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International Logistics Expert Warns Businesses An Effective No-Deal Brexit Could Still Occur At End Of Next Year.

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An international logistics expert has warned businesses trading with the EU that Britain could still be effectively heading for a no-deal Brexit at the end of 2020.

Adam Johnson, director of Leeds-based Tudor International Freight, said this was the logical conclusion to be drawn from recent statements by government representatives such as Prime Minister Boris Johnson and Chancellor of the Duchy of Lancaster Michael Gove.

The government has said that if a majority Conservative administration takes power after the general election on 12 December, the UK will leave the EU – under the terms of the draft withdrawal agreement concluded at October’s European Council meeting – on 31 January 2020.

Both the Prime Minister and Mr Gove have now added that the subsequent standstill transition period will cease on its current end date of 31 December 2020. This is despite the draft withdrawal agreement specifically allowing for the period to be extended for up to two years, provided this is agreed by 1 July.

Mr Johnson said:

“The key problem with not extending the transition period is it only leaves nine months for the whole future relationship with the EU to be agreed and ratified, as realistically negotiations won’t begin until next March. This timescale is, to put it politely, ambitious.

“For one thing, agreement will need to be reached on a vast range of issues on top of goods and services trade, which will be complex enough. These include regulatory standards, aviation, fisheries, security, science, defence, data and labour mobility.”

Mr Johnson said the government’s timescale would demand negotiating mandates, covering all relevant areas, being agreed on both sides by early next year.

He said:

“Agreeing the mandates may not be straightforward and could easily be politically contentious. On the EU side, for example, the process will involve not just the European Council but probably the parliament too.

“Like the talks that follow, which will call on a combination of community and national competences, the process will demand a balancing act between member states whose interests sometimes not only diverge but conflict.”

Mr Johnson said another complicating factor for the negotiations was the Prime Minister’s wish for Britain to leave the EU’s single market and customs union, in favour of a new free-trade agreement. This would allow Britain to diverge from EU regulations and make its own trade deals with other nations in the future.

He said:

“Even if all the Prime Minister has in mind initially is a basic zero tariff, zero quota regime for goods trade, it’s hard to point to a deal of this sort the EU has concluded with a third country previously. It also seems possible member states will be reluctant to grant Britain this access to their market if it can gain a competitive edge by undercutting them in areas such as workers’ rights at home.”

Mr Johnson added legal texts would need to be complete next autumn for the ratification process to be finalised by the year-end. This rubber-stamping would demand approval not just by the UK and

European parliaments, but by all EU national parliaments and some of its regional assemblies too.

He said:

“The Prime Minister apparently believes his timescale is realistic, because Britain and the EU will be starting their negotiations in complete regulatory alignment. But this overlooks that these will be the first trade negotiations in history where the object is divergence, not convergence.

“In practice, this is likely to make the negotiations more complex, painstaking and time-consuming than for a conventional free trade deal, not less, with every detail and proposal understandably being scrutinised very carefully by both sides.”

Mr Johnson said reaching this sort of agreement even if the transition period was extended for the two years would be a challenge. The respected Institute for Government think-tank had suggested that four years would be a more realistic overall timeframe for such a deal and some experts had predicted five to seven years would be needed.

He said:

“If we take the government at its word, the likelihood is therefore that the transition period will end without a free trade agreement being in place and British businesses will have to transact with the EU under World Trade Organisation terms from the beginning of 2021. That will mean the kind of damaging no-deal Brexit they last feared might take effect at the end of October will, in effect, have finally become a reality.

“For this reason, if a majority Conservative government is elected on 12 December, which seems the likeliest outcome at present, we’d urge Britain’s relevant companies not to drop their guards and continue their preparations for a cliff-edge departure.”

For further information about Tudor International Freight, please visit https://tudorfreight.com/