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Why must Brexit talks move onto trade so urgently?

British and European businesses say they need clarity and certainty from UK and EU negotiators to avoid imminent damage.

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Why must Brexit talks move onto trade so urgently?

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If Brexit was a football match, then half-time was reached this weekend between kick-off (23 June 2016, the day of the UK referendum) and the final whistle (29 March 2017, the date the UK leaves the EU). There is of course the possibility of extra time – but the green light has still not been given for talks on a transition or implementation period.

Across all sectors of the economy, and increasingly on the continent as well as in Britain, alarm calls have rung out for negotiations to move onto post-Brexit relations, fast. The obstacle – the impasse on priority issues – has raised the possibility of no deal being reached: acceptable or even desirable for some, catastrophic say many others.

The word “uncertainty” has peppered the Brexit debate across a range of issues from citizens’ rights and the labour market, to the Irish border, future funding, regulations – and especially, trade arrangements. The message from many in business: clarity is needed now.

With British and European business leaders due to meet UK Prime Minister Theresa May on Monday, here is a selection of recent comments from key players across the economy in Britain and in Europe.


The ticking clock

“We need agreement of transitional arrangements as soon as possible, and without urgent agreement many companies have serious decisions about investment and contingency plans to take at the start of 2018… Failure to agree a transition period of at least two years could have wide-reaching and damaging consequences for investment and trade, as firms review their investment plans and business strategies.”
business lobby groups the CBI, British Chambers of Commerce, manufacturing trade body the EEF, Institute of Directors, Federation of Small Businesses in a joint letter to UK Brexit Minister David Davis.

“We’re getting to a point of no return for some industries, there comes a cut-off point where they have to make fiduciary decisions to carve up the businesses and either ship jobs and roles onto the continent.”
Chris Southworth, Secretary General, International Chamber of Commerce told BBC Radio.

“(Clarity) about transition will be needed in Q1 2018 at the latest, with significant progress made before the end of 2017… Without early agreement on transition, the market will inevitably fragment, impacting services to UK, EU and global consumers, and will likely increase the cost of products and services for customers across the continent.”
TheCityUK, financial and professional services lobby group in its report on Brexit transitional arrangements.


“We are already selling holidays for the post-Brexit world, so we are preparing the business to operate in that environment… We do expect some form of agreement on aviation but we now need urgent clarity from government.”
Thomas Cook in a statement.

“We want to have reached agreement about our future partnership by the time the two-year Article 50 process has concluded… A strictly time-limited implementation period where we continue to have access to one another’s markets on current terms and take part in existing security measures will help investors, businesses and citizens in both the UK and the EU adjust in a smooth and orderly way. We expect this to last for a period of around two years. It should be agreed as early as possible, to provide certainty.”
UK Brexit Minister David Davis in a formal response to parliamentary committee report “Brexit: Trade in Goods”.


Cars and drugs: back and forth across the Channel

The UK car industry and its supply chain rely on the frictionless integration of products and people between Britain and the continent. Well over half of exports of cars and components go to EU countries.

“To maintain frictionless trade… interim arrangements must retain membership of a customs union with the EU and full participation in the single market. Any other arrangement risks additional administration, delays and costs, undermining the competitiveness of UK exporters and increasing the costs of imports.”
Mike Hawes, Chief Executive, Society of Motor Manufacturers and Traders (SMMT) in a Brexit position statement.

“The unbundling of one of Germany’s closest allies is unavoidably connected with high economic losses… A disorderly exit by the British from the EU without any follow up controls would bring with it considerable upheaval for all participants.”
Joachim Lang, Managing Director, Federation of German Industries (BDI) said in Berlin in October.


It is estimated that tens of millions of packets of medicines are supplied to and from the UK and the EU each month. A survey by the European Federation of Pharmaceutical Industries and Associations (EFPIA) of its members found that 45% expected trade delays if the UK and Europe fell back to WTO rules.

