DCN October Edition 2019

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TRADE LAW The fog of Brexit Just like a London ‘pea soup’, the Brexit situation has only become more murky, writes Andrew Hudson I WROTE AN EARLIER ARTICLE ON Brexit for this publication and thought it may be a good time to review the situation and whether there was any further clarity on the position. Is there any further clarity? The short answer is no. But there have been some developments. WHAT HAS BEEN HAPPENING IN THE UNITED KINGDOM? We have watched as the UK secured a time extension to negotiate an exit from Brexit during which time the UK government and Parliament have been trying to deliver a clear map to point. But it hasn’t happened and we have been witnesses to the UK Parliament and political system becoming further divided while the terms of the exit are even less certain. There has been a change in the UK Prime Minister that led to a massive change to the Cabinet. As new PM, Boris Johnson wants a “no deal” Brexit either to force the EU to deliver a better deal or to actually leave, even without a deal, accepting the chaos that follows, presumably as being loyal to the referendum which voted for the UK to leave the EU (even though that referendum did not set out which form of departure would be available or acceptable). The ruling Conservative (or Tory) party has splintered a number of different ways. A proposal by the PM and his party for a new election was rejected by Parliament which then passed a law stating that a “no deal” Brexit was unacceptable and that the government had to go back and negotiate a new deal. Which the PM doesn’t want to do. HARD-BALL POLITICS Boris Johnson is on the record of saying that there is “no way” he will agree to delay Brexit and the only way to force an outcome from the EU is to stand firm on that position on the basis that the EU would be equally at risk and would have to further compromise. Yet, there is no way to force the EU to give the UK a new deal. The PM and his allies have managed to “prorogue” UK Parliament to limit time to vote on the terms of a new deal. That has met with protests in the UK by those in politics and outside politics who see that the move by the PM represents a threat to democracy. Attempts by the new UK Minister responsible for Brexit to negotiate on what could be an exit outcome have Elena Schweitzer 54 October 2019 thedcn.com.au
Ian Ackerman been unsuccessful as the UK isn’t quite sure what it will (or can) offer. BUSINESS UNCERTAINTY As you would expect this has led to massive uncertainty in the UK business community and in the overseas community which trades with the UK. That uncertainty is taking a real toll. Investors have reportedly withdrawn $4.2bn from UK equity funds since late May with capital outflows of $29.7bn since the Brexit referendum in 2016. According to research by the Bank of England with about 6000 companies, that uncertainty had lowered capital spending on average by about 11%. The research claims to have found a direct and causal link between Brexit and lower investment. The research estimates that the level of UK productivity by between 2% to 5% over the three years since the referendum, possible due to work time being dedicated to post - Brexit planning. Other research by Make UK (representing UK manufacturing) has reported that UK manufacturers are halting investment in their businesses, with even stockpiling activity now being subdued, leading to concerns over whether the sector is less prepared than six months ago at the time of the last Brexit deadline. The same research indicated that domestic orders are falling and that export orders have also dropped, even though the potential weakening of the UK currency may make UK exports more attractive. PERILS OF UNCERTAINTY Uncertainty is anathema to investment and business decisions, not just in the UK but anywhere in the world. When you add in the uncertainty of the US v China trade war, disputes around access to the South China Sea, possible moves against Iran together with adverse economic results then the Brexit issue does not actually support ongoing investment whether financial or in the purchase of goods, plant and equipment. Many Australian companies use the UK as a base to enter the EU or use the EU to enter the UK market. Either way, the current convenient arrangements for movement of goods, services and employees between the EU and the UK could be cancelled or varied. That has an adverse impact on business continuity and financial viability. Whatever government and industry says about the need to prepare for Brexit, the ongoing uncertainty and posturing gives parties cause to do the opposite. Unfortunately the lack of preparation of those parties will