Last reviewed 13 May 2019
The UK is set to leave the EU with, at the time of writing, no deal agreed regarding the future relationship. Richard Smith looks at the current options and at any plans that can be made based on a degree of certainty.
There appear to be four options that could happen.
The deal with the EU is accepted by Parliament.
Parliament forces a cancellation of Brexit (which the EU has said it will accept).
Parliament forces further extensions to the date of leaving (which it is not known whether the EU will accept).
The UK leaves without any special deal, ie on World Trade organisation terms.
The European Union (Withdrawal) Act 2018 repeals the European Communities Act 1972 on exit day and from that date, the UK will cease to be a member of the EU. Exit day was originally set as 29 March 2019 but has so far been postponed twice and is now set for 31 October 2019 unless a deal is agreed in the meantime.
However, since options 1, 2 and 3 all mean effectively remaining subject to EU law, either temporarily or permanently, the situation for operators is quite simple since the only one they need to prepare for is leaving without a deal.
The customs union and single market
The EU is defined by the Treaty of Rome, which establishes its “Four Freedoms”. These guarantee the free movement of goods, services, capital and people anywhere within the Union. The first three of those four are further developed by two institutions.
The single market.
The customs union.
Neither of these involve the free movement of people. These are two distinct entities, though it may sometimes be hard to understand which is which, and the two are often confused.
Full members of the EU are members of both single market and customs union, but it is possible to be a member of either one but not the other. Turkey, Andorra and the Isle of Man are members of the customs union but not the single market and Norway and Iceland are members of the single market but not the customs union. With all the various options for deals with the EU being suggested (though only one is on the table), it is important to understand the difference between these two entities.
The single market
The European Commission says that the single market “refers to the EU as one territory without any internal borders or other regulatory obstacles to the free movement of goods and services”. The strategy is to improve efficiency, raise quality and help cut prices through the stimulation of competition and trade, ie by the application of private enterprise and the operation of the market. This is something that should be familiar to UK hauliers since it is exactly the same strategy that has been pursued in road haulage by UK governments since 1968. For such a strategy to succeed operations have to proceed on the famous “level playing-field” to avoid unfair practices by some tilting the playing field in their favour and possibly causing danger to workers and public by cutting corners. This requires the unfettered operation of the market to be constrained by a certain amount of regulation. Quality licensing of operators and control of drivers’ hours are just two of the aspects of this strategy introduced in the UK by the Transport Act 1968 and taken on the EU from 1992.
The necessary conditions for this strategy are fairly easy to produce in a single country since, by and large, economic and social conditions are not dramatically different and all are subject to the same laws. However, in a market that stretches from Finland to Italy and Ireland to Romania, a large amount of common legislation is required in all sorts of areas, some seemingly unconnected with the maintenance of a single market. This may be overly restrictive and a burden in some cases, and especially so when one of the partners has a democratic and legal system (some of it of centuries longer standing) that is uniquely different from the others. These ramifications in so many disparate areas explain why it appears to be so difficult to understand what needs to be done to effect an orderly withdrawal.
The other essential element is a set of common mandatory standards across the whole market and while this does tend to raise the standards of the lowest, it also prevents individual members from imposing higher standards than the mandatory ones.
The customs union
As explained above, the customs union is an entirely separate thing from the single market, though it does share one aspect in common. A customs union is, in part, an agreement between a number of States that there should be no customs tariffs applicable between them. This clearly supports the single-market principle by removing any barriers to trade between the members, effectively creating a free-trade area. However, the other aspect of a customs union, by definition, is that all parties agree to maintain a common set of tariffs against imports from countries not party to the union. This tends to negate one of the basic economic principles of trade — utility of place — and protects producers in the union from outside competition, tending to keep prices of goods higher than they otherwise might be. It also prevents one party to the union from fostering or maintaining a special relationship with a particular country or countries, for example, the USA and the Commonwealth in the case of the UK.
In the event of a “no-deal” exit from both the single market and the customs union, we must consider what difficulties UK-based operators may face.
Refer to the Brexit — Consequences for Road Haulage sheet in the Operator Licensing topic. This lists the issues that may arise with an indication of the possible consequences.
