BREXIT: A GLOBAL IMPACT ON UK TRANSPORT COMPANIES?
by Isabella Pileri
Life after Brexit. What are now the UK’s options outside the European Union?All is highly uncertain, and this includes the future of the transport companies.
At first, it’s probable that there will be a transition period during which the UK laws, regulations and market access as an EU member will be phased out. But after this period, new agreements will change the relationships between the UK and the EU.
Political observer agree that a possible model for the UK after Brexit could be Norway, that as a member of the European Economic Area, have access to the Single Market and to european transport legislation.
Take, for instance, the maritime cabotage services. In this field, Norway pays no taxes or duties on goods moving across the EU borders, and this could be a good path to follow, but the future is open. The UK could sign up to the EU Countries special Agreements as Norway, and in such a case the most important element will be the European political will with regard to the “revenge” against the Brexit. If conversely the UK could decide to negotiate new bilateral Agreements with no EU Countries, by making this decision the destabilising effect on its relations with the EU would be very clear.
Brexit effect on the regulation to which UK transport companies are subject
European Communities Act 1972 (the ECA) provides for the adoption of EU law into domestic law. After Brexit, EU law implemented via primary legislation is going to be unaffected whereas secondary legislation made under the ECA is going to fall away. The UK will of course still be subject to its obligations under any international treaties such as the Convention on the Chicago Convention (1944) and MARPOL, the International Convention for the Prevention of Pollution from Ships.
In the aviation sector, following the Brexit, the UK will cease to be a member of European Aviation Safety Agency (EASA). EASA is the entity which, amongst other things, issues type certificates for aircraft on behalf of EU Member States. However, the “Basic Regulation” as set out in Regulation (EC) No 216/2008, under which EASA operates, contemplates that EASA is open to participation to European third countries which are non-EU Member States (such as Iceland, Liechtenstein, Norway and Switzerland): if the UK became an EASA member state under this arrangement, it will not have voting rights in the EASA decision-making process and would need to comply with all EU law in the aviation safety field, unless negotiated otherwise.
In the rail sector, the ORR (Office of Rail and Road), responsible for both economic and safety regulation in UK, derives much of its regulation from the EU and is therefore designed to be a ‘one size fits all’ for all European rail networks. In the absence of this system, ORR could in theory seek to modify the regulatory framework in a way that it considered better suited the rail network in UK.
Impact of the vote on UK transport companies : ability to trade and operate within Europe
In the aviation sector, low-cost carriers have particularly benefited from the freedom of establishment rules to set up business in countries with low labour costs and without any limitations as to pricing , frequency or capacity: in this sector, UK's access to the free EU market was a key factor in the rising of these companies.
This situation could be easily maintained if the UK keep joining the ECAA (European Common Aviation Area); this scenario depends on the agreement of ECAA existing members, who may be more recluctant to welcome the UK and its LCCs.
In the shipping sector, the ability of UK shipping companies to trade within Europe is going to be unaffected if the UK, for instance, becomes a member of the European Economic Area (EEA): probably indeed the Brexit won't impede the right of UK shipping companies to carry goods from or to EU ports with no taxes or duties payable on goods moving across internal borders of the single market or the right to offer maritime cabotage services across the EU, pursuant to Council Regulation (EEC) No 3577/92, but the degree of access to these benefits would clearly depend on the type of exit scenario.
In the rail sector, the ability of UK rail operators to bid for franchises and operate in the single market will be determined by the nature of the after-Brexit relationship between the UK and the EU.
Impact of Brexit on EU transport companies: their ability to operate in the UK
For instance, at present, in the aviation sector, any aircraft owned by, or leased to, nationals or companies with their main place of business or registered office in the EEA and the Commonwealth may be registered in the UK. Is open to doubt if this ability to register aircraft on the UK aircraft register would be open to EEA entities post-Brexit.
In the rail sector, in theory, we envisage ability to EU or EEA transport companies to tender for rail franchises in the United Kingdom is going to be substantially unchanged after Brexit, particularly if the UK remains part of the integrated EU railway system.
At present, in the shipping sector, a qualified owner could register any ship in the British register. The concept of “qualified owner” includes corporate bodies in EEA, but is open to doubt if this ability to register ships on the British register is going to be open to EEA entities.
These few key considerations demonstrate the complexity of the situation in United Kingdom and show that UK has not yet started its process of political after-vote stabilization.
As the dust also settles after the UK vote to leave the EU , legal opinions are emerging as to how the UK's departure from the European Union might be slowed or even stopped via a Scottish block or via the operation of Article 50 of Lisbon Treaty or, also, via a second national referendum.
In other words, the referendum result itself is not legally binding in UK law, but has changed everything politically and has generated a certain cooling of the relationship between UK and the whole of Europe.
In particular, Article 50 is the mechanism by which the UK will end its 40-year relationship with the EU: a phrase of Article 50 that has given lawyers and legal-experts (such as Nick Barber, Tom Hickman and Jeff King) pause for thought is the one that says that also a EU member can leave the Union “in accordance with its own constitutional requirements”.
For the UK Constitutional Law Association, indeed, it is argued that under UK
constitutional settlement, the prime minister cannot issue a notification under Article 50 without being given authority to do so by an act of Parliament. There is also an attempt to crowd-fund legal advice on the issue if Parliament should decide in this case and Crowd Justice website says a legal challenge could be the 'most important public law case in living memory'. Probably, this unquestionably and extremely complex question will be hard to resolve rapidly.