At midnight (CET) on 29th March next year, the UK will cease to be a member of the EU. At a stroke, unless there is an agreement beforehand, UK becomes a third party to the EU, and the whole legal basis of the relationship with UK will change. What will be the implications for the EO services industry?
On the table is a withdrawal agreement (WA) which if agreed will prolong the application of EU law to the UK until midnight on 31st December 2020. This gives 21 months to negotiate specific agreements. As is well signalled, the WA is stalled due to the failure to find a solution which will avoid a hard border between the Republic of Ireland and Northern Ireland. Without the WA, the UK will crash out with no deal. In this situation, no-deal means no-deal!
Since 2000, when a resolution was signed to co-operate between the EU and ESA, the EU has taken a stronger interest in space to the point where a new EU Space Programme is being proposed by the EC. The UK would clearly not be part of the programme without specific agreements which could be made. At present this would mean no participation to the 2 flagship programmes Galileo and Copernicus and no access to the R&D programme (currently H2020). Just to be clear, the UK would still be a member of ESA and able to fully participate to ESA programmes. This includes the technology development necessary for Galileo and Copernicus, but the UK participation would stop once EU funds were being used.
In the event of the no-deal scenario, many other issues will very rapidly become a real problem ie customs, goods transportation, aviation etc. It is no exaggeration to say that there will be chaos. Personally, I consider it completely irresponsible that the UK government is not setting out these implications which can easily be seen in the series of “Notices to Stakeholders” which have been published by the EC. The equivalent UK papers which started to be published last week are bland, lacking any advice and everywhere put responsibility on the EU to act. In these circumstances, participation to the EU space programme will be low on the list of negotiation priorities. At the outset of Brexit, I would have considered it highly unlikely that the UK would not participate fully to Galileo and Copernicus but the row which has exploded over access to Galileo and the announcement by UK that €92m will be invested to consider a UK GNSS shows that the outcome is less clear. It is also highly ironic given the UK opposition to the European GNSS programme back in 2000/2001 on the basis that the US GPS was adequate.
But, in the event of agreement for the WA everything changes and a comprehensive UK-EU deal becomes possible. UK companies get a good return out of H2020 being good partners to projects. One of the simplest points to negotiate should be UK participation to the European R&D programme. Indeed, it has already been announced that a shadow programme will be executed in the UK meaning that UK companies can be partners to H2020 projects - only that they will be paid directly in the UK (through a new agency I believe). Since there are many other third-party countries participating in H2020, it should not be complex to have the same or similar agreement with the UK. Longer term, UK will decide how much budget to allocate but in the next few years there should be no real change. Separate agreements are necessary for EASME and (I think) Erasmus+ programmes.
For our sector, Copernicus is the programme of most interest. Currently, as well as the EU28, Norway and Iceland have negotiated participation to the programme. In principle, after leaving, the UK can do the same if it wishes. In a favourable negotiating environment this should not be too complex.
In the recent UK government white paper, referred to as the Chequers proposal, the UK indicates its interest to continue partnerships in space and particularly in the Galileo and Copernicus programmes. The UK government has invested significantly in Copernicus since the start of the programme, both via ESA and via the EC. The UK industry has contributed strongly to the programme, in up-stream as well as downstream and both UK and EU can benefit if this were to continue.
Financially, it should be attractive also for the EU to maintain a UK contribution, whilst the UK would continue to benefit from the data and information streams which Copernicus and its Sentinels generate. The relationships with the agencies entrusted with the responsibility to deliver Copernicus Services would need to be negotiated on a case by case basis as their governance and legal base differ considerably.
In addition to supplying EU (and UK) decision makers with global, strategic, geospatial information, the Copernicus programme also has a goal to deliver economic benefits through the development of the downstream industry and commercialisation of services. The industry anticipates a renewed effort towards this goal as a result of the EU Space Programme proposal. In particular we look for:
- greater use of commercially supplied data coming from investments made by the industry,
- a shift towards the procurement of services rather than infrastructure,
- continued support to the establishment of the industry through accelerator and other programmes
- support (non-financial) to enter and develop export markets.
