This post, focusing on transport issues, is the last in our series looking at the UK Government’s July 2018 White Paper on the future relationship between the UK and EU.
The White Paper sets out the UK Government’s position on aviation, road, rail and maritime transport - areas where the UK Government considers co-operation to be desirable. However, since the UK Government’s rail priorities focus on reaching bilateral agreements with Ireland, France, Belgium and the Netherlands on cross-border travel via the Channel Tunnel and on the island of Ireland, this blog post focuses on those aspects more directly relevant to Wales.
While the response from UK transport stakeholders and related industries to the White Paper has been broadly positive, the response to the White Paper from Michel Barnier was less encouraging on key issues like facilitated trade and customs. With potential for pressure from Brussels for further “concessions” meeting vocal resistance at home in the UK the future of the White Paper proposals is far from certain.
While agreement seems close in key areas such as aviation, given the guiding EU principle that “nothing is agreed until everything is agreed” discussions over the next few months will be played out with high stakes for all concerned, including the transport sector.
As this blog was being posted the UK Government began to publish guidance on how to prepare for Brexit if there's no deal.
Aviation
The EU’s role in aviation covers three key areas: the aviation single market (the European Common Aviation Area or ECAA); bilateral Air Transport Agreements with non EU countries; and EU-wide initiatives on safety (the European Aviation Safety Agency – or EASA) and air traffic control (Single European Sky).
While international law applies to air travel it offers a limited “fall-back”. The Institute of Government concluded that if no deal is reached “at most” the UK would continue to enjoy the first five of the nine Freedoms of the Air post Brexit. In November 2017 the Director General of the International Air Transport Association told the UK Aviation Club:
When the UK leaves the European Single Market, it will also leave the European Common Aviation Area. And when it breaks from the European Union, all traffic rights to the rest of the world associated with Europe will also be thrown into question. And, as we all know, the basis of international aviation is bilateral air services agreements. There is no WTO agreement to fall back on. For that reason, I don't see any alternative to a negotiated agreement.
The White Paper formalises the UK Government position set out in its framework for a future UK-EU transport partnership, published in June 2018, and proposes:
- An Air Transport Agreement (ATA) permitting UK and EU carriers to operate services “to, from and within the territory of both the UK and the EU on an equal basis”;
- “Close co-operation” on air traffic management as well as “close collaboration” on aviation security”; and
- Continued “participation” in EASA – the body which develops and monitors common safety and environmental rules at a European level, and provides technical expertise, training and research.
In addition to pilot licensing and training, and aircraft licensing, EASA also certifies engines and aircraft components and approves design organisations. This makes it central to UK trade and manufacturing in the aviation and aerospace sectors. Agreement on EASA is a major concern for aircraft manufacturers and suppliers across the UK, including Airbus, which was estimated to support 11,700 jobs across Wales in 2015.
The European Council’s March 2018 Brexit guidelines (PDF 296KB) stated that there should be “an air transport agreement, combined with aviation safety and security agreements” as part of the wider goal of ensuring continued connectivity. However, while both the UK Government and the European Commission have provided some additional detail on their position and priorities, the deal remains to be done.
The reaction of the aviation industry to the White Paper has been cautiously positive. The Airport Operators Association (AOA) welcomed the White Paper, while calling for early ratification of a withdrawal agreement and early talks between the UK’s Civil Aviation Authority (CAA) and EASA.
Similarly, the General Aviation Manufacturers Association (GAMA) welcomed “long awaited clarity” on the goal of participation in EASA, as well as proposals on customs and manufactured goods. However GAMA highlighted “several questions that remain unanswered” – including arrangements for movement of aviation personnel - and called for EASA and the CAA to begin dialogue with the industry.
With Cardiff Airport’s January 2018 annual report indicating that 8 of its top 10 direct routes service destinations in the EU27, the Welsh Government-owned Airport will be watching negotiations closely. While the White Paper addresses some of the issues identified by the Airport in evidence (PDF 153KB) to the Assembly’s External Affairs and Additional Legislation (EAAL) Committee in February - such as participation in the single aviation market and EASA – the Airport is likely to be keen for more detail and concrete progress.
It’s also pretty clear that the Airport hasn’t got everything it wants. For example, it proposed that the UK should have voting rights within EASA – explicitly ruled out by the White Paper – and called for clarity on the UK’s position on immigration which remains to be set out in detail.
Road Transport
EU law governs significant aspects of road transport (PDF 87 KB), including: driver licensing and working time; access to professions; the international carriage of goods and also carriage of passengers by bus and coach.
Like the aviation industry, EU standards also apply to road vehicle manufacture. Through the type approval process, designated Member State Approval Authorities, including the UK’s Vehicle Certification Authority, confirm that production samples of vehicles meet specified standards. Industry and road users broadly support the standards.
While international standards and agreements exist as a “fall-back” position, these are more limited than the EU internal market and legal framework. For example the multi-lateral quota system of licences for pan-European road haulage will offer some provision for cross-trade, but exclude cabotage operations.
As with aviation, agreement on vehicles type approval will be a big issue for Welsh industry as the Welsh the automotive sector comprises around 150 companies, estimated to employ 18,000 people and generating £3 billion annually for the economy.
