Lack of frictionless trade solution for Brexit will stifle economy on both sides, says FTA
Tuesday 27 March 2018
While today’s adoption of the proposed Brexit transitional period by the EU27 leaders has been met with cautious optimism by business and politicians, the UK’s leading association representing the logistics industry has expressed concern that frictionless trade is not sufficiently at the centre of EU leaders’ negotiating position for the future relationship with the UK.
The Freight Transport Association (FTA), which represents more than 17,000 of the UK’s logistics businesses, says that today’s guidelines adopted by the European Council open various avenues for potential customs and regulatory solutions, but anticipate that controls and checks on both sides of the border between the UK and EU will be unavoidable. In addition, FTA says, the guidelines do not go far enough in providing guarantees to businesses looking for reassurance on future trading arrangements: the outcome could be damaging to deeply integrated supply chains, which often rely on just-in time production processes.
“Goods moves seamlessly across our borders today,” explains James Hookham, FTA’s Deputy CEO, “with only minimal customs checks and no need for lengthy inspections at the borders that can delay the process. Even a small delay of two additional minutes per truck could result in tailbacks of 29 miles or 47 kilometres at the borders during peak hours, as demonstrated last week in research published by London’s Imperial College. This would create uncertainty and potential damage to deeply integrated and time sensitive supply chains.
“Throughout the negotiating process to date, FTA has been very clear on the need to ensure no barriers to trade with the European Union, and this includes checks imposed on trade at the border, as well as non-tariff barriers and red tape for traders and logistics companies alike. Exports to the EU from the UK are currently worth more than £240 billion, and imports exceed £320 billion – delays experienced by logistics operators while transiting between countries will increase costs, making goods and services more expensive to the end user, and this is something which FTA has been lobbying hard to avoid.
“The guidelines touch upon potential solutions to reduce frictions at the borders, but also make it clear that checks and controls will be unavoidable; limiting non-tariff barriers is favoured by the proposals, but these also mention cumbersome rules of origins and fall short of giving guarantees to traders. To protect trading relationships and deeply connected supply chains, FTA is urging both negotiating teams to bear in mind the effect of potential delays on economies on the two sides, and to prioritise the scrapping of potential barriers as negotiations on the future relationship start.
“No one wants to return to the situation of the Summer of 2015, when HGVs were queueing along the M20 in Kent for days on end, costing British business many thousands of pounds. Yet this is the prospect we could be facing now. It is a huge concern for industry, the future growth of the UK, and the EU economy, if the cost of trade starts to spiral.”
FTA welcomes the recognition of the importance of an agreement on all modes of transport to protect connectivity as part of these guidelines, together with reassurance on the recognition of qualifications, which would ensure that air freight links, the much-used and much-needed roll-on roll-off model and rail freight would continue to be in a position to support trade and the economies on both sides, but urges logistics operators, retailers and manufacturers to continue to plan with caution:
“There is still much detail to be agreed in the two and a half years between now and the end of the transition period – a tiny period of time in business terms considering the scale of the challenge,” continues Hookham. “The devil will be in the details when it comes to negotiation, and it is now critical that both sides focus closely on trading arrangements to minimise the potential for delays, which will otherwise hit supply chains and economies on all sides hard.”
FTA Press Office