Much discussion will take place on this over the next 12 to 24 months in the lead up to the next financial period of the EU. If the UK is missing from these discussions both sides will be losers with the strong elements coming from the UK space activity missing from the considerations made in Brussels.
One further element will be the relationship with GEO; the Group on Earth Observations where both UK and the EU are members with the EC co-ordinating the European efforts. As this is an ad-hoc relationship it may be possible to continue but without H2020 or Copernicus agreements, the UK role will be seriously weakened.
EARSC membership is open to all European companies which will include the UK whatever is the final relationship. As such companies will be able to follow and to an extent influence the industry position. However, full participation of the UK in the programme through an Association agreement will be the only way in which the benefits can be maximised. I strongly hope that the current bluff and counter-bluff will soon end and the UK along with the EU negotiators will focus on the longer-term relationship.
I wrote about Brexit only once before, immediately after the vote in June 2016. I hoped at that time that the vote could be reversed but could not see the mechanism as to how that possibility could arrive. Now it is possible to see a mechanism through the growing voices for a second vote, but less the wisdom of repeating a vote as, even if some polls show people changing their minds, it is not clear that a decisive result would be the outcome. A decisive result would be necessary to send a strong enough message and heal some of the wounds which have been opened. Another close result would leave everyone with a sense of frustration and an even more divided society. Further, the outcome is by no means sure; if voters fell for the lies told by the Brexiteers last time, why should they be immune a second time?
Leadership should have come from the government with clear explanations and advice on the various issues and possible outcomes. But the performance of this UK government has been inept. The result is a conspiracy of silence where no one will, or is capable to, explain the implications without project fear being invoked. Not one minister seems to have taken the trouble to really understand how the EU works. The strategy has been to insist that the EU changes its rules despite that the UK will leave! There seems to be no idea how an agreement should be successfully negotiated and no concept of what is or is not acceptable to the EU. It seems to be the classical image of the Brits that if Johnny Foreigner does not understand then shout louder.
I blog here about some personal views and I do this as a pre-curser to looking at the possible implications for the EO services sector. So, bear with me today and I’ll write again shortly on my view of Brexit for the industry.
Despite my own personal view that the UK should remain a firm and long-time partner and member of the EU, in the current situation, for me, the solution to all the issues is quite evident; UK should apply to join EFTA and hence remain a part of the EEA. At a stroke this would solve the problems of the border in Ireland, the supply-chain management issues for manufacturers especially for cars and aircraft as well as the import/export of food and livestock. It does not solve the issue of aircraft landing rights nor airport accreditation, but these should be possible through a side deal (although not exactly easy since both European Aviation Safety Agency and the European Common Airspace Area have very specific rules regarding membership). Unfortunately, Theresa May in her wisdom ruled this out as a red-line last January from which all the potential for chaos stems.
The EEA/EFTA option would preserve the UK participation to the single market whilst cutting links with the EU in Brussels. At a stroke it would suppress something like 80% of the laws stemming from the EU. However, its detractors consider that it has 2 drawbacks; it would not be possible to limit immigration since the EEA preserve the 4 pillars, and that since the rules for the EEA are set by the EU, it would mean the UK becoming a rule-taker. These are both anathema to the hard-core Brexiteers who wish to “take back control”.
However, neither assertion is really true and a more detailed analysis shows that this option meets most of the demands of the hard-wired Brexiteers as well as being mostly acceptable to those like myself who voted to remain. Happy to discuss this another time if anyone is interested! I consider that this solution is the only way to unite the British people.
But the current situation looks dire. The government has got itself into an impasse and seems to have no solution on how to extract itself. Two years have been wasted trying to paper over the cracks in the Conservative party. People talk about falling back on WTO rules in the event of a no-deal. Without going into detail, this is nonsense; a simple example, WTO has no influence over aviation which is managed by ICAO.
