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EU-UK Trade and Cooperation Agreement: the impact on the transport industry

Four years after the Brexit referendum, the UK officially severed its ties with the EU on 31 December 2020. In the final moments of the transition period, and after more than nine months of negotiations, the EU and the UK reached an EU-UK Trade and Cooperation Agreement (TCA) on 24 December, outlining the terms of their post-Brexit partnership. The agreement provides for continued and sustainable air, road, rail, and maritime connectivity, albeit with limitations for UK companies when entering the EU’s Single Market. So, what are the main changes in the new relationship compared to the transition period? And what impact does the new agreement have on the EU-UK transport connectivity?

Air transport: providing a framework for EU-UK air transport connectivity  

The key takeaways of the agreement

The EU-UK Trade and Cooperation Agreement replaces existing EU legislation regulating the operation of UK airlines in the EU vice versa. The agreement states that British air carriers holding a valid license may continue to transport passengers and freight between the UK and the EU without limits on capacity or frequency. However, they are not allowed to operate between EU airports anymore. Onward carriage (‘5th freedom’) will be possible for the carriage of cargo to/from a third country (e.g. Paris-London-New York), if Member States agree this bilaterally and reciprocally with the UK.

To ensure a level playing field, both the EU and the UK agreed to eliminate all forms of discrimination which would safeguard fair competition between EU and the UK air carriers in each other’s markets. Moreover, the agreement includes ownership and control requirements to determine what airlines are considered ‘Community carriers’ and what airlines are considered ‘UK carriers’. To be considered as a ‘Community air carrier’, meaning an EU airline, the company must be majority-owned by EU interests. However, UK carriers which had a UK operating licence on 31 December 2020, may also be owned and controlled by EU/EEA/Swiss nationals.

The effects of the agreement

Due to the new ownership and control requirements, certain airlines have moved, such as EasyJet, Ryanair and Wizz Air, to stop UK investors from buying shares after 1 January 2021. The same airlines also announced that existing UK shareholders would see their voting rights restricted, and will not be allowed to attend, speak, or vote at meetings anymore.

Road transport: new border and customs checks result in administrative burden

The key takeaways of the agreement

As the UK has left the Single Market and Customs Union, border and customs checks have been reintroduced starting 1 January 2021. Haulers crossing the border from the EU to the UK or vice versa must ensure that they possess the necessary paperwork to cross the border with their goods. Passengers must also be in possession of the correct travel documentation. Regarding transport of private citizens, the UK continues to recognize EU driving licenses, but Member States no longer recognize driving licenses issued by the UK. Under the EU-UK Trade and Cooperation Agreement, haulers may continue to operate and transit between UK and EU territory without needing specific permits or additional certificates of professional qualification or licenses.

The effects of the agreement

In practice, road transport (especially transport of goods) has been highly disturbed due to the newly introduced border and customs checks. As a result of the increased administrative burden and longer waiting time at the border, increasing delivery times as well as the chance of spoiled goods, hiding of stowaways in vehicles, or other risks engaging the liability of haulers, many companies have decided to suspend their EU-UK service. This is for example the case of DPD or German company DB Schenker.

Maritime transport: no market access restrictions, but seaports will have to accommodate border and customs checks

The key takeaways of the agreement

The agreement maintains the principle of unrestricted access to international maritime markets and trades. This means that each party must grant access to ships sailing under any flag. Each party must also provide port services such as pilotage, towing or port assistance to international maritime transport service suppliers. Moreover, safety and environmental issues related to maritime transport are not regulated by EU law but by international treaties. UK companies and vessels will need to continue operating within the scope of this international regulatory framework.

The effects of the agreement

Although the agreement will require limited adaption from the maritime transport sector, maritime seaports will have to accommodate significant trade volumes that are transported by sea and facilitate haulers crossing the border from the EU-UK or vice versa by ferry. Around half of the UK exports and imports are heading towards continental Europe. Vice versa, for EU Member States, specifically those situated on the Atlantic coast, trade with the UK constitutes a big part of their overall trade numbers. As such, maritime seaports play an important role in facilitating the new border and customs checks as well as accommodating the subsequent traffic flows.

Rail transport: EU-UK cooperation continues on rail safety matters

The key takeaways of the agreement

The agreement itself does not include any specific provision for rail services. EU-based railway undertakings need to apply for UK licensing to run services in the UK, for which the UK has determined a deadline on 31 January 2022. UK-based railway undertaking running domestic services in the EU need an operating license issued by an EU Member State. The UK is no longer a member of the European Railway Agency (ERA) since 31 January 2020 and will not be seeking membership. However, the British Government encourages its rail industry to continue to work with ERA at technical and working levels, and has announced its intention to continue cooperating with the ERA on safety related matters.

