Brexit and benefits for all

Malcolm Latarche

Malcolm Latarche · 06 February 2020

ShipInsight


Brexit is now something that can be talked about in the past tense as since 23:01 on 31 January, the UK is no longer a member of the EU. That may be a disappointment for some but to others it is the culmination of a campaign that has been ongoing for almost half a century.

The UK generally was never a committed supporter of the EU in the way it had been for the simpler trading bloc that was the EEC. If the whole aim of the European Project was a future federal Europe, then that was withheld from the public when the UK joined back in the 1970s and a major reason why the referendum of 2016 resulted in a decision to leave.

Although the UK is no longer a member of the EU, it is in a transition phase where most things will go unchanged until the end of this year but as for what happens after no one can yet be certain.

Some commentators have likened the UK unfettered from EU rules to a Singapore on the EU’s doorstep. That description reflects the economic success of Singapore and its success in competing with larger regional economies. The UK economy cannot by any stretch of the imagination be considered a small economy – it is the sixth largest in the world and equivalent to 18 of the lower ranking EU members combined – and is perfectly capable of growing its overseas non-EU trade.

Most commentators have previously expressed the view that the UK would favour preserving as much commonality with RU processes and regulation as possible but there is emerging evidence that this will not be the case.

The current UK government was elected in December last year with a large majority that will allow it to push through most of what policies it desires, it has definitely toughened its negotiating stance with the EU compared to the previous government. The UK government increasingly sees its future interests lies away from the EU and is making overtures to trading partners around the globe. This new position will appeal to government supporters but may horrify others who would prefer the status quo to be continued.

Among the latter is ECSA the European Community Shipowners’ Association (ECSA) which insists that the only and most economically sensible future is for the EU and the UK to remain an integrated and seamless shipping centre.

In a recent statement the organisation said Brexit discussions have brought to the forefront how interrelated EU-UK supply and logistics chains are. Maintaining the fluidity of EU-UK trade must therefore be a priority. Shipping companies are part and parcel of this smooth-running business reality. In addition, mutual market access to provide maritime services, in areas such as the offshore supply sector and regular domestic trades, is imperative in sustaining those close relations going forward.

"European shipowners strongly believe the current interconnection of companies and services across both sides of the Channel should be preserved to ensure the well-functioning of both the EU/EEA and UK economies. It is essential that we secure the fluidity of trade, continued market access and easy movement of staff and passengers, while maintaining the current level playing field between the EU and the UK," said Martin Dorsman, ECSA's Secretary General.

If there is a major divergence between the UK and the EU, then it can be expected that there will be a small drop in trade volumes in both directions although this difference would likely be made up with growth in trade with third parties. For ship operators the most impact would come by way of increased demand for formalities. As far as the UK goes, this would probably not involve physical inspection and delays to goods as this does not happen now with trade with non-EU states. The formalities involved should really pose no problems as these would be covered by the FAL convention and quite easily performed by port agents or through the electronic reporting systems with no delays to vessels expected. If there is an area which would be a major change it could be that phytosanitary and veterinary certificates for some cargoes might be demanded. Until now there has been no need for checks on this with free movement of goods being allowed.

It is also to be expected that if the UK and EU cannot come to an agreement, the UK will most definitely be taking advantage of being outside of the EU sphere of regulations. That is not to say it will become an environmental vandal but it will be weighing up the economic and environmental benefits of all aspects of regulation.

One area where it could succeed is becoming a hub for European cargoes where vessels can tranship cargoes imported from or exported to non-EU ports around the globe. That may not mean those cargoes will be exempt from any EU imposed carbon border adjustment mechanisms but the ships undertaking the ocean voyages need not have to comply with the whole gamut of EU measures such as the EU MRV regime or recycling rules for example.

Shipowners have almost always opted to protect their interests and are known for preferring open registers to national flags so as to avoid some of the most draconian regulation. While ECSA has a position to promote it would not come as a major surprise if many of the individual companies that come under its umbrella are already exploring what benefits Brexit’s aftermath could hold for them.

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