Brexit: what next? Start lobbying now, experts urge shipping industry

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Allie Renison of Institute of Directors addresses Brexit event.

Allie Renison of Institute of Directors addresses Brexit event.

 

Brexit: what next? Start lobbying now, experts urge shipping industry

By James Brewer

Shipping interests have been advised to seize the moment to lobby new ministers and their departments while the UK government is groping towards a coherent Brexit strategy.

“The government will never be more open, more willing to listen” in this phase, said UK Chamber of Shipping chief executive Guy Platten.

He was opening a seminar on the theme Brexit: What next? at the Chamber’s London headquarters on July 18 2016.

Guy Platten

Guy Platten

An array of speakers underlined that there was considerable uncertainty as to trade and economic prospects in the wake of the Leave vote, which has been endorsed by new Prime Minister Theresa May, but on the positive side they said opportunities would emerge.

Mr Platten said that the UK Chamber of Shipping would launch a manifesto later in 2016 to spell out its priorities. “It will set out in very clear terms what policies should be implemented: it will be pro-free trade and pro-free movement of labour, ” he said.

Tom McTague

Tom McTague

The first guest speaker, Tom McTague, chief UK political correspondent of Brussels-based Politico.eu, said that there was complete chaos within some departments, and for instance David Davis, Secretary of State for Exiting the EU, did not even have a special advisor appointed at the time of speaking. Industries should realise that it was an extraordinarily “favourable time to get your message across to people, ” advised Mr McTague. “They [some people in Whitehall] do not know what is going on and are trying to find their way. These people are crying out for information – we have never had a department for Brexit before.”

What was being discussed, the journalist understood, was agreement on free movement of labour with an emergency brake, but that would have to be agreed by every single member of the European Council, and the European parliament would have a veto.

Who was in charge of UK policy?  “Theresa May is in control of this, she has the ultimate say. That is where her entire premiership rests. There will be a special Cabinet committee [on Brexit]. Watch out for who is on this committee. That will set the tone of the debate.”

Allie Renison.

Allie Renison.

Allie Renison, head of Europe and trade policy at the Institute of Directors, said that membership of the European Economic Area would provide a certain level of continuity, and passporting rights for financial service businesses would be able to to operate across the European Union. It would be more straightforward than the route of seeking bilateral trade deals.

Talk was about re-erecting trade barriers but “the idea has always been to decrease them, so this is uncharted territory.” Negotiations with ‘new’ third countries would probably go at the tail, but there was “a huge opportunity to make inroads where the EU failed before, ” she said, citing the Jones Act in the US which restricts cabotage.

Dr Swati Dhingra, lecturer at the Centre for Economic Performance, LSE, said that the consensus among economists was that Brexit was going to have a negative effect on the UK economy. In the event of the triggering of the “notice to leave” Article 50 of the Lisbon Treaty there would be potential tariff rises, and border checks and declarations would no longer be consolidated.

Dr Dhingra.

Dr Dhingra.

 

She cited a survey that had shown that uncertainty among UK businesses was at a 19-year high, greater than at the time of the 9/11 attacks on New York, or during the Scottish independence referendum campaign.

An economic downturn was already happening, and it was unlikely we would get out of it quickly short of an amazing trade deal with the US, Japan or China. The UK would be unable to reflate the missing volume of trade with countries that were far away. Dr Dhingra warned that striking trade deals with China and India would be difficult, as those countries wanted to protect their own industries. It was said that Britain did not have much of a voice in Europe, but outside the bloc it would be in a much weaker position than at present in dealing with the US and other major nations.

Dr Dhingra said that one way forward would be for the UK to propose a temporary agreement on the lines of Norway’s relationship to the EU, using the time to hammer out what conditions could be made with the rest of the market.

Toby Stephens of HFW.

Toby Stephens of HFW.

Toby Stephens, a partner with Holman Fenwick Willan, the law firm that sponsored the event, said that areas including ship safety, environmental regulations and crew welfare would have to be clarified. Business contracts that related to the EU where there could be arguments over frustration and force majeure would need to be examined carefully. It was to be hoped that the reciprocity developed over the years with European courts could be maintained.

There was a huge opportunity. International tonnage had grown 34% since 2009, but during that period the volume of UK tonnage shrank by 27%. When the UK was free of EU rules against state aid there was an opportunity to give tax breaks. Greece and Cyprus had managed to create a system for shipping without leaving the EU, but Singapore, where the predominant driver was a favourable tax regime, was able to make it more attractive.

The protection and indemnity clubs, which have been subject to close scrutiny by Brussels, had been covered by “one size fits all” legislation which did not necessarily work for mutuals.  “There may be a way of having a completely separate regime for P&I clubs which will help them with their business, ” said Mr Stephens.

The Panel during the debate

The Panel during the debate

He added: “We have a specialist maritime insurance expertise in the UK and it is in everyone’s interest to maintain that.”

In the offshore energy sector, there was a huge opportunity for the UK in relation to decommissioning of North Sea installations; and stepping away from EU legislation on ports could make those facilities more competitive in the wider world.

During a panel discussion, questions from the audience included a challenge as to whether there had been prior risk assessment of the potential consequences of a leave vote. Alistair Eagles, chief executive of Seatruck Ferries, replied that people did not expect the June 23 outcome. As opposed to taking a negative view, said Mr Eagles, “I’d rather say, what are the opportunities?”

...networking debate

…networking debate

Richard Greiner, a partner with Moore Stephens, added: “You cannot make plans for something that isn’t there. The collective expertise in this country is such that we can deal with what has to be dealt with, ” and in this the UK Chamber of Shipping had an important role. A member of the audience called for a co-ordinated strategy from the industry, and Mr Platten pledged that the Chamber would be at the forefront of such an approach.

 

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