The clock is ticking
Published: 28 March, 2018
The announcement of a Brexit transitional period ending in December 2020 will be a welcome relief for manufacturing businesses exporting and importing from the EU.
Stephen Phipson, chief executive of EEF, the manufacturers’ organisation, said:
“Industry has long called for transition arrangements to ensure manufacturers can plan with sufficient confidence and certainty as the UK leaves the EU.
However as the Freight Transport Association (FTA) has warned there is still much to agree on the detail of the UK's departure from the European Union, and the EU's "nothing is agreed until all is agreed" principle still leaves uncertainty.
Although a transitional period has finally been proposed by both sides and is positive news for British business, as James Hookham, deputy CEO of FTA, says, there is still a huge amount of technical agreement required to ensure that trade can continue to move between the UK and the European Union with as few delays as possible, if industry and businesses are not to be left with huge breaks in their supply chains, at the end of the transition period.
I agree with Hookham that by ratifying the transitional period to run over the next 20 months, negotiators will be granting business a welcome breathing space in which to formulate plans and learn new processes for trade after December 2020. However, as he points out this timescale and its detail is still to be formally ratified by both sides, and with the inherent risk of a ‘no deal' outcome at the end of negotiations, business should be wary of complacency and plan accordingly.
Hookham also says that despite these concerns it is nevertheless positive that we seem to be getting more time to agree the new border procedures and there is some confidence that UK employers will be able to continue to employ EU nationals up until the end of the transition and beyond, as long as those are permanent residents in the UK or frontier workers. But he makes the critical point that business still needs to know what customs and trade procedures look like after the transition period: the customs duties and taxes, the formalities required in the UK and the arrangements for border inspections of goods, the number of trucks that will be allowed to cross the border and the arrangements for the recognition of drivers' licences and qualifications.
We should all be mindful that the clock is still ticking for both sides to deliver a meaningful and comprehensive agreement on a future relationship. As Phipson highlights this is essential to deliver the operational certainty needed by UK manufacturers to trade effectively, access the necessary talent from the EU and provide the vital investment the economy needs.
Although the transition period is welcome there is still an awful lot for government and industry to achieve in an incredibly short space of time, and ultimately we are still a long way from achieving low friction trade after Brexit. However a year ago both sides ruled out an early transition deal; today both sides have agreed one – common sense eventually prevailed. So I do believe that other Brexit hurdles can be cleared in the same spirit of compromise, including an urgent resolution of the Irish border. Tough choices lie ahead but a final deal is possible, which will be to the benefit of everyone.