The effects of the agreement

In practice, cross-border railway undertakings had prepared for the end of the transition period by requesting the relevant authorizations and licenses. Therefore, cross border rail services, such as the Eurostar, have continued with way less disturbance than road traffic. The Eurostar service was briefly suspended in December to limit the spread of the newly-identified COVID-19 variant, but not as a consequence of Brexit. Traffic has since then resumed, to the capacity allowed by the COVID travel restrictions in place on both sides of the Channel.

The limited impact of Brexit on rail freight, compared to road freight, can be explained by the much smaller number of goods transiting by trains compared to goods transiting by truck. If road customs check congestions are not reduced, however, this could trigger a reorganisation of supply chains to the benefit of the rail freight sector.

Next steps: ratification and implementation of the agreement

It is important to note that the EU-UK Trade and Cooperation Agreement and the rights and conditions it contains are not set in stone. Firstly, it is for now an “agreement in principle”, and will be provisionally applied from 1 January until 28 February 2021, pending the final consent of the European Parliament. Additionally, there are still some aspects unclear in terms of the enforcement of the agreement.

Once ratified, the agreement plans for the creation of a Joint Partnership Council, which will oversee the realization of the agreements’ objectives and facilitate its implementation. To fulfil this mission, it has the power to amend the substantive provisions of the agreement. The Joint Partnership Council will be composed of varying EU and UK ministers, depending on the topic that is discussed. It is not yet clear when the Joint Partnership Council will hold its session or at what frequency, and what the exact impact of its creation will be.

Dr2 Consultants has extensive expertise and network by providing support to stakeholders in the transport sector, ranging from rail and aviation to the maritime sector, and assists companies understand the consequences and implications of Brexit through its Brexit Office. We tailor our services, knowledge and expertise to support organizations in the most bespoke way and achieve tangible results. If you would like to know more and gain support in understanding the post-Brexit regulatory maze, please contact us via our website.

Brexit Office

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Jasper Nagtegaal Managing Partner at Dr2 Consultants

Dr2 Consultants is pleased to announce Jasper Nagtegaal (1985) as new Managing Partner. Nagtegaal has a professional background in maritime and logistics, he has fulfilled several pivotal roles predominantly related to Public Affairs and Business Development.

Jasper Nagtegaal will succeed Marlene ten Ham, who will return with her family to the Netherlands. Ten Ham – who contributed to the impressive growth of Dr2 Consultants over the previous ten years – will continue to work for organisations in (re)shaping their corporate and external affairs. Ten Ham will remain involved as Dr2 Associate Partner.

At Dr2 Consultants, alongside Managing Partner Margreet Lommerts, Nagtegaal will manage the international team of twenty colleagues and work for a wide range of clients including corporations, NGOs and European associations. Nagtegaal is looking forward to contributing to the further expansion of Dr2 Consultants in Brussels.

European Commission sets out coordinated response to counter the economic impact of COVID-19

On 13 March 2020, European Commission President Ursula von der Leyen announced a set of coordinated measures to fight the COVID-19 outbreak in the EU Member States.

The Commission will use all the instruments at its disposal to mitigate the consequences of the pandemic, in particular:

  • To ensure the necessary supplies to our health systems by preserving the integrity of the Single Market and of production and distribution of value chains;
  • To support people so that income and jobs are not affected disproportionally and to avoid permanent effect of this crisis;
  • To support firms and ensure that the liquidity of our financial sector can continue to support the economy;
  • To allow Member States to act decisively in a coordinated way, through using the full flexibility of our State Aid and Stability and Growth Pact Frameworks.

The Member States are encouraged to take all necessary measures to decrease an economic downturn. The Commission will apply flexibility in its supervisory role, allowing for the implementation of wide ranges of state aid schemes and flexibility in the EU fiscal framework (e.g. wage subsidies, suspension of payments of corporate and value added taxes or social contributions). Also, EU State aid rules enable Member States to help companies that are in need of urgent rescue aid or need to cope with liquidity shortages.

The Commission considers that the COVID-19 pandemic qualifies as an “unusual events outside the control of government”, which allows for accommodating exceptional spending to contain the COVID-19 outbreak such as health care expenditure and targeted relief measures for firms and workers.

In the coming weeks, €1 billion will be redirected from the EU budget as a guarantee to the European Investment Fund to incentivize banks to provide liquidity to SMEs and midcaps.

Coronavirus Response Investment Initiative

Besides measures stemming from national budgets, the European Commission will set up a Coronavirus Response Investment Initiative worth €37 billion to stimulate the economy. In addition, the Commission is proposing to extend the scope of the EU Solidarity Fund by also including a public health crisis within its scope, in view of mobilizing it if needed for the Member States that have been hit hardest.

