EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

The United Kingdom submitted on 29 March 2017 the notification of its intention to withdraw from the Union pursuant to Article 50 of the Treaty on European Union. This means that, if the Withdrawal Agreement is not ratified, the Unions’ primary and secondary law will cease to apply to the United Kingdom from 30 March 2019 (‘the withdrawal date’). The United Kingdom will then become a third country.

Within the Union, the freedom for the Member States' road haulage operators (Union road haulage operators) to provide international carriage of goods by road is regulated primarily on the basis of Regulation (EC) No 1072/2009, which lay down the common rules for the access to the occupation of road transport operator and for access to the international road haulage market, respectively.

In the absence of a withdrawal agreement, road freight transport services between the United Kingdom and the Member States would cease to be governed by the said Regulations upon withdrawal. This would result in the loss of validity of Community licences issued by the United Kingdom to road haulage operators until the withdrawal date, and thereby loss of access to the Union’s road haulage market for holders of such licences. Similarly, European Union road haulage operators, on the basis of the existing Community licences, would equally lose automatic access to the United Kingdom’s road freight transport market.

It follows that, in the absence of a withdrawal agreement, as from 30 March 2019 there would be no basis in Union law for the provision of road freight transport services between the United Kingdom and the Member States by road haulage operators. The multilateral quota system of the European Conference of Ministers of Transport (ECMT) would become the only legal framework on which the continuation of such services could be based, subject to the possession of an ECMT permit. A vehicle equipped with an ECMT permit may carry goods between any of the 43 countries participating in the system, among which are 26 of the EU-27 Member States (all but Cyprus), the United Kingdom, and 16 other countries. Following an international haulage operation from the country of registration of the vehicle to another ECMT country, up to three operations where the country of registration is not involved are possible before the vehicle has to return to the country where it is registered.

The number of ECMT permits is limited for each Member State and they are distributed at national level by the competent authorities of each Member State. Permits for 2019 have already been distributed and their number cannot be increased at short notice. ECMT quotas are set annually and any changes to the number of permits allocated to an ECMT country have to be agreed unanimously by all ECMT countries.

By example, in 2019 there will be annual permits for 23,252 vehicles registered in the EU-27. In addition, there will be 984 annual permits for the United Kingdom and 23,472 annual permits for vehicles from other countries participating in the system. Considering the volumes of road freight transport services and the goods carried by road between the United Kingdom and the Member States (around 50 million tonnes in 2017; some 30 million tonnes from the EU-27 to the United Kingdom and some 20 million tonnes from the United Kingdom to the EU-27), it is evident that reliance solely on the ECMT quota system does not currently constitute an adequate solution to ensure basic road freight transport connectivity immediately after the withdrawal date in the absence of a withdrawal agreement. The Union and the Member States should work to ensure that an adequate number of permits be available within the ECMT system, so as to ensure basic connectivity.

The carriage of goods by road between the United Kingdom and the Member States is almost entirely in the hands of United Kingdom and Union road haulage operators. The loss by those operators of their right to provide road freight transport between the United Kingdom and the Member States would therefore result in serious disruptions including in respect of public order.

It is therefore appropriate for the Union to adopt temporary and time limited contingency measures to mitigate such potentially disruptive effects for connectivity.

In its Communication ‘Preparing for the withdrawal of the United Kingdom from the European Union on 30 March 2019: a Contingency Action Plan’ of 13 November 2018 the Commission announced its intention to propose a number of contingency measures to address the possibility that the United Kingdom might withdraw from the Union without a withdrawal agreement. As regards road transport in this communication the Commission pointed out that ECMT permits could allow only for considerably less traffic between the Union and the United Kingdom compared to existing levels.

The European Council (Article 50) reiterated its call, on 13 December 2018, for work on preparedness at all levels for the consequences of the United Kingdom's withdrawal to be intensified, taking into account all possible outcomes. This act is part of a package of measures which the Commission is adopting in response to this call.

The present proposal thus has the objective to lay down temporary measures to govern the carriage of goods by road between the Union and the United Kingdom following the latter's withdrawal from the Union (Article 1). These measures are intended to maintain basic connectivity for a strictly time-limited period (Article 9).

In the first place (Article 3), the proposed Regulation provides for the unilateral granting of rights for bilateral carriage to United Kingdom road haulage operators so that these can continue to carry goods between the respective territories.

The rights granted to United Kingdom road haulage operators are subject to conformity with the relevant Union law applicable to road freight transport (Article 4) and equivalent rights being granted by the United Kingdom to Union road haulage operators. The proposed Regulation lays down a mechanism (Article 5) to ensure that the rights enjoyed by Union road haulage operators in the United Kingdom are equivalent to those granted to UK road haulage operators under the proposed Regulation. If that is not the case, the Commission is empowered to adopt the necessary measures to correct the situation by means of delegated acts, including the limitation to the allowable capacity available to UK road haulage operators or to the number of journeys or to both. The assessment of the level of equivalence and the adoption of corrective measures by the Commission are not solely linked to strict, formal correspondence between the two legal orders; this is because of the marked differences between the respective markets and in order to avoid a blind mirroring approach - which might in the end prove counter to the Union interest.

The proposed Regulation, even though it aims to temporarily ensure basic connectivity for road freight transport, lays down a flexible mechanism to ensure that Union road haulage operators enjoy fair and equal opportunities to compete with United Kingdom road haulage operators once the United Kingdom will no longer be bound by Union law. A level playing field requires that, even after the withdrawal, the United Kingdom continues to apply sufficiently high and comparable standards in the area of road freight transport as regards: fair competition including the regulation of cartels, abuse of dominant position and mergers; the prohibition of unjustified government subsidies; the protection of workers and a high level of road safety; the protection of the environment; safety and security, or relating to the granting of licences to road haulage operators or to the qualification, training and medical controls for professional drivers. Moreover, it must be ensured that Union carriers are not discriminated against in the United Kingdom, be it de iure or de facto. The proposed regulation thus charges the Commission (Article 6) with the task to monitor the conditions of competition between Union and United Kingdom road haulage operators and empowers it to adopt the necessary measures, by means of delegated acts, to ensure that those conditions remain level at all times.

The necessary procedures are established so as to enable the Member States and the Commission to verify that road haulage operators carrying goods into the Union under this Regulation are licensed or certified by the United Kingdom in accordance with relevant standards, that all relevant national and Union legislation is complied with and that the allowed rights are not exceeded.

Explicit provision is made to recall that Member States must not negotiate nor enter into any bilateral road freight transport agreements with the United Kingdom on matters falling under the scope of this Regulation and that they must not otherwise grant UK road haulage operators, in connection with road freight transport, any rights other than those granted in this Regulation (Article 3). Nevertheless, the respective competent authorities will be able to cooperate as necessary for the good implementation of the Regulation (Article 7), so that the least possible disturbance is brought to the management of the road freight transport services that will continue to be provided under its aegis after the United Kingdom's withdrawal.