October 2017 issue: references, notes and
quotes.
These
are best read alongside supporting material in the notes for the June 2017
issue.
Index
Pieter Cleppe (Open Europe) on Brussels dictation
Legatum Institute, Shanker
Singham quotes, WTO waiver
Vicky Ford MP on ‘cherry picking’
German and Austrian elections and aftermath
Towards a deal? Reluctance to punish?
Sadiq Khan, Mayor’s Transport Strategy, EU road
pricing
https://www.oxfordeconomics.com/brexit/executive-summary -
(Fill
in form to download)
http://uk.businessinsider.com/brexit-free-trade-deal-oxford-economics-2017-8
(Possibilities
40% just leave, no transition,
Then
SM 7% CU 13% FTA 5% WTO 70% Remain 5%
However 60% likely separation and transition,
Then
SM 10% CU 15% FTA 50% WTO 20% Remain
5%
Overall
%, SM 8.8%, CU 14.2%, FTA 32%, WTO 40%, Remain 5%)
https://capx.co/who-is-really-to-blame-for-the-brexit-deadlock/
…apparently
Theresa May had been “taking dictation” from the EU for her Florence speech, so
it could make sense that he promised May something in return. That would then
not be a concession to start “trade talks” but merely “exploratory trade
talks”.
PM
May’s speech in Florence, 22.09.17
http://www.politico.eu/article/theresa-mays-election-strategy-hard-brexit-soft-landing/
http://www.mydup.com/news/article/seamless-border-key-to-sensible-brexit-for-ni-foster
https://www.theguardian.com/politics/2017/oct/14/cross-party-group-no-deal-theresa-may-brexit-eu
The
10 Democratic Unionist party MPs, upon whose votes May relies for a Commons
majority, have made it clear to government whips that they would not accept a
“no deal” outcome because it would mean a return to a hard border between
Northern Ireland and the Republic. If May were to try to push such an approach,
the deal with the DUP that keeps her in power could fall.
The
Leader of the Democratic Unionist Party, who could join forces with the
Conservatives to form a coalition government, has said they will not back a
‘hard’ Brexit.
However,
the Prime Minister may have to make concessions on her desired Brexit, with Ms
Foster keen for her Northern Ireland to remain in the single market and
involved in the free movement area after the split. She told Sky News: “No-one
wants to see a ‘hard’ Brexit, what we want to see is a workable plan to leave
the European Union, and that’s what the national vote was about – therefore we
need to get on with that.
Guido
on Tom Brake MP
https://order-order.com/2017/10/13/tom-brakes-epic-legatum-whinge-backfires/
So
Brake thinks Legatum are “Hard Brexit” baddies and that giving them access is
“astounding“? He should probably tell his fellow LibDem Paddy Ashdown, who
attends roundtable discussions at Legatum. Or LibDem peer Baroness Bowles, who
sat on a Legatum panel a few weeks ago. The long list of other prominent Remainers
who have “given access” to Legatum recently include Andrew Adonis, the
government’s infrastructure commission chief who is one of the chief opponents
of Brexit. Are they all part of some sinister Brexiteer conspiracy? Tin foil
hat time for Tom…
The
Legatum Institute is not pro Leave or pro Remain
http://www.cityam.com/261129/editors-notes-only-lack-ambition-can-hold-britain-back-says
Singham
was a Remainer, having penned an opinion piece on the case for remaining a
member of the EU just a day before the vote. But within hours of the result he
recognised that if the UK played its cards right, an extraordinary opportunity
now lay before it.
...
Singham
is confident that pragmatism will prevail on the continent and the UK will
secure a comprehensive free-trade agreement.
http://www.li.com/media/commentary
At
the Legatum Institute, we made a series of recommendations in our earlier
paper, "Brexit and the Supply Chain". While there has been much focus on
arrangements immediately after we exit the EU, the most important thing right
now is that we stop negotiating with ourselves and engage with our European
partners on the ultimate free-trade agreement with the EU.
Responding
to the increased confusion about what Brexit will look like for the UK, Shanker
explains in City A.M. that without a clear plan which instils confidence, the
rest of the world will move on without us. He says that both the UK and EU must
promptly declare their intentions to agree a trade agreement.
Singham
advocates taking back control and getting a deep waiver pre FTA
http://www.cityam.com/270024/world-move-if-uk-has-no-executeable-trade-policy-day-one
The
UK and EU may also agree interim measures such as zero tariffs, mutual
recognition of product regulation and so on, in a way that satisfies the WTO,
as long as only for a limited time, and in contemplation of a free trade
agreement.
Since
everyone knows that the EU and UK will be negotiating a free trade agreement,
they should both promptly declare that intention to the WTO so that countries
know what to expect.
This
would greatly reassure global business, as well as the WTO membership. Such a
notification would include reference to the kinds of interim measures they
would be contemplating.
Other
WTO members who manage supply chains that flow through the UK and EU will also
be reassured that the cost of their supply chains will not be increased as a
result of Brexit. These countries will want to make their views on this point
known to London and Brussels.
On
the regulatory side, where possible, mutual recognition type arrangements
should be put in place, and these must be such that the UK can interoperate
with the rest of the world, while maintaining regulatory recognition with the
EU.
