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A German government memo leaked to Bloomberg has highlighted that Germany’s “foremost priority” in the upcoming Brexit negotiations will be to protect the unity of the EU-27, saying, “We must not let ourselves be divided.” The memo goes on to outline Germany’s anticipated approach to Brexit talks, saying, “First of all, elements of the process of British EU membership and exit will have to be settled… Only then will it be possible to negotiate all the political, legal and economic questions regarding the future relationship.” This echoes the structure laid out last year by the Commission’s Brexit negotiator, Michel Barnier. The memo also stresses that the UK will become a “third country” after it leaves the EU, adding, “Brexit will mean less cooperation and economic integration compared to EU membership… Brexit thus becomes a step backward which will have an effect on Britain.”
Hans-Peter Friedrich, a former German interior minister who currently chairs the Brexit working group within Angela Merkel’s CDU/CSU conservative alliance, told Bloomberg TV, “There are [financial] services that you have to leave in London simply because London is better at them. We have to find ways to make these services available to the EU, too. Hence, we need a matter-of-fact discussion.” He went on to argue that the UK and the EU “will have to find a special form of cooperation,” but stressed that Germany “cannot accept” the UK retaining passporting rights – allowing UK-headquartered financial firms to provide their services across the bloc – after Brexit.
Open Europe Intelligence
Donald Tusk has been re-appointed as President of the European Council by 27-1 with Poland, his home country, opposing the appointment for failing “to demonstrate adequate impartiality.” Polish Prime Minister Beata Szydlo said she does not accept the summit conclusion and that “If one country doesn’t accept it, it means the summit is not relevant. If now there is a way to find a different solution, that only shows that there are no rules. And Poland doesn’t agree with this. And I definitely won’t accept any document from this summit.” As a result of Poland blocking their adoption by the Council as a whole, the Summit Conclusions read, “Conclusions by the President of the European Council.” An extraordinary covering note declares, “The European Council deliberated on the attached document. It was supported by 27 Members of the European Council, but it did not gather consensus, for reasons unrelated to its substance.” Speaking after his reappointment, Tusk said, “I prepared my beloved quotation: be careful of the bridges you have burned because once they have gone you can never cross again,” adding, “I want to dedicate this saying to all member states. But today especially to the Polish government.”
Meanwhile, German Chancellor Angela Merkel stressed that, “I think one ought to try and find a consensus but seeking a consensus should not be abused by imposing a blockade and if there is this instrument of a qualified majority and that is expressly stipulated then we can also use this instrument.” Separately, Open Europe’s Pieter Cleppe was interviewed by Polish magazine Wprost, discussing the upcoming Dutch elections, saying, “mainstream parties have taken over some of the euroscepticism of the right wing populists.”
Open Europe: Cleppe
The Financial Times
The Press Association
Irish Taoiseach Enda Kenny said of the Brexit ‘divorce bill’ upon arrival at the EU summit yesterday, “When you sign on for a contract you commit yourself to participation. And obviously the extent of that level of money will be determined. Michel Barnier is the lead negotiator for the EU and obviously Britain will have a say. But that no more than any other problem will have to be faced, it will have to be dealt with and it will be dealt with.” UK Prime Minister Theresa May told reporters at the end of yesterday’s session, “I’m clear that the way people voted on June 23 for us to leave the EU, they voted for us in the future not paying huge sums of money into the EU every year. And of course when we leave the EU that will be the case.” Meanwhile, UK Foreign Secretary Boris Johnson told the BBC, “It is not reasonable, I don’t think, for the UK having left the EU to continue to make vast budget payments, I think everybody understands that and that’s the reality.” He added, “I think we have illustrious precedent in this matter, and you will doubtless recall the 1984 Fontainebleau Summit in which Mrs Thatcher said she wanted her money back, and I think that is exactly what we will get.”
Separately, Danish Foreign Minister Anders Samuelsen said of the prospects of agreeing a UK-EU trade deal within the period specified for Article 50 divorce negotiations, “The question is, can we do it in two years or will we take 15 years? We don’t know.”
At a meeting of Commonwealth trade ministers in London, Liam Fox, Secretary of State for International Trade, said, “New barriers, often invisible, are emerging around the global economy, providing new impediments to the open commerce that is the key to global prosperity. What is worse, many of these impediments are being introduced by G7 and G20 countries, the very nations who have prospered most from free trade itself.” He added, “Protectionism can be a seductive but a false friend. I have described it as the Class A drug of the trading world, it can make you feel good at first but you will pay a terrible price in the long term.” He also highlighted the opportunity that trade represented for the Commonwealth, saying, “There are 52 member states in the Commonwealth, boasting a combined population of over 2.4 billion people. Moreover, one billion of those Commonwealth citizens are under the age of 25, a vast pool of talent and resources that can help transform the world, if we ensure they have access to future trade and investment opportunities.”
Todd McClay, trade minister for New Zealand, said, “We have seen a lot more talk about protectionism over the last six or eight months. That talk is quite concerning because actually if the world, some economies of the world, move in that direction, then we know that overall the world’s economy is harmed.”
