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Belgian Prime Minister Charles Michel, yesterday issued a statement saying that his government cannot sign the proposed EU trade deal with Canada (CETA) after talks with the Walloon regional parliament broke down. “The clear answer, at this stage, is no,” said Michel. Belgium was given Monday as deadline sign the deal on Thursday with Canada. However, European Council President Donald Tusk said yesterday evening, “We think Thursday’s summit [is] still possible. We encourage all parties to find a solution. There’s yet time.” Canadian Prime Minister Justin Trudeau also said, “I spoke with [Council president] Tusk today – we agree that the EU & its members should continue to work towards the Summit on Thursday.”
Meanwhile, yesterday’s editorial in Le Monde claimed that the EU’s failed CETA negotiations depicted an “increasingly isolated” EU. It argued Europe “must not fall into the trap of [following] an alleged global protectionist movement. That would be wrong,” adding, “For a net-exporting continent, Europe’s isolation is a contradiction.”
BBC Le Monde
Speaking yesterday, Prime Minister Theresa May reiterated that “we [the UK] are not seeking to replicate any existing model that any other country has in relation to its trade with the EU. We will be developing our own British model – a new relationship for the UK with the EU – to be there for when we’re outside the EU.” She said that the government “will make time available for general debates” in parliament, which will take place before and after the Christmas recess. She added that she had made clear to other EU countries that the UK is already starting preparatory trade talks with countries outside the EU.
Steven Ciobo, the Australian Trade Minister, has said it would be illegal to begin negotiations on a trade deal with the UK before it has formally left the EU, adding “But when Britain formally leaves we hope to be in a position to secure an agreement as efficiently and promptly as possible.”
Following a Joint Ministerial Committee (JMC) meeting yesterday between Prime Minister Theresa May and the leaders of the UK’s devolved administrations, Scotland’s First Minister, Nicola Sturgeon, said, “I don’t know any more now about the UK government’s approach to the EU negotiations than I did before I went in to the meeting…At the moment, it doesn’t seem to me like there is a UK negotiating strategy, which is one of the sources of great frustration.” She added, “If all we get from the negotiations is a door slammed in our face, Scotland should be able to choose a better option.” Meanwhile, Bloomberg reports that May offered the leaders a “direct line” to the Brexit Secretary, David Davis, setting up a JMC that will meet regularly from next month.
A CBI Industrial Trends survey shows that the weakening of Sterling since the Brexit vote has boosted UK exports to a two-and-a-half-year peak. City AM quotes Rain Newton-Smith, CBI chief economist, who said: “Manufacturers are optimistic about export prospects and export orders are growing, following the fall in Sterling. However, the weaker pound is also feeding through to costs, which are rising briskly and may well spill over into higher consumer prices in the months ahead.” However, the Financial Times reports concerns from the same survey that manufacturing employment saw its first contraction in six years.
A Survation poll for ITV has found that 56% of British voters favour restricting immigration over 44% who would prioritise membership of the single market. Meanwhile, 58% support the way UK Prime Minister Theresa May is handling Brexit, while 25% disapprove. However, a ComRes poll released last week found that the balance tipped in favour of a good trade deal with the EU rather than immigration limits.
Sir Simon Fraser, former permanent undersecretary at the Foreign & Commonwealth Office, has said the Brexit negotiations would take longer than the two years afforded by Article 50 (the formal process of leaving the EU) and “this will inevitably mean some sort of interim relationship between leaving and establishing the long-term, permanent relationship.” He added, “I am not a catastrophist, but let us be clear; this is going to be an incredibly difficult, tough and complex negotiation. One of the objectives of the EU side is to make it absolutely clear to anyone else thinking of leaving the EU that this is not a good idea…For them, it must be absolutely clear that leaving the EU there has to be a price”
The Financial Times quotes Desmond Hiscock, UK Association for International Trade director-general, who said, “The existing [customs IT] system will not be able to cope and there is not much confidence that the untested and still incomplete replacement, CDS [Customs Declaration Service], will fare much better.” It also reports that CDS is due to come online by December 2018, at which point it will be expected to handle 350 million customs declarations per year, as opposed to the 100 million originally intended.
The Financial Times
The IHS Markit Purchasing Managers’ Index (PMI) for the Eurozone grew from 52.6 in September to 53.7 in October.
IHS Markit Eurozone PMI
Germany’s Foreign Minister, Frank-Walter Steinmeier, has told German daily Süddeutsche Zeitung, that “The financial crisis, the wave of refugees into Europe, and the shock of the British referendum have pushed Europe into serious turbulence,” adding “If we don’t know how to appreciate the value of the EU, then it’s going to go to the dogs.”
The European Commission will announce plans today to harmonise corporation tax policy across the EU. The plans would not mandate a single tax rate across Europe, but would instead seek to “eliminate the mismatches and loopholes between national tax systems, which companies can currently exploit,” as well as applying only to firms with an annual turnover above €750 million. An opinion piece for Expansión describes mooted reductions in UK corporation tax as ‘Brutal Brexit.’
According to the Times, former Conservative chairman, Grant Shapps, is seeking to alter the Great Repeal Bill, which intends to absorb EU legislation into British law before the UK’s withdrawal to avoid legal uncertainty. The Times reports that he plans to add a “sunset clause” under which the EU-made laws within the bill would stop being in force after five years.
Open Europe’s Vincenzo Scarpetta writes for Prospect Magazine setting out the conclusions of Open Europe’s recent report ‘How the UK’s financial services sector can continue thriving after Brexit’, which assessed the value of the EU financial services passport. “Our analysis concludes that the importance of the passport really depends on the industry. It is relevant in some sectors, but has much less value in others. Put differently, it is exaggerated to claim that the UK’s success as a global financial centre is entirely reliant on the passport—but so is it to suggest that losing it would bear no consequences at all,” he writes.