On
BBC Radio4 Shanker Singham supports a creative and flexible approach in order
to get the best withdrawal agreement between the EU and the UK
Friday,
1 September 2017
Shanker
Singham tells BBC Radio4 that a clear and timely withdrawal agreement benefits
both the UK and the EU in terms of agreeing a financial settlement and a future
trade relationship.
...
(Singham
and Charles Grant (CER) agree both sides want a CFTA going beyond CETA
Grant
felt offering EUR30-40Bn would secure progress
Singham
noted better starting point, high liberalisation on both sides
The
UK could rather achieve goodwill by unilateral offer over citizen rights).
http://www.cityam.com/261420/deal-no-deal-rhetoric-brexit-negotiations-not-helpful
Singham:
There will have to be interim arrangements.
LI
links to sponsoring/parent company with investment interests
http://www.eureferendum.com/blogview.aspx?blogno=86556
WTO
waiver
http://www.politico.eu/article/britain-10-year-interim-zero-for-zero-trade-deal-brexit/
Under
a little-known WTO clause, the U.K. and Brussels would be allowed a “reasonable
length of time” after Brexit to agree a free-trade deal before trade law would
force both sides to impose the same tariffs on each other as they do on
everybody else
Pascal
Lamy on WTO waiver
https://www.chathamhouse.org/expert/comment/pascal-lamy-way-forward-after-brexit
Q:
What about the role of the World Trade Organization? You were director-general
for eight years, you know it very well. Do you think that if the British were
forced to fall back on just WTO rules, is that easily done?
A:
I think it can be easily done, provided there is a bit of goodwill on all
sides. WTO lawyers can be reasonably pragmatic and if we agree that the main thing
is that trade should be hampered as little as possible, I think that’s not the
most complex problem we’ll have to solve. You just have to know that there is a
level of trade openness today, which is the [EU] internal market.
BBC's
Katya Adler perceives money the issue that is eating the EU.
http://www.bbc.co.uk/news/world-europe-41650246
Julian
Jessop (IEA)
https://capx.co/should-britain-pay-the-brexit-bill/
Pieter
Cleppe
https://capx.co/who-is-really-to-blame-for-the-brexit-deadlock/
It’s
also less than clear what France, Germany and Romania are trying to achieve.
The EU is after an agreement on how the financial settlement will be
calculated, not after a precise figure.
…
Perhaps
Germany and France think that delaying a deal on money will somehow force
Britain to pay more. That would be a risky bet. Linking money discussion with
trade would on the other hand allow the EU side to “sell” trade access. People
are getting nervous about this in Brussels. The EU’s powerful farming lobby is
already warning about the Brexit hole endangering current EU agricultural
policies, including huge subsidy payments to agricultural landowners. Britain
would probably do a service to the EU27 taxpayer by not funding the EU budget so
lavishly, given that any Brexit hole may focus minds in mainland Europe about
the troublesome state of that spending.
Sure,
the UK government is haggling about the money, but EU27 leaders always knew
that was going to happen, which is why they decided to only request “material
progress” instead of a full agreement in order to move to trade talks.
Charles
Grant of Centre for European Reform felt offering EUR30-40Bn would secure
progress
Pascal
Lamy on payments
https://www.chathamhouse.org/expert/comment/pascal-lamy-way-forward-after-brexit
Q:
But the short-term issues that will have to be settled will involve some very
difficult questions, including money, the budget, how much is paid; including
also, presumably, a sense of the jurisprudence – who will, if you like,
regulate the disputes of things. Doesn’t that have to be settled quickly?
A:
You’re absolutely correct. The budget thing… it’s a question of numbers at the
end of the day. Once the principle that the UK has financial obligations it
will respect – which should be a normal thing to do – is agreed, numbers can
always be adjusted. When a negotiation is about numbers, usually there is a
solution.
Monographs
(Leave Alliance short papers)
http://www.eureferendum.com/blogview.aspx?blogno=80999
Monograph
1: Single Market participation and free movement of persons.
Monograph
2: The WTO Option and its application to Brexit.
Monograph 3: Financial
contributions after Brexit.
Monograph
4: Article 50 and Brexit negotiations.
Monograph
5: Trade barriers and Brexit.
Monograph
6: Post-Brexit regulation.
Monograph
7: Trade agreements.
Monograph
8: WTO schedules and concessions.
Monograph
9: A European Economic Space.
Monograph
10: Liechtenstein reprised.
Monograph
11: Authorised Economic Operators (AEOs).
Monograph
12: Taking back control.
Monograph
13: International quasi-legislation and the EU.
Monograph
14: Financial Services and Brexit.
Monograph
15: Leaving the Single Market - Part 1.
Monograph
16: Leaving the Customs Union.
Monograph
17: Food exports to the EU.
“Some politicians in other EU countries may say no to
an “a la carte” relationship for the UK, but when one examines the EU’s own
scoreboard for how individual countries implement Single Market agreements it
is clear that some of those same countries already take quite an “a la carte”
approach themselves.
Our on-going relationship with the Single Market will
of course be partly shaped by the decisions we make to ensure the UK has
control over migration, but even in this area things are not as inflexible as
sometimes portrayed. Politicians on both sides of the channel risk being locked
into positions based on theological purity, laying down absolutes as
non-negotiable whereas real world examples show that there already exist many
examples of more flexible approaches.
