Brexit: Boris Johnson must clarify new Europe trade deal to avoid delays and possible job losses, business groups warn

Boris Johnson has only a matter of weeks to provide clarity on new trading arrangements with Europe to avoid disruption, delays and possible job losses at the end of the year, business groups have warned.

Three days on from the UK’s formal departure from the EU, the prime minister is to use a high-profile speech on Monday to set out his plans to negotiate a comprehensive free trade agreement to an unprecedentedly tight deadline of 31 December, which he insists he will not extend.

Addressing ambassadors and industry leaders, Mr Johnson will say that “no achievement lies beyond our reach”, as he sets out No 10’s priorities for the imminent trade talks, including no alignment with the EU.

“There are two likely outcomes in negotiation – a free trade deal like Canada or a looser arrangement like Australia – and we are happy to pursue both,” a government source said on Saturday.

But experts in transport logistics said he cannot risk taking negotiations to the wire. They said companies urgently need precise details of the changes they will face, in order to recruit, train and deploy potentially thousands of staff to deal with expected extra red tape.

The prime minister’s goal of a Canadian-style FTA will inevitably mean more “friction” from form-filling and checks after 1 January, making trade with the EU slower and more expensive, they said. But the disruption will be heightened if they do not know the exact nature of the additional burden until the last minute.

“Business needs to prepare itself, but prepare itself for what?” said Road Haulage Association chief executive Richard Burnett. “We need to know now. What government fails to understand is that when you have big changes, businesses need to recruit people, train them, fund them, get the IT in place.

“The scale of this is enormous and I think time is against us. I would like to see clarity by March so that businesses can really start to plan. But I have no confidence at this stage that they are in a position to provide that.”

A large firm introducing a new transportation and logistics system would typically devote two years to preparations, he told The Independent, adding: “We’ve got 11 months and tens of thousands of companies affected.”

Talks are not expected to begin until March, after the EU completes the process of agreeing its mandate for negotiations.

The Freight Transport Association’s head of European policy, Pauline Bastidon, told The Independent: “We are asking for enough time to be able to implement whatever they come up with, but most importantly to have clarity on operational requirements and new processes as soon as possible. It’s not good enough just to be told there will be customs formalities, we need to know precisely what it will look like operationally.”

Uncertainty remains over issues ranging from whether physical sanitary checks will be required on food and animal products, whether traders will have to declare each border crossing as it happens, day or night, and whether they will be able to rely on “trusted trader” status to simplify the process, she said.

“Cumbersome” safety and security declarations introduced after 9/11 could suddenly be required for every truck leaving the UK – or even for each individual package within a shipment – creating an “absolute nightmare” for lorries passing through roll-on/roll-off terminals, said Ms Bastidon.

“Imagine you are going home with some complex piece of furniture you have to assemble and you find you have to keep popping out to the shops to get tools or glue and then there are parts missing and there’s no instruction manual,” she said. “That’s the position we are in at the moment.

“It’s not going to be easy, that’s for sure. The industry is extremely adaptable and will rise to the challenge as best as possible, but we have already wasted a lot of time. None of this is new to the government, we have been telling them almost on a daily basis for a long time.”

A shortage of customs agents, who take around two years to train, is likely to limit the assistance available to an estimated 250,000 exporting companies who have never operated outside EU rules before and lack the knowledge and experience to navigate the complex paperwork alone, she said.

If details about future requirements are not provided soon enough, many companies will press ahead and try to make it work, but others will simply decide it is “too difficult”.

Mr Burnett warned that additional red tape would threaten jobs: “We have become used to trading with Europe on the basis that everything just flows through. If you slow the flow of product into retail and manufacturing, the impact inevitably will be that the economy slows. As an industry, we’re all about volume and if volume drops, then the secondary impact of that is jobs.”

A stationary truck waiting in a queue at a port can cost a haulier £58 an hour on a trip which is likely to deliver a profit margin of only one or two per cent, he said, adding: “You are going to be out of business pretty quickly if your truck is sat there for 10 hours at a time.”

British Ports Association chief executive Richard Ballantyne said he believed ports would be ready with the necessary infrastructure such as lorry parks, but the build-up of queues was beyond their control.

“Our aspirations may be to have arrangements similar to the present ones, but it does seem from senior ministers’ statements that the UK government wants divergence and the ability to set their own rules,” he said.

“If there’s an FTA deal without alignment on standards, that’s going to look a bit like a no-deal to the ports industry, particularly roll-on/roll-off ports whose traffic works on the assumption you can move trucks swiftly through. Hauliers may well find themselves sitting in traffic because the paperwork hasn’t been done. Any delays will increase costs which will be fed through to the traders and ultimately the consumer.”

Meanwhile, the government was coming under pressure from industry to be open and inclusive in its negotiating strategy, in order to avoid the kind of public hostility of the kind seen during the abortive effort to strike an EU-US Transatlantic Trade and Investment Partnership (TTIP).

A CBI briefing document provided to ministers warned against the use of non-disclosure agreements, which were imposed during the negotiation of the withdrawal agreement to prevent companies consulted by the government from going public about their discussions.

The document, compiled after discussions with countries around the world which have already negotiated FTAs with the EU, called for the creation of a chief business trade envoy and the establishment of working groups to involve private companies in the talks process.

Source: UK Politics - www.independent.co.uk