How are EU member states preparing for a no-deal Brexit?
In this article we highlight what those EU member states likely to be most affected by Brexit are doing to minimise the impact of a no deal outcome.
Under the Common Travel Area (CTA), Irish and British citizens can move freely and reside in either jurisdiction and enjoy associated rights and entitlements, including access to employment, healthcare, education, social benefits and the right to vote in certain elections. The CTA pre-dates Irish and UK membership of the EU and so CTA rights are not reliant on EU membership.
In the case of a no deal scenario, all relevant EU legislation on imported and exported goods will apply for goods coming from and to the UK, including the levy of certain duties and taxes (such as customs duties, value added tax and excise on importation). The need for customs declarations and the control of shipments according to sanitary and phytosanitary (SPS) requirements for third countries will also come into effect.
In both Dublin and Rosslare Ports, sites suitable for temporary infrastructure have been identified and refurbishment work has started so these sites will be able to apply additional controls in a no deal scenario. At the same time, plans are advanced for the development of permanent infrastructure in both ports:
- At Dublin Port:
- 33 inspection bays for trucks coming off ships
- Parking for 270 trucks to ensure that trucks awaiting inspection do not halt other port traffic
- A dedicated Border Control Post (BCP) for live animals
- Office accommodation for an additional 144 staff within the port area
- A new traffic management system in conjunction with Dublin Port, to manage traffic to/from ferries
- At Rosslare Europort:
- 13 inspection bays for trucks coming off ships
- Parking for 35 trucks
- A dedicated BCP for live animals
At Dublin Airport, the volumes of traffic involved in the event of a disorderly Brexit can be catered for by existing facilities. A BCP is required for Veterinary, Forestry and SPS checks. This will include seven inspection rooms as well as ambient, chilled and freezer storage areas. These changes are currently in development and are expected to be ready by the end of 2019.
The Irish Government has already sanctioned €4m for the commencement of a phased process for the recruitment of additional staff to carry out the greatly increased volumes of import controls and export certification arising from Brexit. It has been announced that 400 additional customs officials will be trained and in place by end-March 2019, with a further 200 recruited by the end of 2019. The recruitment of veterinary personnel and 70 other support staff to implement SPS checks has commenced and an additional 61 Environmental Health Staff are in the process of being recruited.
In Budget 2018, around €120 million was made available to food businesses to help get ready for changes post-Brexit. As of December, more than 280 businesses were approved for loans under this scheme, 58 of which have progressed to sanction, to a value of €13.43 million.
Budget 2019 included an allocation of €115 million for Brexit measures across a number of Departments, such as:
- A €25 million allocation for essential customs requirements
- A €78 million package for farmers, fishermen, food SMEs and additional costs related to Brexit. A new Beef Environmental Efficiency Pilot (BEEP) was announced on 30 January 2019 as part of this package. BEEP is a targeted support for suckler farmers and is specifically aimed at further improving the economic and environmental efficiency of beef production. As well as environmental and climate benefits, the BEEP will provide farmgate investment at a time of market volatility and uncertainty related to Brexit. In addition, the Contingency Action Plan specifies that the sectoral and regional impacts of a no deal outcome in areas such as the agri-food may call for further targeted interventions and supports to business
- Increased funding for the Department of Business, Enterprise and Innovation for measures to support the opening of new markets for Irish businesses and a higher international profile.
- Increased funding for the Department of Foreign Affairs and Trade has already provided for the opening of 13 new diplomatic missions as part of Global Ireland 2025, which will help Irish exporters find new markets
According to the Irish Government, the Irish economy is still heavily reliant on the UK as a trading partner, with 17% (€39bn) of all exports destined for the UK and 14% (€30bn) of all imports sourced from the UK in recent years. This reliance is even greater for some sectors and in particular for the agri-food sector, where 39% (€4.8bn) of Irish agri-food products are exported to the UK and 47% (€3.7bn) are sourced from the UK.
In a worst-case scenario where the UK exits the EU without an agreement, Ireland’s GDP level will be expected to be 3.8% below baseline after ten years. In this scenario, while the economy, including jobs market, will still be growing, it will be doing so at a slower rate.
The French Government is planning for border inspection posts either to be expanded or constructed for the first time in Cherbourg, Calais and the Channel Tunnel, among others. SPS checks on live animals, meat and dairy products originating in or coming from the UK can be carried out after their entry into French territory in facilities located close to their entry points (French Ministry of Agriculture is working on listing these facilities).