In practical
terms it is impossible to move to Belgium without a reasonably well-paid job”.
Also
relevant:
Briefing
- UK-EU TRADE RELATIONS POST BREXIT: TOO MANY RED LINES?
https://www.sussex.ac.uk/webteam/gateway/file.php?name=uktpo-briefing-paper-5.pdf&site=18
The
easiest red line to relax would be the EU one on no cherry picking, at least in
the context of Option 4, since in each case the EU has already granted
non-member states some aspects of Single Market freedoms….
It
can be separately noted that there are several cases of EU members going their
own way – Denmark and the UK opting out of the Single Currency. The Czechs not
participating in the ESM. Other EU members excluded from defence measures on
account of their neutrality.
Unanimity
needed over the parts of trade agreements with French sensitivity.
Special
arrangements for the formerly-named Netherlands Antilles.
Email
11.10.17,
POLITICO
Global Policy Lab: Macron’s reforms, round II — The German model — Et tu,
Europe?
We
start with French President Emmanuel Macron, whose regular communication
blunders are the subject of parlor-room speculation. Are they proof that he
suffers from foot-in-mouth disease? Or are they part of a clever, calculated
communication ploy designed to send an unambiguous message: Macron will talk
and act as he pleases, and his bluntness is part of the price to pay for the
resolute reforms he intends to deliver (eggs, omelettes, and so on).
The
French leader’s most recent fit of temper scores a point to the foot-in-mouth
camp. It’s evidence that his straightforward style might be an obstacle to the
reforms to which he has pledged unwavering commitment. During a visit last week
to a vocational school for the building industry, Macron took umbrage at
workers of a nearby car parts factory protesting a planned takeover of their
company. “Some of these guys, instead of causing a ruckus, they’d better try
looking for some jobs,” he said. “Some of them have the qualifications.”
…the
English language translation doesn’t do the quote justice. The French word
Macron used, bordel, is forceful and abusive, deriving from “bordello.” And
yet, colorful language aside, Macron was putting his finger on a problem that’s
not only important but one of the subjects we’ll be tackling over the next five
weeks.
http://www.dw.com/en/what-does-the-german-election-mean-for-brexit/a-40721978
"The
CDU is open to a strong partnership with Britain after Brexit negotiations are
done.
And
the key term is after negotiations are done because they're also committed to
the EU line which is that there shall be no cherry picking and the single
market must be preserved. And the negotiations have to demonstrate that a
country can't be better off outside the European Union than inside."
...
-
The FDP is expected to influence Merkel's Brexit policy in favor of a mutually
beneficial free trade deal, and maintains that the UK should not be punished
for leaving the European Union.
-
Having the FDP in government would also mean a stronger voice in the Brexit
negotiations for German business, the sector that has most to lose from a
punitive Brexit deal
...
Besch:
"I think the Greens are the most likely to see Brexit in the same context
as they see for example the election of Donald Trump and the rise of populism.
So maybe they're the most strident in their evaluations of Brexit in that sense
and the most critical [party] of the UK's decision. They're equally the most
committed to maintaining EU cohesion and unity and to setting an example that
you cannot be better off outside the EU."
...
Besch
is quick to point out that coalition negotiations are unlikely to focus heavily
on the UK's exit. "It's just not a big topic in Germany."
...
there's
a distinct tendency to overestimate the power that Germany has in the context
of negotiations.
"The
idea that the UK is negotiating with Berlin and not with Brussels is misguided,
because Berlin, at least so far, is willing to submit its interests to Brussels
negotiators, because Germany knows that a European Union that only pursues
German interests will lead to a backlash against Germany and [German
politicians] can't allow that to happen."
Professor
John Ryan, Fellow at LSE Ideas (International Strategy and Diplomacy).
http://blogs.lse.ac.uk/brexit/2017/09/26/german-election-will-slow-down-the-brexit-process/
A
so-called Jamaica coalition of CDU/CSU, FDP and the Greens is unlikely to
deliver any Brexit shocks.
...
Merkel
will want to address these problems once a new coalition government is formed.
She
will want to provide breathing space for the UK and avoid a damaging Brexit for
Germany and the EU. It is essential for the UK and EU that there is minimal
disruption to banking and financial services
...
This
may be questioned because the French President Emmanuel Macron wants a common
Eurozone budget, a European finance minister and a Eurozone parliament, and he
thinks Germany and the EU should boost investment. The CDU/CSU, however, are
sceptical of France’s plans and the FDP have taken a very strong position
against Macron’s proposals in the German election campaign. The Greens are in
favour of the Macron proposals but it looks like Merkel will have very little
leeway to compromise with the French
.....
Due
to the European debt crisis, the increasing threat of terrorism, and the
refugee crisis, conflicts and divergences have been on the rise among EU members.
The resurgence of extremism and populism has undermined the EU’s internal
cohesion, creating new troubles for European integration.
For
Germany, clearly, the weight of the “market-friendly/liberal” block in the EU
(whose current core members include the UK, the Netherlands, Sweden, Denmark
and Estonia) will decline with Brexit, potentially making the EU less
market-friendly. The EU budget would also have to do without UK financial
contributions.
...