The Press Association
According to a new Harris Interactive poll, independent presidential candidate Emmanuel Macron is predicted to finish top in the first round of French presidential elections with 26% of the vote, one point ahead of Front National leader Marine Le Pen, increasing his lead to 65% versus 35% for Le Pen in the second round. This comes as Le Figaro reports that the ‘right wing’ of the French Socialist party is tomorrow expected to announce its support for Macron, rejecting Socialist candidate Benoît Hamon as unable to deliver a credible programme for government.
Separately, The Times reports that a series of school riots in the Northern suburbs of Paris yesterday could boost support for Marine Le Pen, who has argued that social unrest in Parisian suburbs is “not tolerable.”
Le Figaro 2
Discussing the prospect of UK-based financial service firms continuing to undertake euro-denominated clearing after Brexit, Olivier Guersent, European Commission director-general for Financial Stability, Financial Services and Capital Markets Union, told a Brussels hearing there was “no reason to doubt” the UK’s ability to achieve equivalence status provided “a number of [EU supervisory] safeguards” were in place, but said adherence to “a global standard is not an alternative.” Steven Maijoor, European Securities and Markets Authority chief, agreed that it was “important that the EU can control the risks of third-country market participants.”
Burkhard Balz, a German MEP and member of Angela Merkel’s Christian Democrat party at the session, went further by saying, “We have serious concerns about the future of these transactions once Brexit is implemented… [they must take place] under the jurisdiction of EU institutions,” while Jakob von Weizsäcker, a German socialist MEP, also called for a scale of supervisory measures, “sliding to elements of extraterritoriality, sliding as a last resort . . . to repatriation.”
The Financial Times
Theresa May said last night that legislation to increase national insurance contributions (NICs) for the self-employed will not be put before the House of Commons until the autumn, adding, “the chancellor will be speaking – as will his ministers – to MPs, business people and others to listen to the concerns.” 18 Conservative MPs voiced concerns over the measure, but the Prime Minister also defended the proposals. “This is a change that leaves lower-paid self-employed workers better off, it’s accompanied by more rights and protections for self-employed workers and it reforms the system of National Insurance to make it simpler, to make it fairer and to make it more progressive,” she said. Meanwhile, A YouGov poll for The Times found that the measure was backed by 47% of voters, while 33% thought that it was the wrong priority.
EurActiv quotes Peter Navarro, economic adviser to US President Donald Trump, who described the United States’ $65bn trade deficit with Germany as a “serious issue” that he would seek to rectify. He added, “I think that it would be useful to have candid discussions with Germany about ways that we could possibly get that deficit reduced outside the boundaries and restrictions that they claim that they are under,” referring to European Commission and ECB competency for commercial and monetary policy respectively.
Responding to questions about whether immigration powers would be devolved as a result of Brexit, the Secretary of State for Exiting the European Union David Davis told the House of Commons yesterday, “The Scottish Government has raised a very important issue on the joint ministerial committee about the question of the immigration needs of Scotland. And I have reflected those questions to the Home Secretary, and I would expect that when we come to a UK immigration policy, we will reflect the needs of every part of the United Kingdom.”
When asked about the possibility of a second Scottish independence referendum in Autumn 2018, Scottish First Minister Nicola Sturgeon told the BBC that it could take place “Within that window…When the sort of outline of a UK deal becomes clear on the UK exiting the EU, I think that would be the common sense time for Scotland to have that choice, if that is the road we choose to go down. I’m not ruling anything out.” Scottish Labour leader Kezia Dugdale said of Sturgeon’s statement, “This is yet another attempt by Nicola Sturgeon to sow division and uncertainty, at a time when the country needs to pull together more than ever…Nicola Sturgeon could provide much needed clarity to Scotland’s future by ruling out another referendum altogether.”
Ireland’s parliamentary Joint Committee on Jobs, Enterprise and Innovation has released a report calling for a “designated special status for Northern Ireland within the EU.” The committee’s recommendations include Northern Ireland maintaining access to the EU Single Market; all EU funding streams; and the EU institutions, including the European Court of Justice. It also proposed granting Northern Irish citizens EU employment, social security and healthcare rights, as well as ensuring they maintain the right to Irish, therefore EU, citizenship. The committee additionally recommended a transitional agreement “as close to the status quo as possible” should be established until the UK’s long-term relationship with the EU is agreed.
Irish Joint Committee on Jobs, Enterprise and Innovation: Brexit and its Impact on Jobs
Politico reports that the UK could potentially face a €2bn bill from the EU after OLAF, the EU’s anti-fraud office, highlighted an alleged-customs fraud involving imports of Chinese goods. According to OLAF, UK customs authorities have ignored repeated warnings that shipments of Chinese goods were being imported into the UK at a significantly undervalued price in order to slash the amount of payable customs duties. The EU’s anti-fraud office estimates that the “continuous negligence” of UK authorities has translated into a loss for the EU budget of nearly €2bn of customs duties on Chinese merchandise. A spokesperson for OLAF is quoted as saying, “These losses to the EU budget are still ongoing since this fraud has not been stopped to date. Despite repeated efforts deployed by OLAF, and in contrast to the actions taken by several other member states to fight against these fraudsters, the fraud hub in the UK has continued to grow.”