In respect of operations taking place entirely within the UK, the situation is relatively straightforward and there is no reason to suppose that anything will be any different in the days and weeks after leaving from what it was before.
EU law expressed in the form of directives has always had to be brought into force by separate legislation in every individual Member State so all of this body of law is already given force by UK legislation and the Withdrawal Act provides that even though the country leaves the EU and could immediately change or repeal any of these laws, all such legislation will remain in force as it is. EU regulations have not necessarily had to be incorporated into separate national laws, the European Communities Act having the effect of doing that on an automatic basis.
Nevertheless, many aspects of regulations are incorporated into our national law but, in any event, the Withdrawal Act also provides for all such direct EU legislation operative immediately before exit day to become effective as UK law even if it is not already incorporated separately.
The regulatory and operational environment for road transport operations will therefore not be changed by leaving the EU and worries about a lack of legislation or diminution of standards are groundless. This includes:
operator licensing, drivers’ hours, the Driver Certificate of Professional Competence (Driver CPC), working time regulations, plating and testing,
Changes will not happen unless at some time in the future our Parliament wishes it to. There may, though, be some other potential effects for the business.
Many businesses employ a number of workers who are nationals of other EU States and will need to continue to do so after exit day. The Government has agreed that in a no-deal scenario, EU citizens who have been resident in the UK for at least six months in any year over a total of five years before that date will be able to stay with their rights protected.
Those who qualify will need to apply for “settled status” through the GOV.UK website and have until 30 June 2021 to do so.
Those who do not meet the five-year requirement may apply for “pre-settled status” enabling them to stay for a further five years so they can qualify to apply for full-settled status.
In the meantime, EU workers may rely on their passport or national identity card to evidence their right to reside in the UK.
Employers of such workers should, therefore:
help and encourage EU nationals they employ to make the necessary application in good time
provide any documentation that may be required to support the application.
Goods vehicles and maintenance
Since most goods vehicles in the UK, indeed most vehicles of all sorts, are either fully constructed abroad or assembled in the UK with at least some parts sourced from abroad, any problems with the continuity of imports may delay the availability of new vehicles or cause problems with obtaining spare parts. Delivery delay for a new vehicle might not cause too much of a problem and normal service items should be available from a range of local suppliers, but the lack of a spare part which is required to put the vehicle back on the road certainly will cause a problem. Leaving the customs union could also mean that prices increase through the application of an import tariff. However, it is difficult to see why EU manufacturers would want to lose business by obstructing sales to the UK and both import delays at UK ports and import tariffs are entirely a matter for the UK Government, so the remedy is in their hands and not dependent on others.
ensure early booking of programmed maintenance and acquisition of any parts needed
consider their vehicle replacement programmes and the need to start the vehicle selection and acquisition process sooner
include vehicle and parts availability as one of the selection factors.
Brexit and international operations
Some 83,000 vehicles were specified on international operators’ licences at the end of 2018, slightly up from the 79,000 at the end of 2011. However, a truer reflection of the number of vehicles affected by withdrawal comes from the number of certified copies of the Community Licence, which fell from just over 37,000 to just over 32,000 in the same period. At the same time, the statistics show that only about 12% of powered vehicles travelling to mainland Europe were UK-registered and in terms of tonnes lifted both ways between the UK and EU27, EU27-registered vehicles carried about four times as much as UK-registered ones. None of this will provide much comfort to UK-based international hauliers but at least they know that EU-based ones must have similar, indeed greater, ones.
International operators will face the same problems as domestic ones but will also be subject to a wider range of issues, some based on the single market and others on the customs union. Single market issues broadly revolve around the vehicle, the operator and the driver while customs union issues are more concerned with the load on the back of the vehicle.
In terms of a potential “no-deal” exit, it is true that there is no single, comprehensive deal that replicates EU membership; however, there is a whole raft of separate “deals”, mostly based on international agreements between all the various countries under the auspices of the UN, that cover most of the areas, albeit there may be a bit more administration involved. International operators will already be familiar with those concerning drivers’ hours (AETR), dangerous goods (ADR), perishable foodstuffs (ATP), goods in transit insurance (CMR) and border crossing by customs-sealed loads (TIR) and most of these have been adopted by the EU, either wholesale or by replication of the provisions elsewhere. In these particular areas then there should be clarity as to the requirements and obligations.