The
UK is Germany’s third largest export partner with €90 billion in sales last
year. The country’s nominal exports to the UK increased by 50% between 2010 and
2015. No less than 7.5% of all German goods exports were sold to Britain in
2015, a large number, given that the UK does not purchase many machine tools or
other heavy products of the sort Germany also specializes in, unlike emerging
economies.
With
subdued domestic demand, Germany and the EU depend on trade-induced moderate
growth including close trading relations with Britain. Nine EU countries send
at least 5% of their total exports to the UK. In 2015, Germany’s trade surplus
with the UK alone was a staggering €51 billion, about 20.5% of Germany’s entire
trade surplus.
Against
this backdrop, the structure of German industry helps explain why Berlin is
not, and has never
been,
really interested in developing a single market in services. Germany’s economy
is focused on the export of goods rather than services, which is why the single
market works particularly well for them.
...
The
UK often overestimates its ability to win support from Germany. In recent
years, there have been a number of occasions where the UK believed it had
German support, but it turned out not to be the case. For example, the UK
thought it had the support of Germany in the negotiations on the Fiscal Pact as
well as the appointment of Jean-Claude Juncker as Commission President. On both
occasions, Germany decided to change its position and leave the UK isolated.
Also during the pre-referendum negotiations, Germany was not willing to give
the UK government certain concessions on labour mobility….
Austria
https://www.usatoday.com/story/news/2017/10/15/austria-election-peoples-party-kurz-leads/765934001/
http://www.bbc.co.uk/news/world-europe-41627586
https://euobserver.com/political/139511
The
eastern EU bloc is also opposed to deeper EU integration, for instance in the
eurozone, but Tusk's letter noted, in line with French ideas on a multi-speed
Europe, that coalitions of willing member states should be able to press on
anyway.
"The
aim [of the Leaders' Agenda] will be to break any deadlock.
http://www.politico.eu/article/emmanuel-macron-european-council-brings-zest-and-risk-to-eu-summit/
At
a lunch at the Elysée Palace on October 11, Tusk sought and received assurances
from Macron that the French president would pursue unity on every issue, before
falling back on the so-called “multispeed Europe” strategy, in which countries
might pursue greater cooperation in smaller groups.
Not
everyone is convinced Macron’s ideas are all that grand, nor is everyone
reassured that he will put unity first. “The issues he has presented, from
social justice to defense, are not new,” an EU diplomat from Central Europe
said. “What is new is the rhetoric. It’s not unity that he puts first, whereas
we are on this ship all together
...
At
a dinner meeting of EU leaders in Tallinn last month, Dutch Prime Minister Mark
Rutte made a forceful case for limiting the number of new initiatives and
instead focusing on implementing the policy proposals already adopted at
summits in Bratislava in September 2016 and in Rome in March.
Some
officials sought to play down the role and influence of Macron, saying the
French president was getting inordinate attention because of his recent
election, and that other leaders did not feel a need to be in the spotlight
because they had already helped shape the decisions in Bratislava in Rome.
Several noted that Macron charged into his first EU summit last spring,
aggressively pushing a proposal on investment screening only to be rebuffed
…
Macron’s
own aides said they expect to face tough resistance on some proposals,
particularly the idea of a strongly empowered eurozone finance minister. Such a
position would seem to fit into a category of “institutional reforms” that Tusk
largely ruled out in his summit invitation letter.
Pieter
Cleppe on impasse
https://capx.co/who-is-really-to-blame-for-the-brexit-deadlock/
More
fundamentally, there is no reason to despair. There was always going to be
walkouts and drama during these negotiations and, after all, despite his rather
gloomy tone, Barnier also said that after the Florence speech, there was “new
momentum” in the talks. The Financial Times notes that despite the
“standstill”, the EU side is actually “considering beginning work between the
EU27 to “scope” transition terms — or start preparing their positions on the
issue — before approving talks in December or later”. Slowly, the doubtful
partner in these negotiations is turning out to be the EU.
…
When
it comes to citizens, the EU is refusing to grant UK citizens free movement
within the EU – despite asking the status quo for EU citizens in the UK,
something that Britain is happy to grant, apart from some very specific rights
related to family reunification. The EU is also still sticking to its odd
demand for the UK to accept ECJ rule despite the fact it doesn’t have a judge
in the ECJ, although some compromise on that is getting nearer, according to
David Davis.
Interestingly,
senior diplomats apparently don’t see the Irish question, which is the third
element related to the “divorce stage”, as an obstacle to making “sufficient
progress”. When it comes to the transitional period, the UK probably has
provided more clarity than the EU by now on what it wants.
Joey
Jones, Weber Shandwick.
http://www.cityam.com/269314/editors-notes-westminster-rivalries-threaten-brexit
The
Brexit “no deal” option is deeply unattractive, and there is some relief in the
City that the transitional period now agreed as a necessary way forward by the
cabinet seems to make no deal less likely.
…
[a
desire… on the part of the EU to punish the Brits for their decision to leave.]
This
seems unlikely at the moment – the sentiment in European capitals is of
irritable resignation to Brexit and a desire to get it over with.
European
Council President Tusk
Donald Tusk: EU is not
preparing for a ‘no deal’ scenario in Brexit talks
http://www.cityam.com/262377/prime-minister-theresa-may-says-free-movement-could-green
Tusk
has also said EU leaders won't pursue a punitive approach as "Brexit in
itself is already punitive enough".
