Brexit, or the withdrawal of the United Kingdom from the European Union, is currently one of the greatest concerns for the world’s economy. The decision is delicate in and of itself, but even worse is the uncertainty leading time to run out and making it increasingly difficult to reach an agreement that persuades all parties.
What almost everyone seems to agree on is that a rupture without an agreement would be harmful to the economy. Given how little time remains, the most prudent course of action is to prepare for the worst-case scenario: exit from the EU without an agreement. This will automatically occur 29 March 2019 if the British Parliament is unable to validate the pact with Europe, or if Article 50 of the Treaty of Lisbon is not postponed.
Predictions in the face of uncertainty in the EU
Aware of the situation, The European Commission has already urged Member States to make decisions to continue commercial and transit relations, as well as to face the most adverse effects of a possible hard Brexit. Furthermore, it has set forth contingency measures to alleviate foreseeable perturbations in roadway transport.
A breakaway without an agreement would mean that community authorisation would no longer be valid, and market access rights would be limited to permits offered under the framework of the European Conference of Ministers of Transport. For example, this would mean that permitted traffic would be drastically reduced.
For Spain, companies that carry out international transport are already requesting these authorisations from the Ministry of Development, which would be the only valid permits to access the United Kingdom. The problem is that their number is capped, which is why Development has set forth a mandatory procedure for 2019 for prior consulting to rule on the number of clearances that will finally be granted. Spanish transporters are also complaining to Development over the lack of information on the effects of Brexit. In 2017, the United Kingdom was the third-most important market for Spain, accounting for 7.2% of total exportations.
In parallel fashion, the European Commission has begun procedures to implement a temporary shared regulation that guarantees basic connectivity for freight transport by road in 2019. This regulation must be expressly approved before the end of March and be agreed to by the United Kingdom.
As far as ocean traffic is concerned, customs activity and new trade procedures must be added. Such was the announcement made by the Port of Rotterdam, the largest in the EU, which is tackling the future with the same philosophy, preparing for the most restrictive scenario possible. If a hard Brexit were to occur, trade with the United Kingdom would be handled under the system set forth by the World Trade Organisation, with no other kind of additional advantage.
The United Kingdom rehearses with the worst-case scenario in mind
The United Kingdom is also racing against the clock to prepare for the potential logistical and trade consequences of a hard Brexit. Theresa May herself agreed to make these preparations an “operational priority” at the end of 2018.
The British Ministry of Transport wants to ensure that importation trade routes are kept in the event of a Brexit without an agreement. Thus, it has closed deals with European ferry lines to guarantee cargo flow between the isles and the continent and that there are no jams due to new border controls, especially for basic goods, such as food or medicine. These additional routes would divert part of the Port of Dover’s traffic to other secondary British ports.
British authorities also fear lorry bottlenecks in areas with port activity. To this end, they have conducted drills with caravans of lorries to test how the roadway network would behave at the main-entrance gate to Continental Europe, the English Channel.
These drills and preparations are necessary for both parties. However, the transport and logistics sectors hope that they will prove unnecessary after reaching a trade agreement that facilitates the situation.