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brexit transition

A firm deadline always focuses the mind.

With a mere six weeks before the EU and the UK must decide on whether to agree an extension of the transition period, those arguing for and against such a delay are becoming more vocal.

Earlier this week, chief EU negotiator Michel Barnier said the bloc remained open to extending the transition period for up to two years, subject to agreeing a UK financial contribution to EU coffers to cover that time.

Barnier’s letter to UK opposition MPs was sent as trade talks between the EU and the UK have hit an impasse, which both sides acknowledge, with fishing rights and the UK’s post-Brexit tax, environment and labour law regime the key sticking points.

No extension: PM Boris Johnson & cabinet

Who: Johnson has until 30 June to request an extension, which he has so far refused to do. He and his government are determined that the transition period/phase will end on 31 December this year, despite the distraction and disruption caused by coronavirus.

The arguments: Indeed, those in favour of sticking to the current deadline believe that COVID-19 has added urgency to the need to fully withdraw from the EU as soon as possible.

The virus exposed the UK’s over-reliance on supply chains from China and the argument goes that Brexit bestows the freedom to reinvent those supply lines.

International trade minister Liz Truss has said extending the transition would cause more uncertainty for businesses trying to plan for life outside the Customs Union while recovering from COVID-19.

The EU is also faced with funding recovery in those countries whose economies have been devasted by COVID-19 – namely Spain, Italy and France – and pro-Leavers want no part in this.

Adding credence to the government’s assertions on the transition period, policy documents on trade with the US, the EU and how the Northern Ireland Protocol on customs will work have all been published in the last month.

In between: the CBI

Arguably the UK’s leading business lobby group, the Confederation of British Industry has focused on urging the government to ensure good trade deals are in place and to avoid a no-deal scenario with the EU, the latter a key weapon in the UK negotiating team’s arsenal.

In particular, the CBI stresses the importance of putting services – financial, insurance and so on – at the heart of a new UK trading relationship with the EU.

For an extension: opposition political parties and logistics trade bodies including BIFA, the FTA and the RHA

Who: Opposition parties are urging the government to seek an extension to the transition period, while its steadfast refusal to do so is reportedly a source of tension among civil servants within the UK’s negotiating team.

From the international trade camp, the freight forwarding sector led by its trade association BIFA, the Freight Transport Association and Road Haulage Association have been the most direct in calling for a delay to the transition’s end.

The arguments: These boil down to the distraction of managing COVID-19 and a lack of time to secure trade deals, organise logistical changes and ensure effective legislation is in place.

Politicians in opposition parties, to whom Michel Barnier’s letter was addressed this week, cite the “catastrophic economic impact” of COVID-19 as reason enough to delay full Brexit.

The RHA echoes this argument, its chief executive Richard Burnett saying COVID-19 means hauliers, while supporting Brexit, “are simply not in a position to give the complexity of future trade arrangements with the EU the necessary focus”.

BIFA has said it has “great reservations” on whether the logistics industry can be ready in time for 31 December, calling no extension “risky and unwise”.