[EPP]
McAllister, who has a British father and is the former PM of the German state
of Lower Saxony for Angela Merkel’s CDU party, is the German Chancellor’s
‘Brexit man’ in the European Parliament. …In this exclusive interview with Open
Europe, McAllister makes clear that, at this stage, he sees a Free Trade
Agreement as the most likely outcome of the negotiations….The UK is asking for
this divorce. We are not eager to punish Britain nor are we eager to give it a
favourable treatment.”
Brussels
fears Britain’s ‘Brexit chaos’ part of cunning plan
Maltese
Prime Minister Joseph Muscat expressed the same skepticism last week: “People
who say the Brits don’t know what they are doing are wrong,” he told the Dutch
newspaper De Volkskrant, “I have lived in Britain, I know the British
mentality. A non-prepared British government official simply doesn’t exist.”
Jean-Paul
Gauzès, who served as a French MEP from 2004 to 2014 and negotiated frequently
with British counterparts as a member of the Committee on Economic and Monetary
Affairs, said that in his experience, U.K. officials pursued their goals with
single-minded determination while keeping others off balance.
“The
Brits are pragmatic and very concrete,” Gauzès said, adding: “The Brits never ask
for clarity because the more ambiguous it is, the better it is.”
http://www.politico.eu/article/british-team-cool-in-brexit-talks-eu-michel-barnier/
Robert
Azevedo, Director-General of WTO
https://www.wto.org/english/news_e/spra_e/spra178_e.htm
At
the WTO, we are working with both the EU and the British government to support
this transition and ensure that any impact on trade is kept to a minimum
Programme
of the Estonian Presidency of the Council of the European Union
http://www.consilium.europa.eu/en/council-eu/presidency-council-eu/
The goal of the Estonian Presidency is to ensure that the European
Union continues to be an active advocate
of free trade on the international arena. Estonia is committed to
contributing to the initiation of negotiations on new free trade agreements and
to the continuation and conclusion of ongoing negotiations.
‘Trio’ of Estonian, Austrian and Bulgarian Presidencies,
Taking forward the Strategic Agenda 18-month Programme of the
Council
(1 July 2017 - 31 December 2018), document POLGEN83
https://www.eu2017.ee/trio-programme
…the EU has an important role
to play in shaping globalisation and ensuring that all groups in society
benefit, by taking the lead in the WTO as well as through the negotiation of
ambitious, balanced and comprehensive plurilateral and bilateral agreements.
The EU's trade agenda should seek to open markets…
Institute
for Government papers
Institute
for Government - Dispute resolution after Brexit
https://www.instituteforgovernment.org.uk/blog/pascal-lamy-brexit-trade-deal-not-possible-two-years
Two
other papers, if anything slightly sympathetic to Brexit. Readable for raising
issues.
Institute
for Government - Frictionless Trade?
What
Brexit means for cross-border trade in goods
https://www.instituteforgovernment.org.uk/publications/frictionless-trade-brexit-august-2017
A
deal on customs is important to reducing post-Brexit trade friction, but is
only half the story. Our report Frictionless Trade: What Brexit means for
cross-border trade in goods, says leaving the EU will disrupt the country’s
important integrated supply chains in areas like automobile manufacturing. It
will create friction in cross-border trade in goods.
The
paper examines five potential options for future trade:
• A deep and comprehensive free trade deal,
including customs cooperation
• A new customs union agreement
• Staying in the Single Market
• Combining staying in the Single Market with
a new customs union arrangement
• Leaving with no deal and trading with the EU
on WTO terms.
Institute
for Government - Implementing Brexit: Customs
https://www.instituteforgovernment.org.uk/publications/implementing-brexit-customs-september-2017
Implementing
Brexit: Customs offers recommendations to help the UK avoid the customs cliff
edge, such as moving customs requirements away from the physical border,
retaining access to key EU computer systems and establishing working groups
with the private sector on implementation.
The
paper follows on from Frictionless Trade? What Brexit means for cross border
trade in goods, where we examine five options for future trading relationship
with the EU and assess the friction created as a result of Brexit.
(Critical
response on some points:
http://www.eureferendum.com/blogview.aspx?blogno=86602
http://www.eureferendum.com/blogview.aspx?blogno=86637 )
UKIP
Trade Spokesman William Dartmouth
http://www.ukip.org/negotiation_101_if_we_are_prepared_to_leave_then_things_might_progress
Up
until now Michael Barnier, through no fault of his own has been a door-stop not
a negotiator. He wants the negotiation to work, as it will be his legacy, and
the Nations of the European Union want it to work as their own electorates will
treat them harshly when failure will mean job losses across the continent.
Pascal
Lamy, 5-6 years to negotiate a comprehensive EU-UK Free Trade Agreement
http://www.freetradeagreements.co.uk/projects/pascal-lamy/
On
16 March 2017, I had the opportunity to attend a presentation by former head of
the World Trade Organization and former European Commissioner for Trade, Pascal
Lamy, at the Institute for Government.
One
of the key points discussed by Mr Lamy concerned the fact that any agreement
other than remaining in the single market would be costly. Once the UK leaves
the EU, compliance with regulations and customs procedures will lead to
increased costs for both sides.
