure from the European Union.

How the winner will shape Brexit

Theresa May’s team negotiated a deal with the European Union, even though this deal was accepted by the EU and the only available deal, parliament still rejected it. Other options were tabled, which included a new referendum, leaving without a deal and agreeing an off the shelf agreement, which were all defeated. The numbers and dynamics within parliament have not changed, but below is a basic overview of the two remaining candidates;

Boris Johnson

Has promised to deliver Brexit by October 31, he claims that there is a 1000/1 chance of leaving without a deal, how a smooth exit is going to be achieved is unclear, remember the EU have no appetite to re-open negotiations and parliamentary numbers are stacked against all tabled solutions. He has claimed that free trade will continue, even in the case of leaving without a deal, by falling back on article 24 of GATT. A domestic argument with Johnson’s girlfriend was made public, which may have had an effect on the campaign, but he is still comfortably ahead in the opinion polls.

 

Jeremy Hunt

Also claiming to deliver Brexit by the end of October, however, he would consider a short extension if a deal could be done but needed more time to organize the mechanics of departure. He claims to be the “trust worthy” candidate, without saying Boris Johnson was not a trustworthy character. Some credibility has been lost over a comment that referred to the UK as “Little Britain”

 

Questions

If you are concerned about how Brexit will affect your business, we can address any questions you may have, get in touch! 

 

 

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Update 16th June 

Theresa May’s last week

Pushing through a Brexit deal through Parliament was never going to be easy, however, this was the challenge accepted by Theresa May when she took possession of the keys to 10 Downing Street in July 2016. Almost three years later, after failing in her attempt to deliver an acceptable deal to Parliament, she will step aside on June 7th and become the caretaker Prime Minister until the successor takes over at the end of July 2019.

There are now thirteen confirmed contenders, only on of which is a pro-remain MP backing a new referendum. The winner of the leadership contest will have a direct influence on what Brexit will look like and when it may happen. As Donald Trump, President of the USA, prepared to meet the Queen, he announced his support for Boris Johnson and mentioned there would be a 'very big trading deal awaiting the UK' once it leaves the EU. At a time when the US Trade War is gathering pace and the UK is looking extremely vulnerable, it raises a number of concerns with a number of UK law makers. 

What does this mean? 

Until the new leader of the Conservative Party is elected, there will be no further parliamentary work on Brexit. However, once a new leader and Prime Minister emerges, we could go back to the drawing board and see an attempt to re-open negotiations. The European Union are adamant that the deal will not be re-written, therefore as mentioned on our Trade School webinar on May 31st (available here) the chances of leaving without a deal has never been greater. Below are a number of points that make an Exit with No Deal look extremely plausible: 

  1. UK Parliament in paralysis
  2. Not one of the Brexit options has adequate support to be passed in law
  3. Another Article 50 extension requires unanimous support by hte 27 remaining states. 
  4. A new Prime Minister may not fight a No Deal, but instead support that outcome, more below.
  5. Any New Referendum would need to passed by parliament and written in law.
  6. On October 31, 2019, without any agreement, the UK leaves with No Deal
  7. The EU are growing tired of the situation

The contenders for Prime Minister and what they stand for: 

Boris Johnson - 38% - Renegotiate parts of the deal, but would also allow No Deal

Michael Gove - 21% - could extend Article 50 whilst seeking a Deal

Andrea Leadsom - 14% - Leave preferably with a deal but more important to leave in October

Dominic Raab - 11% - wants to leave the EU on October 31, with or without a Deal 

Jeremy Hunt - 7% - looking to renegotiate but would not be adverse to No Deal

Rory Stewart - 6% - will press to leave the EU with a Deal

Sajid Javid - 5% - promote unity, not adverse to an extension but committed to leaving the EU

James Cleverly - 3% - Planning on leaving with a deal, may extend Article 50 but would aslo accept No Deal

Matt Hancock - 2% - Pursue a compromise deal, will avoid a No Deal, where possible

Esther McVey - 2% - Leave without a Deal

Kit Malthouse - 1% - Leave with a Deal and another short extension

Mark Harper - 1% - Fresh plan for Brexit, previously opposed to No Deal

Sam Gyimah - 1% - Staunch remainer, will push for new referendum

Questions: 

A question was asked by Pete Mento, VP Global Trade and Managed Service during our recent Brexit webinar on May 31st (Recording available here) 

Q. How much will the United Kingdom gain in Duties post No Deal Brexit? 

       A. Direct analysis is not available at this time, however, below are some figures from the Office for Budget Responsibility:

Currently the UK government collects GBP 3.5 billion in duties, of which 80% is handed over to the European Union, 20% is retained to cover collection and administration costs. It would be difficult to determine what trade deals the UK will have in place or how tariffs will be adjusted to prevent shortages at the point the UK leaves the EU, however, based on EU trade being 53% of the UK's total import trade, my estimates are as follows: 

Currently the UK retains GBP 0.7 Billion

Post Brexit, my estimate would be GBP 7.5 billion

If you are concerned about how Brexit will affect your business, Crane Worldwide Logistics and our team of experts can address any questions you may have: 

Get in touch

 


 

 

UPDATE 27th May 2019 

A divided country?

 

If any of us thought the European Election would offer some clarity on where the British Public stood on the Brexit question, we have just been proved wrong. 