also affect those who have prepared, unless some “two speed” clearance arrangements can be entered into. WITH WHOM SHOULD WE NEGOTIATE? The delays and uncertainties over Brexit have a major impact on our ability to negotiate a free trade agreement with the UK or to conclude discussions on proposed new visa arrangements. Those negotiations cannot start in earnest until the UK has left the EU and there is certainty around the timing or terms and conditions of that departure. That position can become worse if there was an election in the UK followed by a change in government or change in position of the current UK government. The current trade negotiations with the EU may well be affected, through the uncertainty of just which countries will Investors have reportedly withdrawn $4.2bn from UK equity funds since late May be in the EU. That leaves open how to deal with the possibility of the deal being completed while the UK is in the EU but then leaves the EU or UK leaves the EU without a deal and the EU is not clear on border arrangements with the UK. RECESSION FEARS The impacts of Brexit on the UK and the EU are likely to be significant. Some research suggests that a recession in the UK will follow a “no deal” or “hard” Brexit. At the least there will be adverse financial and economic effects on the EU and the UK. The EU and the UK are already major trading partners with Australia so economic adversity in those countries will have an adverse effect on Australian companies relying on those markets for some or all of their revenues. It is clear that the Brexit uncertainty is already being factored into business investment decisions. Moreover the uncertainty is not limited to financial and economic issues. There will Andrew Hudson, partner, Rigby Cooke Lawyers also be legal issues in having to manage border controls between UK and the EU where there have not been border controls for many years. Australian companies will need to separately document entry to and departure from the UK and the EU which has not happened before. DIFFERING APPROACHES There potentially will be different standards in both markets for all manner of goods and services. There probably will be different quarantine obligations and different obligations to pay customs duties and other clearance fees. The UK has now created its own “trade remedies” regime so that there could be dumping and countervailing duties imposed on Australian goods exported to the UK that are seen to cause material injury to UK industries. All of this also creates multiple new compliance obligations keeping in mind that political assurances rarely translate into legal protections. FINAL THOUGHTS The best advice I can provide at the moment is to remain informed from reliable sources. DFAT and Austrade are providing assistance as are the UK government and even the New Zealand government through a dedicated web presence. There are a number of reliable news sources online that are also worth utilising. Stay tuned to commentary in the DCN. You may even wish to get legal advice here and overseas. thedcn.com.au October 2019 55
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First published in 1891 October 201
Page 4 and 5: XXXXXX Contents 32 24 FEATURES 24 3
Page 6 and 7: First published in 1891 October 201
Page 8: WORD FROM THE MINISTER Victoria del
Page 11 and 12: Report released into Brisbane dedic
Page 13 and 14: Hirohito Takada Safety processes da
Page 15 and 16: You wouldn’t accept overbooking i
Page 17 and 18: Helping economies grow and customer
Page 19 and 20: INDUSTRY OPINION Removing road bloc
Page 21 and 22: WOMEN IN MARITIME Svitzer Australia
Page 24 and 25: LINER TRADES TO THE AMERICAS The li
Page 26 and 27: LINER TRADES TO THE AMERICAS Contai
Page 28 and 29: LINER TRADES TO THE AMERICAS 27 % A
Page 30 and 31: LINER TRADES TO THE AMERICAS 6.1 %
Page 32 and 33: PORT DESIGN, CONSTRUCTION & DREDGIN
Page 34 and 35: PORT DESIGN, CONSTRUCTION & DREDGIN
Page 36: PORT DESIGN, CONSTRUCTION & DREDGIN
Page 39 and 40: Weathering seasons Major ports in S
Page 41 and 42: BRINGING THE PORT TO THE PRODUCT T-
Page 43 and 44: equipment has been installed, inclu
Page 45 and 46: ARDENT OCEANIA A leading marine ser
Page 47 and 48: local barge sourced by the Southern
Page 49 and 50: speed and channel bathymetry. This
Page 51 and 52: TMC Marine Stages of autonomous shi
Page 53: TMC’s Captain Roger King When dis
Page 57 and 58: Image supplied Alexis Cahalan, prin
Page 59 and 60: WINTER CROP PRODUCTION AND AREA, AU
Page 61 and 62: THE 24TH ANNUAL AUSTRALIAN Shipping
Page 63 and 64: Roger King and Neil Lawson at PIANC
Page 65 and 66: INDUSTRY OPINION Traxens’ role in
Page 67 and 68: SUBSCRIBE TODAY! Stay up to date wi
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