Mr
Lamy also offered his cockpit view on the complexity of negotiating a
post-Brexit scenario, dividing the issues into three groups:
1)
The ‘relatively straightforward’ category included establishing an EU-UK Free
Trade Agreement on goods and the division of the WTO schedules and quotas.
2)
Environmental provisions, public procurement and trade defence actions such as
anti-dumping were in the ‘fairly complex’ category.
3)
Finally, Mr Lamy listed standards (technical, safety and security) and their
mutual recognition and equivalence together with indirect and direct taxation
and IP rights as the most complicated issues to be negotiated over the next
couple of years.
You
can watch a recording of the event here.
https://www.instituteforgovernment.org.uk/events/pascal-lamy-brexit-trade-and-wto
https://www.instituteforgovernment.org.uk/blog/pascal-lamy-brexit-trade-deal-not-possible-two-years
The real issue is that the EU-UK
negotiations will involve “100 small steps” and “some of these steps can be
easy, but many of them are very complex and complexity in negotiations means
time”. Lamy categorises the issues for a EU-UK FTA into the “relatively
simple”, “complex” and the “really complex”:
|
Relatively simple |
Complex |
Really complex |
|
Goods
and tariffs |
Trade
defence |
Technical
standards |
|
Establishing
the UK in the WTO |
Public
procurement |
Services |
|
Maintaining
existing EU FTAs |
Climate
change and environment policy |
Taxes |
|
Fisheries |
Competition
law and its enforcement |
Intellectual
property (IP) protection |
|
Erasmus
programme |
EU
research and innovation |
Euratom |
…Jeremy
Browne, Special Representative of the City of London Corporation, expressed
confidence that political determination can overcome administrative challenges;
he pointed to the breakup of Czechoslovakia and the disentanglement of the
Baltic States from the USSR as examples of projects that a technocrat would
have rejected as unfeasible.
Does
the UK have a negotiating “capacity issue”?
Nevertheless,
UK politicians will not be able to complete the negotiations inside two years
simply by willing it so. Instead, they will need to establish the processes
inside government that will allow them to be swift and nimble negotiators. The
IfG continues to argue that the UK civil service has shown real progress in
preparing for negotiations. But questions remain about the composition of the
negotiating team, the role of Whitehall departments in negotiations (and the
capacity that they will need to build to fill this role) and the
decision-making process that Theresa May will use to resolve issues in the heat
of discussions. If the Government is serious about its timetable, it needs
ensure it has a machine that can deliver it.
Michel
Barnier, the EU’s chief negotiator
In
his speech, Barnier dangled some sweets for the U.K., by describing the future
relationship in more detailed terms than he has previously used. “It’s not too
early to start to sketch out that relationship,” he said. “It will include a
free and fair trade agreement, cooperation agreements, particularly regarding
universities and research, and partnership, we hope, in the areas of security
and defense.”
EU
Trade Commissioner Cecilia Malmström
"For
us, trade is something where both sides win."
In remarks which will have been closely watched in London
top eurocrat Cecilia Malmstrom insisted the bloc will look to strike a fresh
economic pact with the UK as soon as possible. The Swedish EU trade
commissioner said that a new relationship with Britain should only take "a
couple of years" to complete
EU
‘foreign secretary’, Federica Mogherini
“No one would emerge as a winner in a trade
war.”
To
prevent such a scenario we must engage together, we must look for win-win
cooperation, and we must agree together on a set of rules shared by everyone.
Juncker
pledged in Strasbourg to do everything to make sure “the negotiations will be
according to the rules and yield good results”.
https://piie.com/commentary/op-eds/why-soft-brexit-interest-both-london-and-brussels
…the
EU's chief Brexit negotiator Michael Barnier wants the EU to retain easy access
to London's financial institutions following Brexit.
Spain
on Gibraltar
Spain’s Foreign Minister
Alfonso Dastis said, “…what I don’t want to do is jeopardise an EU-UK agreement
by subjecting it to a need to alter Gibraltar’s status at the same time. I
won’t make an agreement between the EU and the United Kingdom conditional on
recovering sovereignty over Gibraltar.”
https://www.ft.com/content/1394c4da-97a7-11e6-a1dc-bdf38d484582
Wolfgang
Münchau, writing this week in the Financial Times, is rather unusually for that
newspaper quite optimistic about the prospects for an “amicable divorce”, and
about how Merkel will play this: “She may pretend that she wants to be tough on
Britain — but once German jobs are at risk I would expect her principled
position to crumble.”
What
the cliff edge looks like
http://www.politico.eu/article/brexit-cliff-edge-no-deal-departure/
http://www.eureferendum.com/blogview.aspx?blogno=86633
Martin
Howe QC explains need for two agreements, withdrawal and future relationship
http://brexitcentral.com/legal-ins-outs-implementation-periods-avoiding-negotiation-noose/
Spectator
‘Evening Blend’ email briefing 11.10.17
This
morning the Chancellor wrote in the Times that ‘we are planning for every
outcome and we will find any necessary funding and we will only spend it when
it’s responsible to do so’. He later told the Treasury Select Committee that he
was surprised that the general interpretation of his article had been that he
was reluctant to give departments adequate Brexit funding. ‘I am clear we have
to be prepared for a ‘no deal’ scenario unless and until we have clear evidence
that this is not where we will end up. What I am not prepared to do is allocate
funds to departments in advance of the need to spend.’