Leading up to the European Parliamentary elections, which commenced on May 23, Theresa May prepared to put the not so popular Withdrawal Agreement forward for the fourth time to parliament, even adding in her speech to parliament that a parliamentary vote for a second referendum would be her concession should the bill be approved. However, the idea of re-presenting the deal to the House of Commons was completely quashed. This was the Prime Minister's final chance and lefter with very little option other than to proverbially fall on her sword, which was confirmed in her resignation speech outside of No.10 DOwning Street on Friday May 24.

 

The European elections took place across Europe between May 23 and May 27. As the results rolled in on Monday, it brought a mixed bag of news for the EU and the United Kingdom. 

 

In general terms, Pro-European Union parties held ground, which is a relief to all key stakeholders in the European Union. On the reverse side, it is evident that Anti-EU political parties have have gained ground, achieving a greater number of seats since the last elections in 2014. In the UK, the Brexit Party achieved the most number of seats, at the expense of the governing Conservation Party and the opposition Labour Party, also losing seats to the Pro-EU Liberal Democrats. 

 

The results conclude that overall the British Public are still split down the middle over the issue and that support is drifting away from the traditional main stream parties: The Conservatives and Labour. As we have alluded to previously, we could be witnessing a major change in the political landscape in the United Kingdom.

 

What does this mean? 

Following an election which delivered the worst result for the conservative party since 1832, they are desperate for a leader that can turn the fortunes of the party around. The European question has cost the careers of the last three Conservative Prime Ministers and now Theresa May. It will be a tough task to unite the party given the gaping internal split on the matter of Brexit

 

However, we could see further Pro-Brexit pressure, especially given the Brexit Party's strong showing under Nigel Farage. It was the threat presented by Farage under UKIP that pressed former Prime Minister, David Cameron, to call the referendum on Brexit in the first place. 

Should this be the case, the chance of a No Deal is extremely likely. 

 

Parliament has formerly rejected the possibility of a No Deal, but that was also the case for all other possibilities and could be amended. 

No Deal looks to be looming... Given that the UK does not have adequate time to call a second referendum and for it to take place prior to the end of October (The date when the UK is now due to leave the EU). Many MPs within the House of Commons will be making a concerted effort to block a No Deal, however this options is still looking likely if there is no other break through. 

 

What about No Deal preparations? 

If your business depends on movements of trade between the UK and the EU, you should continue to prepare or start preparing if you have been sitting on the fence. Although we can not definitively say which direction Brexit will take, we can say that the risk of a No Deal is increasingly significant.

 

JOIN US - If you are concerned about how Brexit will affect your business, we can address any question you may have on our LIVE webinar on Friday, May 31 at 10am EST. 

 

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UPDATE 21st May

The elections that the United Kingdom didn't expect

On May 23, the UK public will head to the polling stations to elect British members of the European Parliament. This is an event that was not planned nor anticipated. In the meantime, Theresa May prepares to present universally unpopular Withdrawal Agreement to parliament for the fourth time. In the event of it being agreed, the members elected would not have the chance to take their seats in the European Parliament. 

On previous occasions I have mentioned that Brexit has changed the political landscape in the UK, both main political parties are split on how the current deadlock should be broken and supporter of both main parties are split between the two possibilities of Leave and Remain. The British public are disgruntled and are about to take action against those that they consider to be instrumental in creating the deadlock. The governing Conservative party are in the driving seat and are seen as the main architects to the current position, whereas the official opposition party, Labour, have tried to sit on the fence and not be seen as either Remain party or a leave party. As a result, both parties are expected to perform badly in these European Elections. In the meantime, the political parties that have firmly set their manifestos to Leave or Remain, are gathering support and look likely to benefit.

In the UK, the European elections are conducted under the D'Hondt Proportional Representation voting system, which can benefit smaller political parties by giving them the opportunity to have some representation in the European Union parliament. 

Looking across the English Channel, we could see some shocking election results over Europe, which could see the rise of the populist right and left wing parties at the cost of the establishment parties. 

 

Attempts to break the Brexit deadlock

Talks between the two main political parties in the UK broke up last week without any deal, this followed Theresa May's confirmation that she would be stepping down as Prime Minister. The timing of her exit is expected to be confirmed in June. A leadership contest will then follow and would dictate how Brexit is driven forward. 

The European Union in the meantime have stated that they will not be re-opening negotiations for any new leader. 

 

Import clearance of European goods into UK post Brexit

As and when the UK leaves Europe, it is likely that customs clearances for goods entering the UK from Europe will be required. In order prevent queuing and potential backlogs of goods awaiting customs clearance, customs have put in place some measures that would mitigate delays which applies to Ro-Ro cargo arriving on short sea routes. 

1. The customs clearance declaration must be raised in advance of the goods being checked in for the ferry on the EU side

2. Goods under Common Transit can proceed through to approved premises without the need to stop

3. Transitional simplified procedure, which is available to VAT registered importers; enabling an importer to submit a simplified entry at the point of departure from the European Union followed by a supplementary declaration by the forth working day in the month following the arrival of the goods. 

See here for more detail 


 

Have any questions pertaining to Brexit? Get in touch

 


 

 

 

UPDATE May 13th

Nothing is agreed until everything is agreed

On March 29, 2017, the UK gave notice to the European Commission of their intended departure from the European Union being the 29th March 2019, at that point everything appeared to be straight forward. Over the last two years we have witnessed many twists and turns, the most dramatic being in the two months. The public in the UK have already demonstrated their frustration at the Local Council elections which took place May 2, 2019, with losses for both main parties, it is apparent that there is much resentment and anger across the country reflected in the result and voter apathy with only 1 in 3 registered voters turning out. The UK is now gearing up to select MEP’s for the European Parliament on May 23, this could be another tough day for the main two parties.

