Potential roadblocks ahead for draft Brexit deal

This article was published on 19 November. Since events are fast-moving and information is subject to change, please keep checking the gov.uk website for the latest information and advice on Brexit.

The draft agreement of a Brexit withdrawal deal between the British government and the European Union was published last week, shortly after Transport Operator’s November print edition had gone to press – but the message from the Road Haulage Association (RHA) was that operators should continue to plan for the possibility of a no-deal departure.

The 585-page draft agreement sets out a detailed legal framework for the terms of withdrawal, with arrangements pertaining to Northern Ireland’s border with the Republic – widely regarded as the most challenging element of negotiations – looming large within the text.

Published at the same time was a much shorter political declaration on the future relationship between the UK and EU, which briefly sets out joint aspirations for what will come next.

Among the stated post-Brexit aims in this second document is comprehensive, mutual “market access for freight and passenger road transport operators, underpinned by relevant existing international obligations to ensure open and fair competition” – working in tandem with “a free trade area [for goods] combining deep regulatory and customs cooperation”.

This – in combination with confirmation within the draft text of a 21-month transitional or ‘implementation’ period, which would mean EU law, including that of the single market and customs union, would continue for the most part to apply to the UK until December 2020 – is likely to provide a degree of reassurance to international fleet operators, who have been beset by uncertainty as to the extent to which they will be able to continue to operate on the continent after March.

The proposed deal: industry reaction

Following the publication of the draft deal and political statement, the Freight Transport Association (FTA) reacted positively to the documents’ contents, and called them “a decisive step forwards in the process of the UK’s departure from the EU”.

“The detail of the agreement… includes essential elements which will allow continued frictionless movement of goods and maintain the integrity of the UK’s supply chain,” said FTA in a press statement.

“Remaining in the customs union will maintain seamless transport of goods and services between the UK and the EU until a new trade agreement can be negotiated, while the protection of citizens’ rights, both in the UK and the EU, will safeguard the logistics workforce.”

The RHA acknowledged that an agreement had been reached, and said it was “an important step given that there is no workable solution for UK/EU cross-border road haulage possible by March 2019”.

But it added that: “Until… final political agreement is reached, all preparations for a no deal/no transition Brexit must… continue.”

Both associations emphasised the importance of the transition period, which FTA said: “would enable Britain’s businesses to prepare for a seamless transition to new trading arrangements, without concerns over a cliff edge which could be disastrous for the supply chain.”

The politics

But the transitional period through to December 2020, and any agreement on market access for road transport operators on the continent beyond that, will only come into play if the deal receives political sign-off.

The document will be endorsed by EU leaders at a special summit this Sunday, European Council president Donald Tusk has announced – provided that “nothing extraordinary happens” before then.

But it is far from certain that nothing extraordinary will happen, following a particularly tumultuous few days in British politics.

Dominic Raab, the Brexit secretary with ostensible responsibility for negotiating the agreement – and Esther McVey, the work and pensions secretary – resigned from Theresa May’s cabinet the day after the draft agreement was published.

Meanwhile, several more senior ministers are thought to have agreed to stay on in their jobs largely in a bid to put pressure on Number 10 to renegotiate parts of the agreement that are causing concern – a possibility that various EU figures have already rejected.

There had been speculation that Chris Grayling, the transport secretary, was among those considering resignation, but he remains in post for the time being – with reports suggesting that he would attend a meeting of cabinet ‘Brexiteers’ early this week to discuss options.

Further resignations cannot at this stage be ruled out – while rumours abound of a Tory leadership contest being triggered should the requisite number of Conservative MPs declare no confidence in the prime minister.

Even assuming that the government survives the week, and that sign-off of the deal by the EU27 occurs on Sunday as scheduled, the prime minister then needs Parliament to vote for her deal in order for it to be finalised.

This is likely to be an uphill struggle to say the least, with Northern Ireland’s Democratic Unionist Party (DUP) – on whom Theresa May relies for her parliamentary majority – having publicly condemned the deal.

The DUP says that the proposed ‘backstop’ arrangement, designed to ensure that there will never be a hard border between the UK and the Republic of Ireland, threatens the integrity of the UK by leaving Northern Ireland more closely aligned to Europe than mainland Great Britain.