Circulation of vehicles
In general, the free circulation of vehicles is guaranteed, other than through membership of the single market, by the Vienna Conventions on Road Traffic of 1926, 1949 and 1968. All EU members have ratified at least one of these Conventions independently of their membership of the EU and the UK Government ratified Vienna 1968 at the end of 2018. There are, therefore, no barriers to the free circulation of vehicles from the UK in the EU within the terms of the Conventions.
Additional rules apply to goods vehicles carrying loads for hire and reward into and through other countries, which, outside EU membership, may require a permit to be obtained. Some countries on the fringes of the EU already require either a bilateral or multilateral permit so operators to those countries will already know the ropes. The single market, though, obviates the need for permits so those who continue to operate to EU countries after EU exit day 2019 will need to do so under the European Conference of Ministers of Transport (ECMT) permit scheme, although the EU has proposed steps to allow permit-free operation until 31 December.
DVSA established an application scheme for ECMT permits under the terms of the Haulage Permits and Trailer Registration Act 2018 and the application period for 2019 annual permits closed on 18 January, though monthly permits may still be obtained. A permit allows unlimited journeys during the period of validity and while a permit may only be used by one vehicle at a time, permits may be transferred from one vehicle to another.
Vehicles used on an annual ECMT permit must be Euro VI compliant and cannot undertake cabotage, nor do the permits apply to unaccompanied trailers.
Monthly permits will be available for Euro VI or Euro V compliant vehicles.
Holders of Northern Ireland operator’s licences will not require a permit to travel to the Republic of Ireland.
Actions for operators
Operators who have applied for ECMT permits should ensure:
they are aware of what documentation is required and how to complete it
their drivers know what documents they must carry on the vehicle.
The Vienna Convention requires commercial trailers over 750kg to be registered separately so to take advantage of free circulation under the Convention, the Driver and Vehicle Licensing Agency (DVLA) has introduced a trailer registration scheme under the terms of the Haulage Permits and Trailer Registration Act 2018 and the Trailer Registration Regulations 2018.
From 29 March 2019, trailers travelling to any country that has ratified Vienna 1968 must be registered with DVLA, display their own registration plate and drivers of drawing vehicles must carry the registration certificate. Registration is not required for trailers travelling directly between the UK and Spain or for trailers travelling between Northern Ireland and the Republic.
UK driving licences were always recognised prior to 1992 when they were of unique design and issued under specific UK legislation. Now that they are of the fully-harmonised EU design issued under EU-compliant legislation, there seems no good reason why they would not continue to be accepted. However, as a precaution, drivers should obtain an international driving permit (IDP) in the appropriate format for the country or countries to be visited.
IDPs are issued under the terms of the Vienna Conventions but since not all the EU States have ratified Vienna 1968, different formats may be required. Countries that are party to Vienna 1968 will require a permit in 1968 format, while those that haven’t will require one in 1926 or 1949 format.
EEA countries and driver licences
All EU or European Economic Area (EEA) countries except Spain, Iceland, Ireland, Malta, Cyprus and Liechtenstein will require a 1968 permit.
These named countries, except Liechtenstein, will require a 1949 permit; Liechtenstein may require a 1926 permit. So a driver on a journey from the UK to Spain via France will need two separate IDPs.
Ireland does not require IDPs for UK licence holders.
Actions for operators
ensure their drivers obtain IDPs in the format(s) that will be required for any international journeys they make.
Despite the Driver CPC being introduced as a result of EU harmonisation, it is possible that the UK Driver CPC may not be fully recognised after EU exit day.
However, the UK Driver CPC will still be valid for drivers of vehicles operating under an ECMT permit (or any agreement that is reached).
UK nationals working for EU companies will need to exchange their UK Driver CPC for an EU one by applying to the relevant body in the country concerned.
Situation up to EU exit day
Vehicle insurance policies issued in the UK while it is a member of the EU have included third party cover applicable in all EEA countries. This means that there is no need for any separate cover to be obtained or for any special documentation other than the insurance certificate.
