The Implications of Brexit for the Movement of Goods
The decision of the United Kingdom to leave the European Union has major consequences for the transport, logistics and supply chain sector. This statement draws attention to the principal issues relating to the movement of goods which have been identified to date by the Chartered Institute of Logistics and Transport in Ireland (“the Institute”) and which should be considered by public authorities and by the transport, logistics and supply chain sector.
Brexit will impact on three equally important aspects of Irish trade:
- Irish exports to the United Kingdom,
- Irish imports from the United Kingdom, and
- Irish import and export trade with the rest of the EU and third countries which transits through the United Kingdom.
The UK plans to leave the Single Market and the Customs Union and wishes to be free to conduct an independent trade policy. This means that there are only two realistic options for a future trading relationship between the EU and the UK:
- A bespoke free trade agreement, or
- Trading under World Trade Organisation (WTO) rules.
This suggests that a prudent starting point for planning both by public authorities and the transport, logistics and supply chain sector would be to assume that the UK leaves the EU without agreement on future trading arrangements - that is a “hard Brexit” followed by the introduction of a “hard border”. We are not suggesting that this is the most likely or an inevitable outcome but that it would be prudent to prepare for a worst case scenario.
What might a worst case scenario look like? The following provides some outline guidance:
- Post-March 2019, the trading relationship between the UK and the EU would be governed by WTO rules.
- Customs and other administrative controls would be re-introduced.
- Tariffs would be levied in accordance with WTO rules.
In the light of this analysis, the Institute makes a number of recommendations to Government which can be summarised as follows:
- Certainty is required as quickly as possible on the future trading arrangements between the EU and UK as is good quality, timely and easily accessible information to ensure successful implementation of the new trading regime.
- An adequate transition period is necessary to enable both public authorities and the transport, logistics and supply chain sector prepare effectively for the implementation of the new trading arrangements.
- The Brexit negotiations should seek to minimise the impact on trade, recognise the complexity of the issues involved, consider the impact on time to market, address the particular implications for SMEs and take account of the importance of the GB landbridge for Irish trade.
- Public authorities will have to plan, implement and resource new administrative systems to ensure a smooth transition to the new trading regime. That will include recruiting additional suitably trained and qualified staff and developing IT systems which are fit for purpose. The planning of these systems should be based on international best practice and avail of industry expertise.
- Training and advisory supports should be provided for business to address identified skills deficiencies. Targeted Governmental and EU financial supports should be considered for enterprises adversely impacted by Brexit.
- Consideration should be given to potential public infrastructural requirements arising from Brexit.
The transport, logistics and supply chain sector needs to start planning now. A good starting point would be to begin planning for the worst case scenario described earlier where a “hard Brexit” takes place and a “hard border” is re-introduced. Scenario planning does not need to involve substantial expenditure but will require some management time and perhaps some limited external training or consultancy support. The policy statement suggests a range of matters which might be considered as part of the planning process:
- Consider the likely risks and possible business opportunities.
- Consider the financial impact.
- Consider the impact in terms of time to market.
- Consider developing alternative markets.
- If you use the GB landbridge, will it continue to be a viable option post-Brexit?
- Is your company particularly dependent on the Northern Ireland and GB market?
- Consider the implications for eCommerce and your trading partners.
- Consider the likely administrative requirements, training needs and IT requirements.
- Are there “no regrets” investments that could be made now irrespective of the eventual Brexit outcome?
- Update your scenario planning as the Brexit negotiations continue.