How will Brexit affect the logistics industry?

By: Peter Rodwell, Customs & Compliance Manager – UK and Ireland

September 25, 2018

The Brexit negotiations continue, Peter Rodwell, Customs and Compliance Manager - UK and Ireland shares the detail about the transitional period that has been agreed by the EU and the UK. 

 

Transitional / Implementation Period

In order to facilitate an orderly withdrawal, a transitional period of approximately 21 months has been agreed by both parties involved in the Brexit negotiations, ending in December 2020, in order that;

  • The UK & the governments of the remaining 27 members have more time to build new infrastructure and introduce new systems to support as much free and frictionless trade has possible along with the systems that will be required for this purpose, such as the bedding in of CDS.
  • Business is ready and will only need to consider one set of changes.
  • The UK can sign an agreement on a future partnership with the EU, and allow time for the legal ratification, as an agreement cannot be signed or agreed whilst the UK is still a member of the EU

However, the transitional period would be subject to a deal being agreed between the EU and the UK in the first place which is now unlikely to be finalised by October and therefore negotiations will now run into November. This leaves very little time for business to make any necessary adjustments in the event of no deal.

 

Road Freight

Haulage Permit System
Currently a business holding National and International operating licenses with a current Community License can freely operate equipment between the UK and the EU in accordance with EU regulation 1072/2009. Currently UK haulers carry around £35million worth of trade each year between the UK & EU, which in the event of a hard exit from the EU, could result in access being withdrawn. In all possible outcomes there is a risk of losing;

  • Open access to the EU roads
  • Ability to tramp within the EU under current cabotage rules

Transitional period will facilitate continued access in the interim, however the UK & EU will need to agree what access the UK has to EU roads after exit from the EU and vice versa. The UK government has since taken steps in order to ensure the continued movement of goods between the UK and the EU with the recent Haulage Permits and Trailer Registration Act 2018 which sets out;

  • Arrangements which include a permitting scheme
  • The establishment of a trailer registration scheme as set out in the Vienna Convention 1968 in order that UK trailers comply with EU countries requirements
  • Sets out the legal framework for UK hauliers to operate in the EU and vice versa
  • In the event of a no deal scenario, which is still possible, access would be highly restricted for both the UK and the EU, which critically would also affect Ireland.

Frictionless Border

Under EU law, any goods that are already in Free Circulation within the EU can move between EU states without the need to undertake any Customs formalities, under transitional arrangements this ability will remain, however between now and December 2020, assuming a deal is agreed before the deadline, the issue of customs clearance of goods transiting between the UK & the EU is still high on the agenda of discussions

  • Frictionless trade will remain an issue, it is highly likely that all transiting goods will require clearance at the UK-EU frontier even in the event of an FTA agreement.
  • Movement of goods between Ireland and Northern Ireland, suggestions to resolve this issue have so far been rejected as either not fitting with EU law or crossing the UK’s red line. This issue is probably one of the most prominent and arguably the most contentious which represents a real danger of derailing any future deal, and Ireland being the unwitting victim and caught in the fall out.
  • In the event of there being a No Deal, all imported goods will be subject to customs clearance and any tariff duty rates which will need to be accounted for upon declaration into Free Circulation
  • The sudden implementation of Prohibitions and Restrictions on certain supply chain goods involving the UK.
  • Health certification and inspection affecting food stuffs

Republic of Ireland & Northern Ireland

It is the United Kingdom’s proposal to implement a technological solution to the Irish border in order to retain the free movement, that combined with simplification approvals. The EU feel that the only solution is their back stop proposal, which is to retain Northern Ireland within the bloc’s economic space and thereby introducing controls between the UK and NI

  • The EU’s back stop is not acceptable to the UK or the DUP, who currently support the UK’s conservative government who do not have an overall majority.
  • The UK’s frictionless border idea is not acceptable to the EU in its current format.

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