“This survey highlights not only the sheer scale of pharmaceutical industry integration across Europe – but also how essential this integration is to the successful and timely supply of live-saving treatments to more than 500 million patients. To avoid significant disruption to the supply, regulation and safety monitoring of medicines for patients in the UK and the EU, agreement and legal certainty on these future arrangements is urgently required.”
Mike Thompson, Chief Executive, Association of the British Pharmaceutical Industry (ABPI)

Farming and fishing

As well as trade, agriculture is also concerned about migrant labour, costs and especially changes to subsidies post-Brexit. The prospects for Britain’s farmers would appear to depend on sector and performance. A report by the Agriculture and Horticulture Development Board (AHDB) on various Brexit scenarios concluded that a future free-trade agreement with the EU could see incomes rise. But – and it is a big ‘but’ – average agricultural incomes could halve if no deal leads to protectionist barriers or low-cost global competition.

“We are very reliant on the EU for our exports, not surprisingly given that it’s an affluent region and it’s on our doorstep, and in the absence of that market we wouldn’t be able to find alternative markets to replace those.”
Phil Hadley, AHDB international market development director on BBC Radio.


“I don’t want to be all pessimistic because there are some really big markets opening up. The state of trade in India for example, there’s some massive opportunities there. But for me Brexit’s gonna be about what we get over and above what we’ve got, and I wouldn’t want to lose what we have in Europe at the moment… for UK farmers it’s 70% of our exports going into the EU, so we do need to preserve that.”
Cheesemaker Richard Clothier, Wyke Farms on BBC Radio.

“Outside the EU and free from the bureaucracy of the Common Agricultural Policy, our farmers will be able to focus on growing, selling and exporting more fantastic produce.”
UK Department for the Environment, Food and Rural Affairs

“The overall picture is that the economic consequences for all fleets in all scenarios are severe. Unless the current CFP continues, Brexit will lead to a significant decline in landing values, gross profit, and net profit for the fleets involved.”
University of Copenhagen study on the impact of Brexit on the Danish fishing industry.

“All of this is about making sure we remain competitive… We have rival processing centres in Bremerhaven (Germany) and Boulogne-sur-Mer (France) where they will be looking to capitalize after Brexit… any agreements about customs has to be done on both sides. If seafood is stuck in Calais for two days on its way to us, then that is no good either.”
Simon Dwyer, Seafood Grimsby & Humber. The seafood processing industry in northeast England is seeking special free trade status for local ports, with no import taxes or duties.


Keep calm and drink wine…

“Wine and spirit businesses on both sides of the channel unanimously agree that politicians need to provide clarity to ensure businesses have time to adapt to Brexit including agreeing a comprehensive customs agreement to avoid the imposition of tariffs where they currently do not exist and to minimise disruption to historic trade flows.”
Miles Beale, CEO, UK Wine and Spirit Trade Association (WSTA) in an industry call for early transitional rules.

“We want the fewest changes possible in commercial flows between the EU and the United Kingdom. Devaluation is the only known effect of Brexit right now. What frightens us the most are above all political declarations, as anti-English or anti-European feeling is very strong. Brexit must be a non-event.”
Jean-Marie Barillère, President, Comité européen des entreprises vins (CEEV) representing the EU wine industry said at Vinexpo Bordeaux 2017.


’No deal’ – better than a ‘bad deal’?

“If the UK’s future relationship with the EU were to rest largely on World Trade Organisation (WTO) obligations with no transitional arrangements in place, 40-50% of EU-related financial services activity (approximately £18-20 bn in revenue) and up to an estimated 31-35,000 jobs in the sector could be at risk, along with approximately £3-5bn of annual tax revenues.”
TheCityUK

“There’s only one country that does do that (WTO) and that’s Mauritania. Everybody else trades on trade agreements with their neighbouring countries… Nobody would agree that that’s a good idea for the UK to do that.”
Chris Southworth, International Chamber of Commerce

“Trading under WTO rules gives us time. Unless the EU sees Britain is prepared not to sign any FTA (free trade agreement) that Brussels puts on the table, we’ll only be offered a bad one… Better to trade, for a while at least, under WTO rules – which can be used as a platform to cut a better trade deal after March 2019.”
Liam Halligan, economist and co-author of ‘Clean Brexit’ said in an article in the Daily Telegraph.

“To make it clear: Yes, German industry wants to keep a very close relationship with Britain. But have no doubt: We prioritise the further development of the EU.”
Joachim Lang, Managing Director, Federation of German Industries (BDI)