Transport

The transport sector has been hit especially hard by the spread of COVID-19. According to Von der Leyen, Member States are encouraged to take all necessary measures to support people in certain sectors such as transport, through, for example, short term employment schemes. Article 107 of the Treaty on the Functioning of the EU enables Member States to compensate companies for the damage directly caused by exceptional occurrences, which is applicable to aviation and tourism.

On aviation, the Commission has proposed targeted legislation to temporarily alleviate airlines from the “use-it-or-lose-it” rule – whereby air carriers must use at least 80% of their airports slots within a given period in order to keep them within the corresponding period of the next year. This is done to lower the economic impact for airlines, as well as the ecological impact of flying empty airplanes to be able to keep the slots. This targeted legislation, however, still has to be approved by the Council (expected next week).

Dr2 Consultants among top EU Public Affairs Consultancies in Brussels

Dr2 Consultants has been shortlisted among the top 60 EU Public Affairs Consultancies in the range of mid-to-large consultancies, published by Best in Brussels. With key sectoral expertise in digital & tech, transport and sustainability sectors, Dr2 Consultants has grown into a well-established consultancy firm and has experienced tremendous growth over the past years.

In 2019, Dr2 Consultants further expanded its client portfolio and grew its team of Public Affairs professionals who provide continuous guidance, support and strategic advice to our clients at both EU and Belgian level.

Furthermore, Dr2 Consultants opened two new offices, in New York City and in Copenhagen which, together with offices in Brussels, The Hague and Shanghai, form part of a network covering three continents and five countries.

In addition, Dr2 Consultants recently launched brand-new services:

  • the European Green Deal Impact Scan that helps companies identify risks and opportunities of new and existing legislation linked to the Commission’s European Green Deal initiatives.
  • the Brexit Office which offers support to organizations from local startups to European associations and corporations planning to settle in Belgium following Brexit.
  • the Dr2 Academy which provides tailor-made coaching for Public Affairs professionals and organizations about the skills and knowledge needed to be successful in the field of EU Public Affairs.

Read our full profile here and get in touch with us for more information on how we can support your business.

 

News alert: Dr2 Consultants launches European Green Deal Impact Scan

The start of the new European Commission marked also the start of a new European Growth Strategy: the European Green Deal. The ultimate goal: to become the first climate-neutral economy by 2050!

The measures stemming from the European Green Deal will provide opportunities but will also pose challenges to businesses. Whether you are a front runner in your respective field or a company which is challenged by these new policies, the European Green Deal will affect your business.

Dr2 Consultants’ experience in dealing with sustainability issues allows us to identify clear-cut opportunities and threats for organizations dealing with the green transition.

Dr2 Consultants has, therefore, developed a ‘European Green Deal Impact Scan’. The Impact Scan will give you a comprehensive overview of how the European Green Deal will affect your business, identifying the opportunities and challenges as well as highlighting moments to positively influence policies and legislation.

If you want to know more about our European Green Deal Impact Scan, please visit our dedicated web page and do not hesitate to reach out to Ward Scheelen via w.scheelen@dr2consultants.eu.

Visit EGD Impact Scan webpage

News alert: Dr2 Consultants opens Brexit office

Tomorrow, on 31 January, the United Kingdom will officially leave the European Union, and the two parties will have eleven months to negotiate a formal trade agreement regulating trade relations between from 2021 onwards.

The Brexit brings uncertainties for companies currently based in the UK with many of them considering to move their headquarters to the EU where they can enjoy the benefits of the single market. Being the capital of the European Union and having an excellent geographical location with the vicinity of other European capitals, it is no surprise that numerous companies have looked at Belgium as a potential new location. Belgium is strategically located in the heart of Europe with access to critical infrastructure for maritime, rail and road transport.

Belgium, however, having no less than six governments, is a complicated political environment, where competences are spread over different levels. Guidance in the Belgian and European maze is therefore essential to develop businesses in Belgium.

Dr2 Consultants, a well-established Public Affairs consultancy based in Brussels, helps businesses find their best locations in Belgium and assist them to build constructive and long-lasting relations with Belgian and European stakeholders, develop and implement comprehensive Public Affairs strategies.

If you want to know more about our Brexit services, please visit our dedicated web page and do not hesitate to contact us at c.kremer@dr2consultants.eu for more information.

Dr2 Consultants hosts successful transport networking event with focus on sustainability

On 22 January, Dr2 Consultants hosted a transport networking event welcoming over 60 representatives of the transport sector both from EU institutions and private companies.

