Freight forwarders pin hopes on a UK-EU trade deal

6/26/2020

Freight forwarders are now pinning their hopes on a on a UK-EU trade deal despite the UK government last week announcing a phased transition of new border procedures from 1 January.

Commenting on the confirmation last week by the UK government of new border controls and procedures from the end of the Transition Period at the end of this year following the UK’s departure from the EU, the British International Freight Association (BIFA) questioned “whether the phased transition will succeed in giving the companies that manage cross-border trade between the UK and EU enough time to make the necessary preparations to facilitate the revised arrangements”.

Robert Keen, director general of BIFA, said that “BIFA members, the freight forwarders that handle a significant proportion of that trade, will also be hoping that the transfer of the Border and Protocol Delivery Group from HMRC to the Cabinet will have the galvanising effect of ensuring the readiness of the border for the end of the transition period”.

Keen noted: “A recent survey of our members, revealed that the majority of respondents believed that an extension to the transition period is desirable, if no trade deal is agreed by December 31st 2020, and UK trade with the EU is conducted on WTO lines. With that option now off the table, we hope that a trade deal between the EU and UK can be agreed before the end of the year.

“Even with a phased transition for the new border processes, and the promise of an additional £50 million investment in Customs IT infrastructure and training, we remain  concerned on a number of issues, including the recruitment of staff qualified and experienced in Customs procedures, and the lack of available time to train newcomers, which is not a five-minute job.

“In effect we have a plan, but as always, the devil will be in the detail. For instance, how long will it take to build the infrastructure that the government recognises will be required?

“And it remains to be seen whether the EU will reciprocate with a similar phased transition for UK exports to the EU.”

As reported last week, the UK government has abandoned its plan to introduce full border checks on goods entering the UK from the EU on 1 January as ministers come under mounting pressure from business not to compound the chaos caused by coronavirus. In a significant policy U-turn, Michael Gove, the Cabinet Office minister, has accepted that businesses cannot be expected to cope with Covid-19 and simultaneously face the prospect of disruption at the border at the end of the post-Brexit transition period.

Instead of full checks, the UK government will now introduce a temporary light-touch regime at UK ports such as Dover for incoming EU goods, under both a ‘deal’ and ‘no-deal’ scenario. However, officials concede that goods flowing to the EU from the UK are likely to face full checks as they enter EU countries such as France, Belgium and the Republic of Ireland. “We recognise the impact that coronavirus has had on UK businesses,” a Whitehall official said. “We will take a pragmatic and flexible approach.” 

Only solves half the problem

An FT report also quoted Richard Burnett, chief executive of the Road Haulage Association, which has repeatedly called for a Brexit extension, who said that a “pragmatic” approach to checks would be welcomed, but would only solve half of the problem. “The UK taking a more relaxed approach to checks only works one way. All the issues surrounding customs agents and preparing British business for export still stand,” he added. 

The Freight Transport Association (FTA) broadly welcomed the announcement today from the UK government of a package of measures aimed to ease the UK’s transition to a new trading relationship with the EU from 1 January 2021. However, it acknowledged to Lloyd’s Loading List that a more relaxed approach to from the UK to border checks, if applied a unilaterally, would only solve half of the problem, and that goods flowing to the EU from the UK would still face full checks as they enter EU countries, unless the initiatives were reciprocated by Brussels.

Implementation period

A spokesperson told Lloyd’s Loading List: “We can’t control what happens on the EU side of the border but we are hopeful that the EU will mirror the UK’s pragmatic approach to the borders to allow trade to continue to flow freely. This will obviously be a key part of the negotiations between the two sides as talks progress over the next few months, and we are hopeful that the UK will prioritise these issues with their EU counterparts. 

“The UK has ruled out an extension to the transition period, but we would like to see both the EU and UK adopt an ‘implementation period’, to allow business time to plan.”

Short-term measure

Shane Brennan, chief executive of the Cold Chain Federation, which represents companies specialising in the distribution of chilled goods, said the UK government’s move today would be “reassuring” to importers but could only be a short-term measure given the risks involved.

“It has been clear for months now that the only way to avoid traffic chaos is for the UK not to impose import controls on food goods entering the UK from the EU,” he said. “But it is a damning indictment of the UK’s strategic planning that the only workable way to control our food imports post-Brexit will be to not control them.” 

Commenting more widely on the package of unilateral measures announced by the Cabinet Office today, the FTA said the new initiatives “will provide some certainty to the UK’s logistics operators, who are currently facing the unprecedented challenges posed by the COVID-19 pandemic”, stressing that the FTA was “the first business group to voice its concerns over the lack of time and clarity available to them in planning for the UK’s departure from the EU and specifically ask for an implementation period”.