But
Theresa May told the Commons that ‘where money needs to be spent it will be
spent’, with her spokesman saying that £250 million of new money had been
allocated this year to prepare for the ‘possibility of a no-deal scenario’.
Aviation
http://airlinebasics.com/brexit-in-aviation-will-the-uk-leave-easa-3-significant-topics-to-consider/
http://www.eureferendum.com/blogview.aspx?blogno=86640
a
report in The Times (no paywall) telling us that British airlines are preparing
to warn their customers that flights booked after March 2019 may not take off
and they will not pay compensation if flights are grounded.
We
are told that this move has been discussed with government and would be
introduced in spring next year if Brexit talks are still deadlocked. It would
apply to all tickets sold to EU destinations and up to 17 other countries,
including the United States, where British airlines' legal flight rights are
overseen by Europe-wide agreements.
Transport
Secretary Chris Grayling
Presentation:
Aspects of post Brexit regulation in the Aviation sector
"Overall,
taken on a sectoral basis, it is doubtful whether the EU, even if it holds most
of the cards, would want to deny continuing access. There are many significant
economic interests to consider, which could be undermined by instability, such
as the impact on the tourism industry."
https://www.jdwetherspoon.com/tims-viewpoint/tims-viewpoint
In
any event, as we did in the pre-referendum edition of Wetherspoon News, we have
included four articles from optimistic Brexiteers and four from gloomy
Remainers. Once you’ve digested their views, you can make up your own mind as
to how we’ll do…
Mark
Littlewood, IEA: Times article, reproduced in Wetherspoon News, Autumn 2017)
“Last week, without it
obviously being a spoof, BBC’s Newsnight asked: “Will Britain’s planes fly
after Brexit?” It is safe to assume, even if negotiations were to flounder
hopelessly, that the answer to this question is a very firm “yes” and that our
departure from the European Union will not mean the immediate closure of the UK
aviation industry.
Of course, underlying
Newsnight’s rather hysterical concern was the issue of how an independent
Britain will comply with the enormously complex web of airline safety regulations
once we are no longer forcibly locked into them by virtue of our European Union
membership. This will, indeed, be a
necessary undertaking for a
handful of administrators and bureaucrats, but it is impossible to credit that
it is a task that will not be completed satisfactorily, even if it concludes
less than perfectly.”
Larry
Elliott and Lisa O'Carroll
The
report, titled Switching Lanes, said there would significant price rises on a
range of household goods if ministers stuck to their fallback plan of resorting
to World Trade Organisation tariffs on EU goods in the event of a no-deal
outcome.
But
the Resolution Foundation and the [Sussex] university’s UK trade policy
observatory examined the consequences of the UK exiting without a deal and
imposing the same tariffs on EU goods as it does on imports from the rest of
the world. It said tariffs on dairy products would increase by 45%, those on
meat products by 37%
Transport
Secretary Chris Grayling
Grayling
was “talking tripe” and was “out of touch with farming”, farming leaders said
after he claimed in a television interview that the UK could just “grow more
food” to keep prices down if Britain crashed out of the EU.
http://www.politico.eu/article/germany-france-push-harder-line-on-brexit-talks/
Examining
the ten-year impact on cities
http://www.centreforcities.org/publication/brexit-trade-economic-impacts-uk-cities/
Supporting
analysis
http://cep.lse.ac.uk/pubs/download/brexit10.pdf
Interpretations
on goals and obligations of WTO-GATT Treaties
WTO
Marrakesh Analytical Index – especial note of references 8, 9, 11, 13
https://www.wto.org/english/res_e/booksp_e/analytic_index_e/wto_agree_01_e.htm
“security
and predictability of ‘the reciprocal and mutually advantageous arrangements
directed to the substantial reduction of tariffs and other barriers to trade’
is an object and purpose of the WTO Agreement
…
concessions
made by WTO Members should be interpreted so as to further the general
objective of the expansion of trade in goods and the substantial reduction of
tariffs. arrangements entered into by Members be reciprocal and mutually
advantageous
…
the
purpose of such agreements should be to facilitate trade between the constituent
territories and not to raise barriers to the trade of other Members with such
territories; and that in their formation or enlargement the parties to them
should to the greatest possible extent avoid creating adverse effects on the
trade of other Members;
…
regional
trade agreements and those of the GATT and the WTO have always been
complementary, and therefore should be interpreted consistently with one
another, with a view to increasing trade and not to raising barriers to trade,
thereby arguing against an interpretation that would allow, on the occasion of
the formation of a customs union, for the introduction of quantitative
restrictions)”
WTO
D-G Azevedo
http://www.ibtimes.co.uk/brexit-unlikely-disrupt-uk-trade-says-wto-director-general-1588422
In
an interview with Sky News, the WTO boss said he was not of the opinion that
the Brexit vote was "anti-trade" and added that the UK would not
suffer trade setbacks during or after its negotiations with the EU.
http://blogs.spectator.co.uk/2016/10/project-fear-backtracking-isnt-yet/
Azevedo
- The UK is a member of the WTO today, it will continue to be a member
tomorrow,’ he told Sky News. ‘There will be no discontinuity in membership.