After EU exit day
After EU exit day, this arrangement will cease and the UK will revert to the previous situation with drivers being required to carry a separate “Green Card” as evidence of third-party insurance cover in EEA countries. UK motor insurance policies will still be required to include the compulsory third party cover for the EEA so there will be no need to obtain any additional insurance and the Green Card will be issued free of charge. However, given a substantial demand for the issue of Green Cards, insurers may increase handling charges.
Vehicles drawing trailers may require a separate Green Card for the trailer in some countries and if the insurance policy renews during the journey, two Green Cards may be required to cover both the expiring and renewed policies.
Actions for operators
obtain Green Cards for each of their vehicles that travel abroad
ensure drivers know that they must carry the Green Card on the vehicle.
After EU exit day, anyone travelling to the EU will require a full UK passport that has at least six months validity left on it. If a passport has been renewed before it expired, it may have had extra months added to the expiry date but any extra months after 10 years from the date of issue may not count towards the six-month requirement.
Actions for operators
Operators should ensure that drivers:
have valid passports with sufficient time left on them
renew expiring passports in good time
carry their passport with them.
Customs procedures do not theoretically concern the haulier, being the responsibility of the consignor of the goods but clearly it is the haulier’s vehicle and driver that are being directly affected by the formalities so operators must ensure that all the required documentation is available and properly completed.
In the single market and customs union, goods originating in one Member State may move freely within the union to any other Member State without any controls or inspections. Furthermore, there will be no import tariff to pay when they reach their destination. Within the EU, these are known as “goods in free circulation” or “community goods”. Conversely, goods originating outside the customs union must have a Common Customs Tariff paid before they can be sold or used inside the union. Under World Trade Organization (WTO) rules, the tariff must be identical for all countries of origin but may be different for different classes of goods. The EU Common Customs Tariff varies for different goods; generally it is about 3% of value, though it may be much more for some goods, perhaps as much as 15% or even more.
Once the tariff is paid in one Member State, the goods become community goods, or goods in free circulation, and may then move freely without any further formalities or tariffs payable. Goods may be imported to one State and move around the union without the tariff being paid but they are classed as “goods not in free circulation” and will be subject to full movement controls and customs checks until the tariff is eventually paid somewhere. It should be noted that in addition to these, even some goods that originate in the EU are also not in free circulation so some operators will already be familiar with the required procedures.
After EU exit day
All goods moving from the UK to the EU after EU exit day would be goods not in free circulation, whether they originate in the UK or are moving from a third country to the EU via the UK.
However, the UK and the EU have agreed that the UK will be a member of the Common Transit Convention (CTC) thus removing the need for multiple import/export formalities when crossing intermediate borders. This means that customs declarations will only have to be made, and import duties paid, once the goods reach their final destination. The relevant customs declarations are made by the exporter electronically through the New Computerised Transit System (NCTS) and the driver of the vehicle needs only to present a transit accompanying document at each border crossed. This should reduce any delays at borders to a few minutes per vehicle.
Certain goods may be subject to additional regulatory checks, such as phytosanitary checks on foodstuffs and plant material. Although that does add additional delay, given that we already have serious problems with the spread of disease that may be worth it. For such products entering the UK, there is a separate computerised process for registering import of plants and plant products.
Actions for operators
Operators should ensure:
they and their drivers know what the procedure is for transit under CTC
consignors of goods have made the necessary declarations before loading
drivers carry the transit accompanying document with them.
Although the Vienna Convention provides for free circulation, countries may require the driver to carry an ATA carnet or carnet de passage en douane as appropriate. The ATA carnet allows for duty-free temporary import of certain goods, such as trade samples, professional equipment and goods for fairs and exhibitions that will be re-exported within a short time. The carnet de passage en douane allows temporary admission of vehicles into foreign countries. These are both freely available and will be familiar to operators who were in the business prior to 1992.
Actions for operators
If carnets are required, operators should:
obtain them for required journeys in good time
ensure drivers carry the carnets with them
ensure drivers know how to deal with the carnets at borders.
The continuation of international haulage operations after Brexit is assured through a whole range of separate measures that exist outside of the EU single market/customs union arrangements. All transport managers should also have at least some familiarity with most of them, irrespective of how long they have been in the business because they are covered by the syllabus for the transport manager CPC.