With the decision to extend the departure date until October 31, the UK were required to elect new Members of the European Parliament, otherwise it would have been un-ceremonially forced to leave on June 1 without a deal. The October extension can be cut short should the UK government be able to bring a firm proposal to the table which is also acceptable to the EU, which is looking unlikely at the moment.

Attempts to break the deadlock

We have witnessed the UK parliament rip itself apart as various options have been tabled and rejected. The hard truth is that there is no parliamentary support for anything whatsoever, what next we ask?

  • Cross party talks are on-going in the hope of reaching a common agreement, possibly a Customs Union?
  • A People’s vote? This is highly contentious and has previously been rejected, but could be the only solution
  • A General Election, the political landscape has been altered due to Brexit, a new government will bring in a new approach maybe?
  • The EU makes the decision for us, which could be ejecting the UK from the EU without a deal or an indefinite extension or cancellation of Article 50 until a clear plan has been formulated and agreed.

What does this mean to business?

With recent developments, the UK has managed to pull back from the cliff edge for now. The UK will continue to trade under EU rules which means business as usual at present, free movement of goods, people and services across the EU, and EU agreed trade agreements remain in place. The problem still remains, that uncertainty reigns, traders have either spend millions on stock piling and supply chain preparations or have not prepared at all. Logistic providers and customs brokers are unable to advise their clients with any certainty what the outcome will be. The trader can spend thousands on preparation and not need it, or not prepare and have major difficulties on day one of no deal.

The question is where does the UK go from here? Although ruled out by parliament as part of the indicative vote process, many commentators believe that another referendum is looking plausible. The opposition party would like to see the UK enter a Customs Union with some ability for the UK to have a voice on future trade deal talks. What happens in the next 6 months is virtually impossible to predict. Here are some interesting betting odds set out in order of favourite;

Second Referendum – 7/4, Article 50 revoked – 2/1, No Deal – 11/2

Bookies are a reasonable acid test of general opinion, as an example, soon after the referendum, the bookies were offering odds of 5/1 that the UK would not leave the UK, these odds have since diminished, a 20 pound bet would have returned 120 pounds, whereas now it is only 60 pounds.

It should be pointed out that no deal is still very much alive and those of you that are trading regularly between the EU and UK should not rest on your laurels!

Trade agreements so far

The UK currently enjoy around 40 trade agreements being members of the European Union, so far 9 continuity deals are in place:-

 

 

Questions

If you are concerned about how Brexit will affect your business, we can address any questions you may have.

 

UPDATE: April 9th

Another extension?

In 1982 The Clash released their song “Should I Stay or Should I Go”, which starts off “Darling you got to let me know….” I am pretty sure this is something that is being said to Theresa May right now, but not necessarily using those intimate words. Here we are again, one week past departure date and still no further forward.

The events of this week

On Monday, a second round of options were put forward to MPs for further indicative votes to be cast. The options were taken from the most popular choices from last week’s round;

  • The Customs Union - A permanent customs union with the EU
  • Common Market 2.0 - Joining EFTA and remaining in the EEA
  • Confirmatory Public Vote - Another peoples referendum
  • Parliamentary Supremacy – A series of measures to prevent the UK leaving without a deal, which would also include a vote to scrap Brexit altogether

Following a further passionate debate, Parliament voted down all four options.

On Tuesday, Theresa May reached across the House to Jeremy Corbyn to set up a meeting in order to reach a compromise position on a future deal that will be agreed by a majority in the House of Commons. This was met with anger from the Brexitier element of the Conservative party and resulted in further resignations from the Cabinet.

Wednesday a bill to prevent a no deal departure and forcing Theresa May to seek an extension to Article 50, this was approved by the Parliament by 313 votes to 312, which also hands over power to Parliament to agree the length of the delay. Talks between the May and Corbyn on going but not conclusive.

Friday, Theresa May requests a further delay to the departure date, looking for an extension until June 30.

The EU’s Donald Tusk is open to a flexible delay to Brexit, which means that the departure date would be pushed back by 12 months, but would allow an earlier departure in the event of the British having their ducks in a row earlier. The EU have repeatedly rejected requests for June 30 extension, and therefore are unlikely to accept the new request this time. EU leaders do not wish to review new delay requests every few weeks.

What can we expect during next week?

A decision on what delay (if any) will be given to the UK, although the EU are open to a flexible approach, the UK still do not have anything concrete to offer. The UK could still depart without a deal.

The European Council meet on the April 10 (Special European Council Art.50) to discuss the developments on Brexit. On the table is a potential agreement to a Flexible extension of 12 months, therefore Theresa May and Jeremy Corbyn would need to put a vote to Parliament before the meeting. The EU’s proposal requires unanimous agreement by EU 27 leaders before it can go ahead.

Questions

In the event of no deal, many business' in the UK and the EU will be affected. If you are concerned about how Brexit will affect your business, we can address any questions you may have. 

 

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UPDATE 1st April 

UK Parliament in paralysis

Minority governments are rarely stable, they are often unable to pass legislation through due to insufficient parliamentary members. In the case of the UK government, support had to be sought from another political party in order that their policies could be pushed through parliament. With Brexit, the government are unable to pass through the Withdrawal Agreement since the DUP and several members of ruling Conservative party are rufusing to support the deal, as it struggles to pass through the House of Commons.