Infrastructure managers will be asked to begin necessary work without delay (so that border checks are operational on 30 March 2019).
Over the coming months, extra staff will be appointed and trained to carry out customs and veterinary checks (580 jobs), and concentrate them in the regions most affected (largely in UK-facing ports, such as Le Havre, Calais, Dunkirk and the Channel Tunnel). In 2018, France already recruited an extra 250 customs agents.
The French administration is also looking at ways to simplify border procedures (e.g. paperless declarations). They have developed an information system allowing businesses to automate the border crossing by Heavy Goods Vehicles (HGV). This SmartBorder technology will be applicable at all points of entry/exit to/from Calais region and more broadly, Channel-North Sea.
It is based on 3 principles:
- The early completion of customs procedures before arriving at the border, by giving the barcode of the customs declaration to the driver
- The identification of the means of transport and the barcode of customs declaration of transported goods
- The automatic sending of the crossing notifications to the customs declarant, to avoid stopping the HGV
Under this approach, customs declarations must be identified with a barcode in the driver’s possession. The barcode establishes a link between the number plate of the HGV and its customs or transit declaration(s). All these declarations cover the contents of an HGV identified via its number plate upon arrival at the customs facility (port or Eurotunnel terminal): electronic registration of the HGV number plate and customs forms (also known as ‘pairing’) enables the HGV to be tracked as it goes through the facility, especially when it crosses the border. After the border has been crossed, the vehicle is not permitted to turn back.
On arriving in France, the haulier will automatically be directed to the green or orange lane depending on the status of the transported goods customs declaration:
- Green lane: no stop, direction the motorway
- Orange lane: going through a check area
The 3 most affected French agricultural sectors would be wine and spirits (+€1.3 billion trade surplus), dairy (+€100 million euros) and apples.
The target of the Customs service is to recruit 928 full-time workers in seven recruitment tranches and make the associated investments in equipment. By mid-August 2018, approximately 170 Brexit vacancies were filled with suitable candidates, but recruitment will not be complete by 29 March 2019.
Regarding the trade relationship between the EU and the UK, the Dutch government expects a “radical change” in all scenarios, with more barriers for agri-food trade than is currently the case. In 2018, the government agreed to an expansion of capacity at the Netherlands Food and Consumer Product Safety Authority (NVWA) and relevant agricultural inspection services, including recruiting extra staff.
The Port Authority of Rotterdam is consulting with terminal operators and surrounding municipalities to create additional parking areas for freight transport at or around the terminals. A simulation study into the possible impact of Brexit on the infrastructure in and around the terminals is also underway. The government and road authority will use the outcomes of this simulation to remove the most significant bottlenecks. In addition, the Port of Rotterdam Authority is helping, via daughter company PortBase, to make IT system connections that fully automate the formalities, to ensure the fewest possible delays in trading with the UK. The updated Notification Import Documentation 2.0 will be launched (and made compulsory) in March 2019 to enable digital prenotification of customs documents.
The Netherlands Bureau for Economic Policy Analysis has calculated that the impact of Brexit on the Dutch economy could total 1.2% of GDP by 2030. This is equal to 10 billion euros. Less trade may also mean less innovation in various sectors of the economy. However, Brexit can also create opportunities for Dutch businesses and the country has become more and more attractive to foreign companies. According to the Invest in Holland Network, 42 companies have moved to the Netherlands in 2018 as a result of Brexit, accounting for 1,923 jobs and some 291 million euros in investments, and more than 250 foreign companies are considering setting up operations in the country following Brexit. These are predominantly British companies, but also American and Asian organisations.
The United Kingdom is, after Russia, the second country of origin for freight transported via sea to and from Rotterdam, in terms of volume. After Germany, Belgium and Russia, the UK is the fourth country regarding total throughput, at some 40 million tonnes (8.5% of the Rotterdam total).
According to the Belgian Customs’ estimations, Brexit will result in an increase of +14% in import declarations and + 47% in export declarations.
With Europe’s second-biggest port at Antwerp, Belgium is increasing its 3,400-strong customs force with a first wave of 141 new staff, who will be operational as of April 2019. It is also investing in drones and underwater scanners for surveillance of its coastline and the North Sea, according to the Finance Ministry.
- The UK is the fourth largest trading partner of Belgian food businesses, representing 10% of total food exports
- 15 million of the 235 million tons shipped in and out of the Antwerp port go to or come from the UK
- About 85% of Belgian firms exporting to Britain are Flemish