Brexit transitional period crucial to EU-UK trade

Brexit transitional period crucial to EU-UK trade

Little progress has been made on Brexit talks thus far.

Top European business and trade bodies have strongly urged EU and UK negotiators to put legal certainty and predictability at the top of their negotiating agenda and to avoid any sudden “cliff edge” break in relations.

In a statement signed by the Global Shippers Forum, Freight Transport Association, British Chamber of Commerce in Belgium, International Shippers Forum, and the European Shippers Council, the parties said a transitional period during the UK’s exit from the EU must be agreed as soon as possible. This would protect EU and UK competitiveness and ensure that a frictionless customs and trade environment could be maintained.

The group outlined its priority for customs, where it wants the guarantee of a seamless transition period after March 2019 that replicates the current commercial, regulatory, and trading environment. It said this guarantee should be provided urgently if it is to enable industry to plan and invest appropriately for what takes place in March 2019.  

“The transition period should last until the commencement of a long term EU-UK partnership agreement, the details of which must be known sufficiently in advance for businesses to adapt and implement any changes,” the group’s statement read.

“An agreement must promote an economic and trading relationship that maintains and improves the mutually beneficial ties between the European Union and the United Kingdom, each of them being an economic and trade partner of paramount importance to the other.”

The UK government has sought to ease concerns, saying it wants the country to remain in a customs union with the European Union for a transitional period — it has not said for how long — after it leaves the 28-nation bloc on March 29, 2019 after 46 years of membership.

The United Kingdom has also put forward two options in a recent policy paper: a “highly streamlined customs arrangement” deploying the technology used on the US-Canada border, or a “new customs partnership” that would not require border checks as both sides would enforce their respective customs regulations.

How this will play out as negotiations continue is unclear, and although it was clear there were significant questions both sides needed to discuss and resolve at the political level, the shipper and business group argued that both sides’ negotiators should not lose sight of the damage that would be inflicted if business and economic activities were not protected.  

The group said a “big bang” or “cliff edge” situation should be avoided, as they would send costly shock waves through EU trade flows and supply chains that have evolved and flourished over the last 40 years.

“The European Union and the United Kingdom should recognize their mutual self interest in finding a way to preserve these links and the legal certainty that is vital for companies to continue serving Europe’s citizens on both sides of the Channel. In the arena of customs, its associated systems, and the EU Single Market, the group firmly believes Brexit must be a transitional, not a terminal journey for EU- and British-based business. There is no time to lose in making this happen.”

Writing for JOC.com, Pierre Liguori of consultancy Tokema said Brexit may indeed be a threat, but it could also prove to be a major opportunity for UK and European logistics service providers and for global manufacturers that are currently running operations in Europe.

“In business terms, the only way to turn a threat into an opportunity is to be ready to effect change — and to promote this change quickly,” he wrote.

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.