Jeremy Corbyn’s Labour Party, as well as the Liberal Democrats, Scottish National Party, Plaid Cymru, and Conservative backbench rebels on both sides of the Brexit debate, also look poised to vote the deal down.

FTA urged parliamentarians to respect: “crucial economic factors in deciding how it votes, to avoid a disorderly departure from the EU which could cause untold problems for manufacturers, retailers and exporters and protect the ability for Britain to keep trading.”

Contingency planning

In the meantime, transport operators should continue to make contingency plans to protect themselves should the deal either be rejected by Parliament, or collapse before then.

For international operators, this is likely to include application for ECMT permits, which would allow them to continue to operate in EU and European Economic Area (EAA) states after 29 March – the UK’s EU withdrawal date – should the deal collapse.

Earlier this month, elements of the transport sector had reacted with concern to news that the government would deploy “an element of weighted random selection” within the allocation process for the permits.

The RHA slammed the suggestion as “at best, farcical”, warning that international operators could not be expected to maintain the flow of exports to Europe if they were to become dependent on what was in effect a lottery system.

“This won’t just affect truckers,” said RHA chief executive Richard Burnett.

“Many thousands of UK businesses depend on a reliable transport system to get their goods across the Channel and into Europe as quickly as possible.

“It is unthinkable that the supply chain should break down as a result of operators not having the right piece of paper at the right time.

“The implications of a no-deal Brexit should have been considered long before now… The effectiveness of the supply chain relies on planning. But how can the operators of 38,000 trucks possibly make plans when there will only be 1,224 permits to go around?”

Applying for permits

While there is still considerable uncertainty as to whether they will be required after 29 March, plans for the ECMT permit allocation system are now well underway. A no-deal Brexit would be highly likely to result in permits being required, although there is currently no guarantee – despite joint EU/UK stated aspirations – that any final Brexit deal will avoid the necessity for a permit system.

Interested parties should frequent the Department for Transport (DfT), DVSA, DVLA and traffic commissioners’ areas of the gov.uk website – and in particular, gov.uk/euexitdriving – to stay apprised of the latest information.

But at the time of publication, the government was advising that it expected international operators to be able to apply online for ECMT permits from 26 November 2018 until 21 December 2018.

Some monthly permits will also become available next year.

“From 29 March 2019, if there is no EU exit deal, EU and EEA countries may not recognise UK-issued community licences,” said the DfT.

“In those circumstances, the government is confident that it would be able to negotiate new or reinstate old bilateral agreements with EU countries to provide haulage access.

“However, transport managers may wish to apply for ECMT international haulage permits for 2019.

“ECMT permits will enable UK operators to drive in the EU and EEA (except Cyprus) if UK issued community licences are not recognised,” said the DfT.

“ECMT permits are also recognised in 15 other countries.”

Earlier this month, regulations were passed in Parliament confirming that the UK government will not require Northern Ireland hauliers to carry permits when travelling to or through the Republic of Ireland.

DfT confirmed: “Operators with a Northern Ireland operator’s licence will not be required to obtain an ECMT permit for a journey to the Republic of Ireland. Operators with a Great Britain operator’s licence should apply for an ECMT permit if they plan to drive in the Republic of Ireland from 29 March 2019.”

Limited numbers of ECMT permits will be available; and in order to apply for them, operators will need a Vehicle Operator Licence (VOL) online account. Having an O-licence does not necessarily mean the operator has a VOL account.

The government had been strongly recommending that operators should register with VOL by 12 November, taking into account the two-week processing time, in order to ensure the account is ready when ECMT permit applications open on 26 November.

However, operators not yet registered with VOL may still do so here.

Detailed advice on preparing an ECMT permit application can be found here.

Permit allocation

With a limited number of ECMT permits available for UK hauliers, the DfT is employing a strictly defined process to determine allocations, the full details of which are available here.

The primary criteria being used to allocate permits are vehicle emissions levels, the number of international journeys made in the last 12 months, the proportion of an operator’s haulage that is international, and the type of goods carried.

However, the government has also included an element of weighted random selection.

“This does not mean that permits will be allocated by chance and without considering the criteria above,” insisted the DfT, but: “if used in isolation, [those criteria] would cause all the available permits to be allocated to a small number of operators who would receive all the permits they apply for. Other hauliers would not receive any permits.

