U.K. reels as EU exit nears with no deal set
Fear rises goods will stall at ports
LONDON — The British government has canceled a contract with a company to ship in goods when the country leaves the European Union, after learning that the company turned out to have no boats and no experience running a ferry service.
It’s just one of many examples of the confusion and angst surrounding Britain’s no-deal exit from the EU. That exit is set for March 29.
British businesses fear that not having an EU exit deal will cause a ripping up of the trade rulebook and impose tariffs, customs checks and other barriers between the U.K. and the EU, its biggest trading partner, leading to gridlock at the ports.
Authorities had drawn criticism over the $18 million shipping deal with Seaborne Freight, part of plans to keep goods flowing if Britain leaves the EU without a deal.
The U.K. Department for Transport said Saturday that it had ended the contract because an Irish company that was backing Seaborne Freight, Arklow Shipping, had withdrawn its support.
The deal was scrapped when “it became clear Seaborne would not reach its contractual requirements with the government,” the department said in a statement Saturday. A department spokesman said the government is in talks with several companies to secure additional freight capacity, including through the Port of Ramsgate.
The department said no taxpayer money had been transferred to the company.
British lawmakers have not yet agreed upon a deal outlining departure rules and future trade terms. A withdrawal agreement between British Prime Minister Theresa May’s Conservative government and the EU was rejected last month by Britain’s Parliament, and EU officials are resisting U.K. attempts to renegotiate it.
Guy Verhofstadt, the European Parliament’s chief exit official, said last week that a no-deal departure would be “a disaster on both sides of the Channel.” The 27 other EU nations, as well as Britain, have started hiring more customs officials and taking other steps to protect themselves against the worst effects of the EU divorce.
Seaborne had been contracted to provide services between Ramsgate in southeast England and the Belgian port of Ostend to ease pressure on the busiest cross-Channel route between Dover, England, and Calais, France.
Criticism of the deal increased when it was discovered that part of Seaborne’s website appeared to have been copied from a food delivery firm.
U.K. opposition Labor Party leader Jeremy Corbyn said May’s Conservative government claimed to have “‘looked very carefully’ at Seaborne Freight before giving the company the contract, but apparently not carefully enough to notice that it didn’t have any ships.”
Labor transport spokesman
Andy McDonald accused Transport Secretary Chris Grayling of “heaping humiliation after humiliation on our country” and said he should resign.
Several lawmakers suggested that Grayling should review his role, and former Conservative business minister Anna Soubry said Grayling “should be quietly considering his position,” the Guardian said.
Grayling told Parliament in January that the scale of potential disruption if additional customs checks are introduced on the French side of the English Channel — at Calais, Coquelles and Dunkirk, where freight services disembark — “could be very significant.”
As part of contingency planning, the department sought bids for ferry capacity and judged the proposals based on journey time, quality of delivery plans and pricing. Brittany Ferries of France, Danish shipper DFDS and Seaborne won the contracts worth about $140 million for roll-on, roll-off ferries to carry about 4,000 extra trucks a week.
“The whole exercise is a complete and utter shambles,” Mick Cash, general secretary of the RMT shipping and transport union, said in a statement Saturday. “They are blundering on from crisis to crisis.”
The award to Seaborne Freight also drew criticism from lawmakers, who said the company lacked the experience to operate a similar service.
Grayling told BBC Radio on Jan. 2 that civil servants had done “due diligence” and believed the company could deliver the services required.
NETHERLANDS CASHING IN
Meanwhile, some businesses are leaving the U.K., and the Netherlands has emerged
as one of the winners in securing those businesses, vying with countries like Germany, France and Ireland.
About 250 companies are in talks with the Netherlands Foreign Investment Agency to potentially relocate activities in that country, according to a statement published Saturday. The candidates would join 42 companies that made the move last year, and the 18 early birds in 2017.
“I wouldn’t be surprised if the largest Brexit wave is yet to come,” Jeroen Nijland, who heads Netherlands Foreign Investment Agency, said in a telephone interview. “It normally takes about six months to two years from the first conversation we have with a company before it makes a decision, and our pipeline is now bigger than in earlier years.”
The country, which bagged the European Medicines Agency — an EU agency moving from London to Amsterdam — is initially luring corporate entities in the financial and media sectors, both of which require permits to operate in the bloc, Nijland said.
“Without it, they simply can’t operate in Europe,” he said.
High-speed traders are looking at the Netherlands’ largest city where proprietary-trading firms such as Flow Traders NV and Optiver BV have been a fixture for years.
The growth of Amsterdam as a trading hub will boost the Dutch share of European equity trading to around a third from 5 percent currently, the financial markets regulator AFM estimates. The watchdog also expects the country to capture nearly 90 percent of European bond trading.
The media industry is another area where the Netherlands has picked up wins. Discovery Inc. said in January that it’s applying for broadcast licenses in the Netherlands to ensure its pay-TV channels will continue to show across the European Union in the event of a no-deal exit.
Amsterdam’s metropolitan area last year attracted 28 companies that opened new offices as a result of the exit, the city said in a statement Saturday, estimating that 1,937 exit-related jobs will be created over the next three years from the date of relocation, from 170 in 2018.
Some companies that established offices in Amsterdam would’ve picked the U.K. if it hadn’t been for the EU departure, according to the news releases from the Dutch capital, pointing to Japanese bank Norinchukin as an example.
“Amsterdam is a magnet for international companies, with 2018 almost coming in as a record year even when excluding the [European Medicines Agency] from the tally,” Udo Kock, Amsterdam deputy mayor and the city government official responsible for financial and economic affairs, said in a telephone interview.
“I am very optimistic the city will attract many more life science, media and financial companies in the coming years, regardless of the kind of Brexit we will get,” he said. “In case of a hard Brexit I would expect some other sectors to find Amsterdam as well, notably logistics-related companies.”
Businesses across the Netherlands are repeatedly being asked to prepare for all scenarios while the government is racing to hire 928 additional staff members to deal with work stemming from the exit — customs workers, for instance, to check ferries in the port of Rotterdam, Europe’s largest, that leave for the U.K.
By the end of March, not all of the needed additional workers will have been recruited, the government has estimated.