The White Paper commits to “explore options for reciprocal access for road hauliers and passenger transport operators, and arrangements for private motoring”. The UK Government’s framework for a future transport partnership (above) provided further detail on the Government’s negotiating priorities, calling for maintenance of:
- Liberalised access for road haulage, including cabotage and cross trade;
- Liberalised cross-border bus and coach travel; and
- Freedom for citizens to drive in the UK and EU without additional checks and documentation.
The White Paper also refers to the Haulage Permits and Trailer Registration Act 2018 which received Royal Assent on 19 July. The Act creates the architecture for a number of circumstances, including a ‘no deal’ Brexit. It would allow the Secretary of State to deal with the consequences of a range of exit scenarios on the UK haulage industry by creating an international road haulage permit scheme.
In terms of vehicle standards, the White Paper states that the common framework for manufactured goods “would include the type approval system for all categories of motor vehicles”. However, the EU has already moved to legislate on the removal of UK type approval authorities from the EU system.
The White Paper had a generally positive reception from the Freight Transport Association. However, while the FTA’s Deputy Chief Executive James Hookham recognised efforts made to address the sector’s concerns he said “there is still much we need to understand on the practicalities for future trade.”
The Road Haulage Association has said the White Paper “doesn’t go far enough” with RHA chief executive Richard Burnett expressing concern it “doesn’t address the movement of HGVs” and offers “no certainty over future permit arrangements”. While welcoming proposals on customs, the RHA notes that “the White Paper does no more than suggest a framework to manage the movement of people”, emphasising the haulage industry’s need to recruit from the EU.
The implications for Wales of agreement on road transport are significant.
Just over 650 thousand passenger vehicles and 524 thousand lorries and unaccompanied trailers passed through Welsh ports in 2016, the latter carrying around 80% of all goods carried on Irish registered HGVs passing between the Republic of Ireland and Europe. Any Brexit which resulted in the curtailing of this freight traffic could have significant economic consequences for Welsh ports and their surrounding areas. With goods totalling 234 thousand tonnes carried into Wales in 2016, and 294 thousand tonnes exported, agreement on road transport won’t just affect freight passing through Wales.
Maritime transport and ports
EU law and policy affects a number of aspects of maritime transport, not least the internal market for maritime transport services and a range of EU law-based rights, obligations and benefits including: maritime cabotage; port services; employment, working conditions and training of seafarers; and the European Maritime Safety Agency (EMSA).
However, the European Commission’s slides on Brexit and transport note the extent to which international law will offer a fall-back position for market access (with the exception of cabotage) and regulatory arrangements for safety, security, environment and labour rules. Similarly, the White Paper highlights that “the maritime sector is liberalised at a global level” so that post-Brexit “UK ship operators will be able to service EU ports largely as now”. However, the UK Government proposes “to continue cooperating closely with both the EU and the EMSA”.
Of perhaps greater immediate concern for UK and Welsh ports and their customers will be future arrangements for trade. The White Paper’s proposals for zero tariffs on manufactured and agri-food goods, a common rulebook for goods (including agri-food) and for a Facilitated Customs Arrangement to remove the need for customs checks will be profoundly significant for UK ports.
The EAAL Committee’s 2017 inquiry into the Implications of Brexit for Welsh Ports heard evidence outlining the “potential threats posed [to Welsh ports] by leaving the Customs Union”.
Evidence from Irish Ferries (PDF 463KB) pointed to a 694% increase in freight between Holyhead, the UK’s the second biggest roll-on roll-off (ro-ro) port, and Dublin since the completion of the Single Market in 1993 – growth facilitated in part by the fact that the port did not need to maintain standage areas for customs clearance. It argued that “the UK has to avoid returning to a Customs Regime at the ports”.
Similarly, the Welsh Ports Group of the British Ports Association (BPA) (PDF 228KB) pointed to wider potential implications of customs checks in the form of “significant disruption” of Wales-Ireland ro-ro traffic leading to increased freight sector costs which “will be passed on to importers, manufacturers and consumers”.
Reaction since the publication of the White Paper from the BPA at a UK level has been positive – specifically focusing on the Facilitated Customs Arrangement and the common rulebook for goods. The RHA (above) also noted that “the initial move on customs will result in border arrangements that will work well for supply chains”.
The UK Chamber of Shipping was also positive, describing the White Paper as a “comprehensive business friendly proposal for the future UK/EU relationship”. However, it identifies a need for further detail on customs and trade, and highlights that immigration remains a concern for the maritime services industry. Pointing to a lack of any explicit reference to seafarers, it notes wider references to certified employment and co-operation with EMSA which, it concludes, “suggests that the ability of seafarers to attain simpler access to employment on EU and UK flagged ships will be retained”.
While the reception from the transport sector has been positive, the stakes remain high for it and its customers. Many will be looking for signs of white smoke from the negotiations to ensure that Wales can keep moving on 30 March 2019 and beyond.
Article by Andrew Minnis, National Assembly for Wales Research Service
Image from Flickr by Gosport Flyer. Licensed under Creative Commons.