We have witnessed several proposals being put forward and all of them being voted down, including the Withdrawal Agreement, which now suffered three defeats, this coupled with private members bills designed to change the course of Brexit. Here is a brief summery;

March 25 – MPs vote to take control of Parliamentary business in order to table alternative options

March 27 - Eight alternative options put forward to parliament, all of which are given indicative votes (in order of popularity)

  • Customs Union (Soft Brexit, keeping the UK in a permanent Customs Union) – defeated by 8
  • Confirmatory referendum – defeated by 27
  • Labours Brexit Plan (a negotiated Customs Union and access to Single Market) – defeated by 70
  • Common Market 2.0 (in Single Market and Customs Union) – defeated by 95
  • Revoking Article 50 to avoid no deal (Cancellation of Brexit to consider future steps) – defeated by 109
  • No-deal exit on April 12 (Hard Brexit) – defeated by 240
  • Malthouse Plan B (out of Customs Union and Single Market, relies on future co-operation and negotiate future FTA) – defeated by 283
  • EFTA and EEA membership (In Single Market nut outside of Customs Union, allowing other trade deals)  - defeated by 312

 

March 29 – The day the UK were supposed to exit, prior to the extension being agreed. Theresa May puts forward the Withdrawal Agreement, but removes the statement on the Future Relationship (Blind Brexit). If the deal is accepted by parliament, the UK would have until May 22 before departure. The deal was thrown out by Parliament yet again.

The UK is faced with a possible No Deal exit on April 12, unless a further extension can be agreed.

What can we expect during next week?

On Monday April 1, 2019, a second round of indicative votes will be decided upon, in the hope that the deadlock will be broken, there will be four options, most likely being the most popular of the eight options rejected last week. John Bercow, The Speaker of the House to announce which options will be tabled.

Theresa May will consider whether to put forward the Withdrawal Agreement for a forth vote, which could be voted upon on Wednesday.

This week, the government must decide whether to seek a long extension or depart without a deal on April 12.

Another interesting week ahead!


Questions

If you are concerned about how Brexit will affect your business, we can address any questions you may have.

Get in touch here

 


 

UPDATE 25th March

Last chance saloon

When Theresa May took on the role of Prime Minister, following the resignation of David Cameron after the result of the referendum, she did not expect the turmoil and political upheaval that followed. Many believed that it would be difficult, but certainly nobody expected such division. As I have mentioned before during the Trade School webinars, I predicted that the UK would end up not leaving, I even laid money on it!

It has been yet another week of twists and turns in Parliament, as Theresa May prepared to announce that a 3rd Vote would take place, in order to push the Withdrawal Agreement through parliament and thereby ensuring that the UK had something in place before March 29. On March 18, the Speaker of the House John Bercow, created further confusion by ruling that the bill could not be put forward without significant re-wording. This ruling was not expected and potentially pushed the UK towards a constitutional crisis given that departure was set to occur in 11 days time.

A beleaguered Theresa May returned to the EU to request a delay to Article 50, in order to facilitate further time to push her deal through parliament. Following an extended meeting of the leaders from the remaining 27 states, an extension was agreed with conditions;

  • A delay until May 22, provided that Parliament pass the Withdrawal Agreement
  • If Parliament do not pass the Deal, a shorter delay until April 12 will be allowed, in order that the UK can indicate a way forward.

Due to the deep divisions within parliament, as various private member bills that have attempted to divert Brexit in a certain direction, have failed or passed, the choices available have been exponentially reduced. On paper, the only choices that appear to be available to MPs at this point appear to be;

  • Accept the Deal
  • Do not accept the Deal and exit on April 12

The EU offered another alternative in the event of the Deal not going through, which is for the UK to accept a long extension, however, the UK would be required to take part in the European Parliament elections which is due to take place on May 23, however, this option would not be popular in parliament or with a large section of the British public.

What can we expect during next week?

We can expect further arguing, division and finger pointing during parliamentary debates next week. We are expecting the following events to take place during the week;

  • An emergency debate on Article 50, next steps
  • Possible vote on The Deal, either March 26 or March 27
  • In the event of a further rejection, an Emergency EU Summit could take place March 28
  • Friday March 29 – CWW Trade School featuring Brexit. Speakers; Pete Mento and Guest Speaker Peter Rodwell
  • A definitive decision on where the UK is going?

Looking at preparations

 

UPDATE 19th March

10 days remaining, can the deal go through?

Theresa May returned to parliament with legal assurances from the EU in relation to the backstop to convince parliament to support her deal. However, at 7pm on March 12, MPs voted again on whether the deal should be accepted or not. Despite turning several conservative MPs to support the government, the vote was still lost by 149 votes.

Following the defeat, the prime minister stated "I continue to believe that by far the best outcome is that the UK leaves the European Union in an orderly fashion with a deal”  "And that the deal we have negotiated is the best and indeed only deal available”. The EU’s sobering statement of “Chances of a No Deal have significantly increased”, should leave many under no illusion as to what the UK could be facing in just under two weeks’ time.

How events unfolded;

  • 7.25pm GMT March 12, the speaker of the House of Commons announced the result of the second meaningful vote, which had been rejected by 149 votes.
  • March 13, parliament rejected No Deal, however, given that parliament do not have the legal power to rule out no deal, this remains the default position.
  • March 14, MPs were asked whether they support an extension to Article 50, which seeks to postpone the UKs departure from the block, this was supported by parliament. In order for an extension to be facilitated, the EU27 must agree unanimously.
  • A third meaningful vote has been fixed to take place on March 20. Given how close the UK is to a disorderly exit, support is expected to grow but still short of the numbers required for the bill to pass.

What can we expect during this week?

