Seven months have now passed since the UK invoked article 50 of the Lisbon treaty, giving formal notification to the EU that the UK is withdrawing. With the clock ticking down to the 29th March 2019 exit date, negotiations between the UK and the EU are still yet to move on to the second phase, in which the new trading relationship between the two will be defined. This leaves those of us with an interest in freight and customs procedures still wondering what we need to do to prepare. We know the UK intends to leave both the single market and the customs union.
In her recent speech in Florence, Prime Minster Theresa May proposed a transitional period of “around two years” following withdrawal which could effectively give breathing space to enable the UK to negotiate trade agreements with other states, whilst avoiding a cliff edge on the day of leaving. However EU negotiators are yet to agree to such a period, and continue to insist demands are met over a divorce bill and the status of EU nationals in the UK before issues of trade can even be discussed. The UK government also faces resistance at home from those who insist the jurisdiction of the EU Court of Justice must end on 29th March 2019.
We can summarise the two likely outcomes as follows:
- A transitional arrangement is agreed whereby trade with the EU continues after withdrawal on a similar basis as it does now, for a period of around two years. There may be some controls introduced on UK to EU movements, and vice versa, depending on the detail of the agreement. During this period the UK and EU can continue to define a long term trade relationship, and the UK will be free to negotiate deals with other states.
- No deal is reached by the withdrawal date, and EU-UK trade will default to WTO rules. This means the full EU tariff schedule will apply to commodities from the UK, and the same customs checks and controls that apply to worldwide trade will be necessary for EU trade.
The UK government appears to be treating the possibility of the second outcome increasingly seriously, indicating this week that contingency plans are being prepared in the event of ‘no deal’.
Watch this space for further developments.