FTA Warns the Government on Brexit Uncertainty
Posted by netrix | Oct 26, 2016
The UK Freight Transport Association (FTA) has issued a warning to the UK government about Brexit timescales, saying that it will be a mistake to attempt to leave the customs union before Britain actually leaves the EU. It has also asked government representatives to meet with leading figures from the shipping and forwarding industries to discuss the implications of Brexit on supply chains.
Risk of a GDP drop?
The warning from the trade body comes after Liam Fox, the international trade secretary, called for an early exit from the EU's single customs area, in order to maximise Britain's negotiating position when discussing new bilateral trade deals. However, three independent studies have recently found that an early withdrawal from the EU customs union could lead to a significant drop of 4.5pc in GDP by 2030, alongside a rise in UK port trade flow congestion.
Implications for an early exit
The UK would not preclude itself from remaining in a European-wide single market by departing the customs union. However, it would struggle to negotiate new global trade deals freely, as it would need to retain consistent external tariffs that mirrored those within the EU.
Risks to exports and British jobs?
Deputy CEO of the FTA, James Hookham, said that the trade body wasn't opposed to Brexit as a whole, but that a premature move would seemingly overlook the fact that half of Britain's exports were destined for Europe. An early departure would result in a minimum 10pc tariff levy on these exports under a reversion to WTO regulations. He added that Britain relied strongly on the EU for trade, and that any retaliatory tariff action would lead to British goods being more expensive for export and British jobs being put at risk.
The need for clarity
He explained that for members, the top Brexit issue was to understand the new terms of access for goods being sold in the EU, saying that the ongoing uncertainty was bad for business as a whole.
He added that it was still unclear whether a 'hard' or 'soft' Brexit strategy was being pursued by the government, which left the industry with nothing concrete to predicate their business plans on, other than the knowledge that Article 50 will be enacted before next March.
Finally he added that member businesses were ready to tackle the opportunities and challenges of Brexit but needed complete clarity over the procedures and regulations that they would need to work within.
Many businesses and their representative trade bodies have expressed concern that the government lacks sufficient detailed information with which they can progress and plan for the future in a meaningful way.
With Theresa May also saying that she is looking to negotiate a unique deal for Britain rather than adopting any existing 'template' arrangement, shippers will need rapid clarity on what the future could hold for them. With Brexit due to take effect by March 2019, the industry needs that clarity sooner, rather than later.