The event at Holland House provided an opportunity to exchange views about the policy priorities of the EU. The networking event featured two keynote speakers, Mr. Kristijan Ležaić, Counsellor at the Croatian Presidency of the Council of the EU, and Mr. Daniel Mes, member of Executive Vice-President Frans Timmermans’ cabinet giving interesting insights about the impact of the European Green Deal on transport.

The Presidency will focus on the improvement and finalization of the Trans-European Transport Network (TEN-T) and the achievement of a competitive and sustainable shipping sector. The Croatian Presidency will also try to finalize trilogues on the Connecting Europe Facility (CEF) as soon as the negotiations for the next Multiannual Financial Framework (MFF) 2021-2027 are completed.

Mr. Daniel Mes explained that the Commission is committed to work towards a sustainable transport sector that is beneficial for all. The Climate Law that will be presented in February will propose binding targets that will allow the EU to become climate neutral by 2050. Mr. Mes invited stakeholders to take an active role in shaping the EU’s climate agenda.

“At Dr2 Consultants, we promote constant interaction between policymakers and stakeholders in order to ensure future-proof legislation, especially now, at the beginning of the new policy mandate and in view of the challenges the EU is facing. We look back at a successful event and we look forward to gathering colleagues from the transport, digital and sustainability sector in the coming months.”- added Margreet Lommerts, Managing Partner at Dr2 Consultants.

Dr2 Consultants appoints new Junior Partner

Dr2 Consultants is pleased to announce the appointment of Viktoria Vajnai as Junior Partner.

Dr2 Consultants is a well-established consultancy firm situated at the heart of the Brussels’ European Quarter. The consultancy specialises in areas of transport, digital & tech and sustainability. An international team of 20 consultants provide guidance, support and strategic advice to clients in the fields of EU and Belgian Public Affairs, association management, training and coaching, policy monitoring and management consulting. Dr2 Consultants’ network spans across three continents with offices in Brussels, The Hague, Copenhagen, New York City and Shanghai.

We are thrilled about the new role of Viktoria, which will contribute to our ongoing success and growth ambition” said Marlene ten Ham and Margreet Lommerts, Managing Partners of Dr2 Consultants.

Viktoria joined the company in 2017 and has been working as senior consultant advising clients on transport and sustainability. She has 15 years of experience in EU Public Affairs, communication and strategic management. As Junior Partner, Viktoria will work together with the Managing Partners to further expand Dr2 Consultants’ business and service its clients.

Johan Goossens joins Dr2 Consultants

Mr. Johan Goossens, who holds a master’s degree in business administration from Vlerick Business School and an engineering degree from the Katholieke Universiteit Leuven, has joined Dr2 Consultants as a Senior Consultant.

Mr. Goossens, who has a strong track record in circular economy and sustainability issues, will head Dr2 Consultants’ Sustainability and Circular Economy sector. He will support and guide our clients in their Public Affairs activities at both European and Belgian level.

Mr. Goossens has sound experience in strategy, stakeholder management, communication and public relations, Public Affairs (both national and European), finance, human resources and operations. He is also involved in the work of several non-for-profit organisations where he holds positions as a member of the board of directors. He was also the chairman of the Regulatory Affairs Committee of the European umbrella association Expra (Extended Producer Responsibility Alliance).

Mr. Goossens speaks Dutch, French and English.

To visit Johan Goossens’ profile on our website please click here.

To learn more about our Sustainability and Circular Economy sector please click here.

New offices in NYC and Copenhagen

DR2 Consultants opens offices in Copenhagen and New York, in addition to the existing offices in The Hague, Brussels and Shanghai. With this, DR2 Consultants expands its worldwide network even further.

During the late summer drinks in The Hague, DR2 Consultants presented its annual trend report, which this year is dedicated to global public affairs. Founder and senior partner Frans van Drimmelen indicated in his presentation that he sees a clear increase in the importance of global public affairs, in which policy areas and companies extend across borders.

DR2 Consultants Copenhagen

Your key to the Nordics
From Copenhagen DR2 Consultants focuses on public affairs and corporate communications in the Nordic region and the Baltic States. The new office is managed by Jeroen Lammers. He has extensive experience, including in Denmark, the EU, the OECD, and in the Netherlands, in assisting companies and organizations with substantive analyses and impact strategies.

DR2 Consultants New York

Your key to the world
From New York, DR2 Consultants focuses on global politics and developments, with a special focus on the Sustainable Development Goals (SDGs). The new office will develop public affairs strategies towards international organisations, including the UN and the IMF. DR2 Consultants New York is led by Eelco Keij, who has long-standing experience at the United Nations in international politics, lobbying and fundraising.

Learn why global Public Affairs is on the rise here.