“We want to avoid this and make sure permits will also be allocated to more hauliers including small and medium sized operators who also carry out significant amounts of international haulage.

“We estimate that around four times as many operators will receive permits if an element of weighted random selection is included in the allocation process.”

Trailer registration latest

The DfT also advised that: “From 28 March 2019, you must register commercial trailers over 750kg and all trailers over 3,500kg before they can travel through countries that have ratified the 1968 Vienna Convention on Road Traffic.”

In Europe, those countries include Albania, Andorra, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Italy, Kazakhstan, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Moldova, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Russia, San Marino, Serbia, Slovakia, Slovenia, Sweden, Switzerland and Ukraine.

Trailers making international journeys through these countries will need to be registered with the DVLA, display their own registration plate separate from the towing vehicle, and be equipped with a Trailer Registration Certificate, which must be presented to foreign authorities on request.

Said DfT: “You do not need to register trailers that are only used in the UK or only used for journeys between the UK and Ireland.

“You also do not need to register trailers used in Spain, Cyprus or Malta. You will, however, need to register trailers if you drive them through the countries listed above to reach these destinations.

“You can voluntarily register non-commercial trailers that weigh over 750kg but there is no legal requirement to do this.”

DVLA will open registration for trailers in January.

Applying for EORI numbers

The RHA has also advised that UK operators wishing to undertake international road haulage after 29 March should be applying for a UK Economic Operator Registration Identifier (EORI) number.

“HMRC have made this requirement clear and operators should… obtain their EORI numbers as soon as possible,” said the association.

Applications for EORI numbers can be made here.

“Please be aware that  that the HMRC website  has not been redesigned to ‘accommodate’ Brexit,” said RHA.

“Advice is written based on our membership of the European Union  – somewhat confusing when completing the forms for EORI. If you are VAT-registered, there is a single form to complete. If not, you have a choice  – our suggestion is that you fill in the export form as best you can.”

The association also urged operators to advise their customers (importers and exporters) to obtain EORI numbers.

RHA’s full ‘no-deal’ Brexit advice for operators can be found here.

There is advice from HMRC for hauliers operating between the UK and EU from the government here, on what to expect on day one of a no-deal scenario.

Northern Ireland permit clarity ‘welcome’

The Freight Transport Association (FTA) welcomed the news that Northern Irish operators would not require ECMT permits for access to the Irish Republic in a no-deal scenario – having initially been advised that the province would only be eligible for around 60 permits per year.

“When you consider more than 4,000 goods vehicles cross the border between NI and ROI daily, the allowance of 60 vehicle permits per year would have inoperably damaged the transport industry and in turn, the businesses who rely on these imported goods and services to operate,” said Seamus Leheny, FTA’s Northern Ireland policy manager.

“Thankfully, the NI Department for Infrastructure has confirmed all operators with a NI licence will not be required to obtain an ECMT permit to travel to ROI.

“While FTA welcome this special status for businesses in Northern Ireland – it will help maintain vital cross border, all-island supply chains in the event of a no-deal Brexit – the ideal scenario would be a UK-wide application.”

EU nationals to face ‘right to work’ checks

At the end of October, FTA also warned of the lack of system in place to help carry out checks on EU nationals’ right to work, which the immigration minister Caroline Nokes has said employers in the sector will be required to perform after Brexit, including during any transitional period.

“It is simply unacceptable that, with only five months to go until the UK is set to leave the EU, there is still no viable system in place which can provide employers with the information they need over workers’ status,” said Sally Gilson, FTA’s head of skills.

“For some time, FTA has been expressing concern over the legality of allowing EU workers to keep working in the UK in the event of a no-deal Brexit:  a verbal promise guaranteeing rights is not legally binding.”

She continued: “Despite asking for clarification on this issue since Article 50 was triggered, it seems incredible that the government has let the clock run down to this point without giving business the answers it has been requesting.

“Asking employers to prove the right to work status of their workforce, despite assurances in the summer that this would not be needed, is simply unacceptable.

“While logistics as a sector is notoriously good at adapting to change, this additional burden will make it very difficult indeed to keep the supply chain running smoothly at a time when there will be added pressures from new trading conditions, declarations and other processes to adopt…

“The whole situation is shocking and almost farcical: we are now less than five months from Brexit and employers will effectively be asked to check right to work for employees without a mechanism to do so.”