On March 20, Theresa May will again try and push the deal through parliament, and she will be hoping that MPs will accept that this deal is as good as it gets and given little time remaining, will support the bill. It is widely expected that the deal will be rejected by parliament again, which will leave the UK in a perilous position and will be need to look to the EU to decide its fate, which could;

  • Reject the idea of extending Article 50 given that the UK parliament are unable to agree, resulting in the UK exiting the EU next week.
  • Offer an extension, based on the UK offering a tangible solution to the deal lock, such as a General Election or accept a customs union. The length of which could be over a year and the UK would be required to take part in the EU parliamentary elections on May 23

Looking at preparations

Each week, we will try and place government advice and publications which we hope will assist;

Crane Worldwide Logistics brings you the most up to date information via our webinar series of Trade School, should you require further information, please get in touch.

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UPDATE 11th March

 

Can there be an orderly exit in less than 3 weeks?

 

Geoffrey Cox the UK’s Attorney General was tasked with returning to Brussels to request the re-wording of the Irish backstop text within the Withdrawal Agreement. After some frank exchanges, Cox returned to London after failing to achieve a breakthrough. March 29 is fast approaching and it is now unlikely that the bill will pass parliament on March 12, which is the day the new ‘meaningful vote’ takes place. 

 

Current events and position;

  • Cox claimed that the Irish backstop breaches protocol 1, article 3 of the Human Rights Convention
  • Theresa May is due to speak in Parliament in order to head off a second defeat
  • The EU offers reassurances on backstop, to the affect that they will make every effort to reach an alternative solution before December 2020.
  • The House of Lords passed an amendment calling on the government to negotiate a customs union with the EU. The amendment does not pass into law, but it does force Parliament to vote on it. 
  • Following any defeat, Parliament will have the chance to vote on a no deal exit or extend article 50 beyond March 29.
  • Calais customs work to rule, claiming insufficient manpower to deal with customs controls following Brexit. The action created long queues into the port, with delays of several hours.

Given another defeat, what will happen?

As pointed out all along, the default position is No Deal. In the event of the Withdrawal Agreement being defeated, Parliament may choose to request an extension of Article 50 to facilitate more time. Although this would be an agreeable decision, as far as the UK are concerned, it still relies on agreement from Brussels. Given that negotiations have been in progress for the last two years, without a final agreement being set in stone, there is a risk that the EU will not agree unless a tangible reason for the extension is put forward. In effect, Parliamentary stalemate is unlikely to be a good enough reason. Once the WA has been voted down, the UK will be required to have something in their back pocket to persuade the EU that an extension to Article 50 will facilitate a firm decision. Another referendum or general election maybe?

Looking at preparations

Each week, we will try and place government advice and publications which we hope will assist;

 

UPDATE 5th March

With more twists and turns than a Roller Coaster, the Brexit position appears to be no further forward. Conversations on the street invariably turn to this subject, and opinion is still split. The EU are reluctant to engage in any further protracted conversations but instead keen to divert their concentration to other pressing matters. 

 

What happened last week? 

  • Theresa May decides to postpone the meaningful vote that was scheduled to take place last Wednesday
  • A new vote is now scheduled for the 12th March, where an amended deal is hoped to be tabled
  • MPs debated Brexit on February 27th and voted as follows;
    • MPs voted to reject the amendment in the name of the Leader of the Opposition, Jeremy Corbyn, which laid out support for Labour's alternative Brexit plan
    • MPs voted against the amendment in the name of the Westminster Leader of the SNP, Ian Blackford, which stated that the House rejected leaving the EU without a deal under any circumstance and regardless of exit date.
    • MPs voted in favour of Yvette Cooper's amendment which further noted the Prime Ministers statement that she will return to the Commons in March for a series of votes on her deal, the prospect of leaving without a deal and extending Article 50.
    • The House of Commons also voted to approve an amendment in the name of Alberto Costa, which guaranteed the rights of EU citizens in the UK, regardless of the outcome of the UK's withdrawal from the EU which was carried without division.
  • The Labour Party, who are in opposition, pledge to support a second referendum
  • The Irish Government issue “No Deal” to business and individuals
  • DEFRA (The UK Dept. for the Environment, Food and Rural Affairs) publicly announced that they expect there to be a shortage of ISPM15 approved pallets post Brexit, when approved pallets will be required for EU/GB trade.

Will the UK leave on March 29th?

This is a difficult question, as Theresa May moves towards March 12th, where she has pledged the second meaningful vote, it would require a crystal ball to predict in which direction Parliament will go. The default position on the March 29th is No Deal, where the deal was voted down on January 15th, support could increase sufficiently to push the Deal through. Some MP’s would rather have something than nothing, whereas others who sit in leave areas will not want to see Brexit postponed which could result in cancellation given another referendum or general election. In the event that the Government loses the vote, it is likely that Parliament will take over and in which case a postponement to article 50 is plausible and there could be sufficient support for a second referendum.

