UK leaves the European Union; this may be the top trade story of 2017. It was on 29 March of 2017 when Theresa May triggered a two-year process of leaving the EU; the first member to do so in the EU’s 59-year history. Nine months later, under the Article 50 – Lisbon Treaty, UK traverses this two-year negotiation period after which the treaties cease to apply. The country may set to leave by April 2019, however aspects such as trade may be difficult to negotiate until UK has left EU. Supporters see the glass as half full saying that it is probable that impacts of Brexit on trade would be relatively small. Will Brexit be just an inconvenience or a major drawback to maritime trade? What if Britain use its freedom to negotiate its own trading deals to advantageous effect?
EU is the destination for about half of all British goods exports, trade statistics find. Although for some UK ports it is entirely possible that Brexit will have a minimal or even positive impact, for most them it is going to be painful supposing that the same ships that used to travel between British ports and EU ports without obtaining any customs clearances now won’t travel straight to the port facilities but face new customs duties, tariffs and other controls to comply with the EU rules of origin. Prospect of customs as well as bureaucratic environmental health checks at the border may create delays and disruption, particularly for HGVs at Roll-on Roll-off ferry ports, not only at ports like Dover, Holyhead and Portsmouth, but also in the EU at ports like Zeebrugge, Calais and Dublin. This may increase costs both for traders and consumers. Take for instance the Northern French ports which have been urging President Emmanuel Macron to break ranks with Brussels over Brexit. In particular, Hauts-de-France region declares that has much to lose in the event of a disorderly UK exit from EU.
What is more, British ship insurers such as Standard Club and North P&I Club are setting up new European Union subsidiaries in the Irish capital, Dublin, while other Protection and Indemnity (P&I) clubs have been exploring new locations possibilities including Luxembourg or Cyprus. Losing access to specialist P&I clubs may cause significant weakness to the country’s economy. However, leaving the EU is not just about negotiation but also about implementation and infrastructure. Undoubtedly, UK lacks capacity of larger EU ports. The fact that it will no longer be able to rely on giant Rotterdam facilities weighs the cons list. The country will instead need develop its own, equivalent port facilities.
Nevertheless, British Ports Association (BPA) recently emphasized on working with the various governments within the UK. This will include Northern Irish issues in relation to Brexit, new ports ‘Good Governance Guidelines’ in England and Wales, lobbying on environmental matters in Scotland as well as discussions regarding the imminent devolution of most ports policy functions to the Welsh Government.
The first certainty is that Brexit has created great uncertainty as many irrational choices target the British and the EU economy. All that said, the trading relationship between UK and EU will have to be renegotiated. There is no doubt that all benefit from trade between Britain and the Continent, thus efforts must be made to preserve it. Let’s don’t forget that maritime sector is responsible for enabling 95% of the UK’s global trade, supports just under 1 million jobs and contributes around £40bn to UK gross domestic products.