WTO rules mean that behaviour to one trading partner without any trade agreement, must be no more advantageous as to any other. This means that if the UK simply said we accept all imports from the EU even with no deal, it has to offer the same rules to the US, to China and every other country in the world! It will not happen. WTO has a provision to suppress its rules in emergency situations. Lawyers are arguing whether a no-deal would count as such. Even assuming it does, it could only be applied to food and medicine so all other goods could not be moved though the UK ports without risking international legal action. Not the best action when the country is setting itself up to be a new, preferred, trading partner! And of course completely disruptive to industry with its integrated supply-chains.
Further, for food and especially for livestock, Border Inspection Posts inspect the goods being imported. There is no BIP at Dover and many other major ports and where a BIP does exist, its capacity is very limited. A transition is essential to ensure free flow of goods. In the early days of a no-deal Brexit, new systems will need to be put in place. The only solution will be to limit the transfer of non-essential items meaning that trade will almost stop and certainly there will be very limited capacity for exports, as all effort will be dedicated to doing what is possible to maintain imported essentials.
No deal means that there is no agreement on the withdrawal agreement and hence no transition period when these issues would normally be solved. Like most, I do expect a solution to be found. Side-deals will be struck – on favourable terms to the EU of course, but the government performance up to now has been catastrophic and we should not be complacent as almost anything can still happen.
From a personal point of view, I do not expect to be too much affected. The most critical for me will be to preserve my own ease of movement around Europe. This should be satisfied by the agreement already reached between London and Brussels but could be disrupted if there really is NO deal. My fall-back is to apply for a Belgian passport for which I can qualify. The second area is the continued payment of my pension from the UK. UK law guarantees this, but I may face some difficulties with banking rights. The third area will be the future exchange rate since my pension is paid in pounds. Here a no-deal Brexit will quickly cause a sharp depreciation in the pound. However, I would expect that to be corrected within a reasonable period as the situation stabilises and moreover, the Euro is also likely to face its own pressures.
How will a no-deal or even a deal affect the EO services industry? I’ll come to this in the next few days.
In this summer of further record-breaking temperatures around the world, of more devastating, deadly fires in Greece, California, Portugal and elsewhere, of extreme floods in India and extreme temperatures in Europe, of drought conditions affecting agriculture in Australia and slashing the yield for potato growers in Belgium, few people can doubt that climate change is happening faster than ever. A recently, published report[1] talks about the domino effect with one climatic event triggering another leading to an out of control earth system and a “hothouse” earth. Two possible paths are envisaged (see figure); one leading to a stabilised earth system and the other to hot house earth where human life may not even be viable. Very soon, it may not even be possible to avoid the planetary threshold which leads to the dominos falling.
In this context, it was especially interesting to come across this report[2] thanks to my colleague Lef Mamais. It was published in the New York Times at the beginning of August and looks back at a 10 year period between 1979 and 1989 when political awareness grew concerning the impact of CO2 emissions on climate change. It reports the efforts of a few dedicated scientists to create an international agreement to limit CO2 emissions.
It charts the raising of political awareness of the impact of anthropogenic, climate change. Even oil and gas companies Exxon and Shell were convinced and resigned to diminishing fossil fuel use and starting to redefine their business model to adapt to a changed political climate. However, following the political failure to agree to CO2 reductions in 1989, the oil & gas industry changed tone; after all, if world leaders could not agree why should industry invest to change its business?
The story is well-presented, easy to read and shows just how close the world came in 1989 to an agreement to limit emissions. Since then, as much CO2 has been added to the atmosphere than in the all the years before 1989. The article concludes that the technology exists to limit global warming to 2 degrees, but the political will is still not there despite all the signs and extreme events. Maybe those fires and floods of 2018 will change views? Or maybe not.
[1] http://www.pnas.org/content/115/33/8252#F2 Trajectories of the Earth System in the Anthropocene
[2] https://www.nytimes.com/interactive/2018/08/01/magazine/climate-change-losing-earth.html