Looking at preparations

Each week, we will try and place government advice and publications which we hope will assist;

Aerospace - https://www.gov.uk/guidance/the-aerospace-sector-and-preparing-for-eu-exit

Automotive - https://www.gov.uk/guidance/the-automotive-sector-and-preparing-for-eu-exit

Chemicals  - https://www.gov.uk/guidance/the-chemicals-sector-and-preparing-for-eu-exit

Construction - https://www.gov.uk/guidance/the-construction-sector-and-preparing-for-eu-exit

Consumer goods - https://www.gov.uk/guidance/the-consumer-goods-sector-and-preparing-for-eu-exit

Electricity - https://www.gov.uk/guidance/the-electricity-sector-and-preparing-for-eu-exit

Electronics, machinery and parts sector - https://www.gov.uk/guidance/the-electronics-machinery-and-parts-sector-and-preparing-for-eu-exit

Oil and gas production - https://www.gov.uk/guidance/oil-and-gas-production-and-preparing-for-eu-exit

Professional and business services sector - https://www.gov.uk/guidance/the-professional-and-business-services-sector-and-preparing-for-eu-exit

Retail - https://www.gov.uk/guidance/the-retail-sector-and-preparing-for-eu-exit

Science, research and innovation sector - https://www.gov.uk/guidance/the-science-research-and-innovation-sector-and-preparing-for-a-no-deal-eu-exit

 

 

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UPDATE 25th February

What's next? March 29th is looming... 

As negotiations continue between the UK Government and the EU, the clock continues to tick. In order for the UK parliament to agree to the Withdrawal Agreement, there must be an amendment to the text in relation to the Irish Back Stop. Although both sides have agreed to place some urgency to the matter, another week has passed with very little being announced on the progress, other than both sides being agreed to focused on concluding a successful deal as soon as possible. The EU are anticipating that in any event the UK will request an extension to article 50 now, most likely a further three months of possibly kicking the can down the road.

As mentioned in last week’s bulletin, the main parties in the UK parliament are fracturing, the fabric of the political system could potentially change forever. This week we have seen defections from both the Labour Party and the Conservative Party, so far eight MPs from the former and three from the later to form an Independent Group of MPs who currently have no leader or formed an official parliamentary party at this point. Even within the rank and file, both parties are at odds which other over which direction the UK should go all having varying opinions on what the British Public want.

The Irish government have published the Brexit Omnibus Bill, which is a comprehensive outlining the next step in contingency planning; https://www.dfa.ie/brexit/news/news-archive/withdrawal-of-the-united-kingdom-from-the-european-union-bill-2019-and-explanatory-memo.php

What about business?

Last week Honda announced that they are to close their flagship plant in Swindon threatening 3,500 jobs, although the closure was not directly linked to Brexit but instead linking it to “Unprecedented changes in the industry”. Given the recent trade deal between Japan and the EU, the UK’s departure would certainly have had a bearing on the decision. Interestingly 55% of those who voted in Swindon chose to leave the EU.

The Aerospace industry would be heavily impacted in the event of a No Deal exit, both with safety certification and frictionless trade with the EU, such as Airbus who significantly employ approximately 15,000 personnel across several sites.

However will the negatives that Brexit brings also present opportunities? 

  • Low Sterling, which certainly promotes exports
  • Low inflations, promoting increased investment, improve economic stability and growth and maintain international competiveness

Still sitting on the fence?

Following on from the comments on last weeks update, we have added in some useful links;

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UPDATE 18th February 2019 

As the clock ticks down towards the 29th March, the chances of the UK leaving the EU with a deal is diminishing. The issue has caused rifts within the main parliamentary political parties, only this week seven MPs from the UK’s opposition party Labour, have pulled away and set up a new political party and the ruling Conservative party at odds with each other over Brexit. To put this problem into perspective, the House of Commons only have 24 working days remaining, Theresa May has promised another meaningful vote on the 27th February, this only leaves 18 days before the EU departs and very little time to pass legislation.

The government’s current deal is not palatable to many MP’s in its current form:

To Brexitiers the Deal is seen has being too closely aligned to the EU. By not agreeing this deal which does actually deliver Brexit, they risk a last minute push by parliament to force an extension to article 50 and a possible people’s vote, which could result in the UK remaining.

Remainers believe it is a bad deal and that the only good deal is to remain in the EU, many pushing for a second referendum. Ironically by not supporting the deal actually risks the UK leaving without one at all. Several private member’s bills have been put forward, which were designed to either remove No Deal from the table, or to achieve an extension to article 50. Currently No Deal is still the default position and March 29th is still the day the UK leaves.

Those in the minority that do support the deal, largely only support it because they feel it is the only possible deal that can be agreed with the EU.

Without any unity within Parliament, the government are completely ham strung.

What next?

Theresa May has been touring Europe, attempting to rally support from other EU country leaders in order to obtain some sort of adjustment to the Back Stop arrangement. With unity around Europe appearing strong, the reality is that an amendment or re-wording is unlikely. Some opposition party members in Parliament believe that Theresa May will wait until the European Council meeting on 21st and 22nd March, and return to parliament with a final choice, that being her deal or no deal, with no time left to reject both.

Still sitting on the fence?

Now is the time to get down, and review your currently supply chain and determine what impact you can expect given No Deal. Although work is continuing behind the scenes in order to mitigate a melt-down situation on day 1, there will be the inevitable disruption. Consider the risks to your European movements;

  • Free movement of goods between the EU and the UK will end
  • All goods will become subject to current tariff rates
  • Export and import clearances will be required
  • Traders will require EORI numbers
  • All goods will require classification
  • Certain goods will become subject to possible licensing, and certification
  • Carriers will be required to submit Security filings prior to boarding Ro-Ro vessels
  • Reduction in the availability of International Haulage Permits
  • Free movement of people will end, this could have a knock on affect to the logistics industry that has a reliance on EU workers.
  • Trade Deals agreed by the EU with other 3rd countries will cease as far as the UK is concerned, unless trade continuation deals are in place. Duty, where applicable, will be applied. see last week’s update.

 

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Update 7th February

Events this week... 