They have to renegotiate but that doesn’t mean they are not members. Trade will
not stop, it will continue and members negotiate the legal basis under which
that trade is going to happen. But it doesn’t mean that we’ll have a vacuum or
a disruption.’
ICAO
brings EU to heel on EU ETS
http://www.politico.eu/article/icao-rebukes-eu-ets/
Use
of ICJ?
http://www.bbc.co.uk/news/uk-politics-41635217
It
is also important to emphasise that these are largely uncharted legal waters
and some kind of legal challenge at an international level would probably be
made. The EU itself could not bring a case against the UK at the International
Court of Justice (ICJ) in The Hague, because it is not a sovereign state.
But
the remaining 27 member states - acting either individually or collectively -
could in theory appeal to the ICJ, or to another relevant international
tribunal. They would want their money back.
Charles
Grant of CER for the European Parliament, on how to get a better deal
http://www.europarl.europa.eu/RegData/etudes/IDAN/2017/583130/IPOL_IDA(2017)583130_EN.pdf
"It
is true that the EU’s FTAs with other countries include arbitration mechanisms
that do not
involve
the ECJ….
UN
Charter and Resolutions
http://legal.un.org/avl/ha/dpilfrcscun/dpilfrcscun.html
UN
Resolution 2625 aka the 1970 UN "Declaration on Principles of
International Law concerning Friendly Relations and Cooperation among States in
Accordance with the Charter of the United Nations" says
“No
State may use or encourage the use of economic, political or other types or
measures to coerce another State in
order to obtain from it the subordination of the exercise of its sovereign
rights or to secure from it advantages of any kind.”
It
is accepted as a valid lens for interpreting the UN Charter in international
law.
(NB
UN sanctions are obviously a separate issue concerning very different cases,
such as aggressor states.)
UN
Charter
Article
1.2 [The Purposes of the United Nations
are:] To develop friendly relations among nations based on respect for the
principle of equal rights and self-determination
of peoples, and to take other appropriate measures to strengthen universal
peace;
Article
2.2 All Members, in order to ensure to all of them the rights and benefits
resulting from membership, shall fulfil in
good faith the obligations assumed by them in accordance with the present
Charter.
2.4
All Members shall refrain in their international relations from the threat or
use of force against the territorial
integrity or political independence of
any state, or in any other manner inconsistent with the Purposes of the
United Nations.
Article
103 In the event of a conflict between the obligations of the Members of the
United Nations under the present Charter and their obligations under any other
international agreement, their
obligations under the present Charter
shall prevail.
http://www.freedomfordrivers.org/Analysis-of-Mayors-Transport-Strategy.pdf
http://www.stopthekhangestioncharge.london
http://www.fairdealforthemotorist.org.uk/eurp616.htm
https://ec.europa.eu/transport/sites/transport/files/mobility-package-factsheet-iii.pdf
https://ec.europa.eu/transport/modes/road/news/2017-05-31-europe-on-the-move_en
http://www.businesscar.co.uk/news/2013/birmingham-consults-on-congestion-charge-zone
The
Behaviour of Successful Negotiators (sales focused)
https://system.netsuite.com/core/media/media.nl?id=9041&c=1035604&h=47e32ba37e2a3295bec0&_xt=.pdf
Firms
in difficulty
http://www.bbc.co.uk/news/business-41627237
However,
a Vauxhall spokesman said the move from two shifts to one was nothing to do
with Brexit uncertainty, but was about maintaining competitiveness in a
changing industry.
http://www.bbc.co.uk/news/uk-england-kent-40958450
Charm
offensive? An unhealthy closeness on Defence?
Reports
HMG
Position Papers on Brexit
https://www.gov.uk/government/collections/article-50-and-negotiations-with-the-eu
Institute
for Government – the Civil Service after Article 50
https://www.instituteforgovernment.org.uk/publications/civil-service-after-article-50
[Britain would be better off
after Brexit],
https://www.orb-international.com/2017/08/07/orb-monthly-brexit-tracker-august-2017/
40 percent saying they will
be, and 37 percent saying they won’t be.
Overall
there are four general options available to the UK government.
Option
1: Cancel Brexit, remain in the EU and accept
continuous European integration. Politically unacceptable.
Option
2: Remain in the EU for another 5-10 years so that the perfect deal on
withdrawal and a future relationship can be worked out. Politically
unacceptable.
Option
3: Leave the EU in an organised way, recognising that we must take with us some
baggage that needs to be sorted out (‘transition’). That will involve some
compromises and won’t see everybody happy, but might be more politically
acceptable than other options. This will at least preserve trade and vital
industries for when we have the capacity to put in place replacement laws and
trade deals.
Option
4: (Zero Option) Leave the EU abruptly and in a less than organised way, i.e.
without a deal. The UK would be unable to negotiate replacement trade
agreements before Brexit Day. This would most likely produce serious economic
impact and a dislocation of business and investment, discrediting Brexit and
the principle of self-government, and playing into the hands of those keen to
rejoin the EU. Some international agreements would still apply, so there would
not be total policy freedom. Politically unacceptable.
(Threatening
Option 4 might produce some movement towards Option 3, as there would be
consequences for the EU side and international investors)
This
page updated: 20 Oct 2017