Despite being forewarned by Brussels that the withdrawal agreement is not open for further negotiation, Theresa May went back to meet Jean-Claude Junker in the hope of agreeing changes to the Irish backstop. The Irish border issue was the main road block from early on in the negotiations, and it appeared that the only way to protect the free movement over the border, should a long lasting solution not be found, would be the Back Stop Agreement. The Back Stop would align Northern Ireland closer to the EU, where the customs border would be established at the Irish Sea. The majority in Parliament have rejected this part of the agreement, mainly due to the fact that there would be no end date and the UK would not be able to unilaterally withdraw from it. Crucially the DUP, who support Theresa May’s minority government have rejected an open ended agreement. After tense discussions in Brussels, the UK are no further forward, at the time of writing, Theresa May is meeting with the Irish Prime Minister Leo Varadkar to discuss the issue with him, if there is an alternative solution, it will be crucial that the Irish government are on side.

A busy time for customs...

This week HMRC have been busy compiling information in relation to a No Deal exit, depending on what business you have between the UK and the European Union. The Partnership Pack contains a wealth of useful information in relation to legislation changes that could prove very useful;

https://www.gov.uk/government/publications/partnership-pack-preparing-for-a-no-deal-eu-exit?utm_source=bd162f25-610e-46f0-b90e-1e81ba44f0e7&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

If you are trading goods from Europe into the UK, the method of declaring goods will change. The changes are designed to prevent delays entering the UK.

The following outlines the arrangements for Ro-Ro Ports and Eurotunnel; https://www.gov.uk/guidance/moving-goods-to-and-from-the-eu-through-roll-on-roll-off-locations-including-eurotunnel?utm_source=99ff9c88-3d51-4bbd-a654-18e9482411fd&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

The government have announced a very important simplification to assist UK established VAT registered traders involved in the importation of EU goods, allowing simplified declarations under a Transitional Simplified Procedure:-

https://www.gov.uk/guidance/register-for-simplified-import-procedures-if-the-uk-leaves-the-eu-without-a-deal?utm_source=d8949cdc-7b04-4027-8668-839286a85f85&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

 

What deals are in place with other nations once the UK exits the EU?

 

In 2017 EU Free Trade agreements accounted for around 12% of UK trade, which also facilitated market access for a range of opportunities that these deals offer. At this time, the UK has the following agreements in place, which is a reflection of several months of back room negotiations:

 

Switzerland – although not formally signed off, the agreement has the backing of both nations. Offering continued free trade to one of the few trading partners that the UK has a trading surplus with, last year the UK exported GBP 19.04 Billion worth of goods and services, seeing growth over the last five years of 41.1%

 

Chile – The UK and Chile have signed a new trade continuity agreement, enabling preferential trading arrangements between the two countries. Bilateral trade in 2017 was worth GBP 1.8 Billion.

 

Faroe Islands - The UK and The Faroe Islands have signed a new trade continuity agreement. In 2017, the UK imported GBP 200 Million worth of crustaceans and fish, this agreement facilitates continued tariff-free imports into the UK.

 

Eastern African Community -  The UK is an important export market for Eastern Africa, as an example, over 28% of all EU exports are destined to the UK. Officials representing the UK and the EAC have agreed  to ensure trade continuity post Brexit.

 

Southern African Economic Partnership – Trading between the Southern African economies and the UK is worth around GBP. 10 billion annually. The UK government signed a deal which will be ready to enter into force as soon as the UK exits the EU.

 

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UPDATE 31st January 

57 days to go without agreement

There is never a dull day in British politics right now, as the UK sails directly into the Brexit storm at full speed ahead. This week we have seen Private Member Bills that have been designed to steer Theresa May away from a No Deal Brexit and returning cap in hand to the EU leaders.

On Tuesday January 29th, two significant parliamentary votes took place;

  • “The Cooper Bill” tabled by Labour MP Yvette Cooper, which would have instructed the government to delay Article 50 and seek an alternative deal with the EU. This was defeated by 321 votes to 298
  • “The Brady Amendment” tabled by Conservative MP Sir Graham Brady, chair of the 1922 Committee, demanding that Theresa May returns to the EU and negotiates an alternative to the contentious Irish Backstop. This amendment was approved by 317 votes to 301

A full list of tabled amendments as selected by the Speaker of the House, John Bercow, in the below link to the UK’s Guardian newspaper: https://www.theguardian.com/politics/2019/jan/29/amendments-to-may-statement-brexit-bill

Theresa May now has a mandate to return to the EU, in order to renegotiate the Irish Back Stop, but the EU has little appetite to re-open discussions. In response to the approval of the “Brady Amendment”, Michel Barnier issued a warning that there is too little time to agree an alternative to the back stop and that the deal already agreed is not open for renegotiation. Each day that now passes, a chaotic Brexit becomes an increasing possibility.

Political Maneuvering

As it stands, the UK will be leaving the EU on March 29, 2019, however, we still do not know whether it will be with a deal or not. We think it is unlike that the EU will move on the Back Stop, therefore given the positon, it is likely that Theresa May can now put forward a straight forward choice to force a definitive decision;

  1. Accept the current deal; or
  2. No Deal exit

It is probable that given that stark choice, she may garner sufficient support for the current Withdrawal Agreement and Future relationship with the EU within Parliament. In which case the UK has a deal and the transitional period until December 2020 will apply.

No Deal is a possibility

If you are a business dealing with EU/UK trade, you must prepare for the worse case outcome:

•       EORI Number – All traders involved in International movements are required to hold an EORI number, ff you do not already have one, you should make an application with HMRC.

https://www.tax.service.gov.uk/shortforms/form/EORIVAT

 

•       Product Classification - Obtain commodity codes for all of your products.  There is an A-Z of classified goods at the top of the page in this link 

https://www.gov.uk/trade-tariff

 

•       Import Duty – Understand what the current level of import duty will be from third countries. In the case of no deal we default to WTO rules (Given that would be too time consuming to re-write the Customs tariff, we believe that the UK would adopt the current one into domestic law / legislation including current tariff rates – but the UK would potentially lose most preferential agreements currently enjoyed as a member).

 

•       Advance Documentation - Encourage your suppliers to supply commercial paperwork in advance of goods dispatch.  The minimum documentation required for clearance are; i) commercial invoice ii) Packing List iii) shipping details. In some cases it may be required to supply a Certificate or declaration of origin, check with your forwarder.

 

•       Government Publications - Read through the government publications in relation to No Deal, there may be further information in there that impacts your business;

https://www.gov.uk/government/publications/uk-governments-preparations-for-a-no-deal-scenario/uk-governments-preparations-for-a-no-deal-scenario

 

•       Adequate Stock Levels - ensure you have sufficient stock to ride it out for a month or so, as a contingency (finances permitting)

 

•       Prohibitions & Restrictions - Determine whether any of the goods are restricted in any way (Export Licensing, Health & Safety Certification, CITES, etc. etc.) Much of this information is contained within the customs tariff under bullet point two.

 

•       EU Safety & Security Filing (Summary Declarations) – Exports from the UK into the EU will require the carrier to file electronic Security declarations, which are separate from your export declaration, ensure your carrier/haulier has made provision to undertake this formality

 

 


UPDATE 28th January

The Withdrawal Agreement Defeat

Following parliament’s emphatic reject of the Withdrawal Agreement on Tuesday 15th January 2019, Westminster has been busy considering the Prime Minister’s Statement on the 21st January 2019 which sets out the steps towards a plan B. The most significant point put forward was the scrapping the £65 application fee for EU citizens applying for settled status. The speech also hinted that there could be a possibility of compromise, as talks between various factions continue.

Points to note from Theresa May’s statement:

  • Unwillingness to extend Article 50
  • Ruled out taking No Deal off the table
  • More parliamentary input to reach a compromise

On the January 29, the House will be debating a “Take Note” motion on the subject. “Take Note” is a procedure used to debate a subject without needing to take a specific decision. It is hoped that this will bring to the surface opinions on the way forward for that long awaited break through.

Motions to take note always begin “That this House takes note of …” The debate may be on any subject, but the motion must be phrased in neutral terms.

19 Amendments have already been tabled for the motion, the Speaker selects which amendments are then voted upon.

A private members bill “Coopers Amendment” seeks to remove the risk of no deal but instead force Theresa May to seek an extension to article 50 to December 31 2019 if no way forward is found, however, the Bill would need to be selected by the Speaker of the House in order that it is given time for debate, so may not see the light of day.

 

Preparations

No Deal is still a real possibility, in the event that parliament are unable to agree and no extension agreed, the UK will leave the European Union without a deal.

Work behind the scenes by civil servants, government officials and key personnel from the private sector in order that a workable frame work is in place following exit, however, these details are being kept quiet, which is not helpful for those of us involved in customer facing roles in the logistics industry.

Grants have been provided in order to train customs processing clerks in the private sector and recruitment has been underway to onboard new customs officials in order to accommodate the dramatic increase in customs declarations following Brexit.

The new customs system CDS is not ready, therefore the existing CHIEF system has been upgraded to accommodate the increase from 75 million entries to approximately 350 million entries, with much faster processing times.

Infrastructure is in place to accommodate waiting vehicles , under the name “Operation Brock” which will provide;

  • A20 Tap holding location to sort incoming vehicles destined for Dover
  • M20 J8-J9 contraflow and HGV holding area
  • HGV holding area at Manston Airport
  • A256 holding area
  • M26 HGV holding area

 

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UPDATE 18th January

Vote of no confidence in the government

On Tuesday 15th January 2019, the UK Parliament voted on whether to accept the government’s Withdrawal Agreement. It was widely expected that it would be rejected by a margin of around 100 votes, however, the loss was actually much more severe with a rejection by 230 votes.

Following the defeat, the opposition called for a vote of No Confidence which was held on Wednesday 16th January 2019. The government won the vote by 325 to 306.

 

The next steps...

Theresa May spoke in the House of Commons following the defeat of the No Confidence vote and pledged to engage all senior political MPs from both sides of the house in order to understand the consensus of opinion and what an acceptable deal might look like.

Labour have refused to engage unless No Deal is completely taken off the table, however, this is unlikely to happen given that No Deal is the default position should nothing be agreed.

The government has until Monday 21st January 2019 to outline the plan to Parliament.

 

What are the options?

  1. Hold a further vote in Parliament on the Withdrawal Agreement and the Framework for the future relationship.
  2. Departure on the 29th March with No Deal, which would involve no transitional or implementation period following exit.
  3. Request an extension from the EU to seek a renegotiation of the deal or alternative deal, such as changes to the existing deal, agreeing a Canada or Norway type arrangement or becoming members of EFTA and the EEA.
  4. Returning to the people with another referendum, which would also require an extension to Article 50

The experts at Crane Worldwide Logistics held an informative webinar on 15th January to discuss possible outcomes to Brexit, full recording and slides CLICK HERE


 

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