7 July 2017

“Frictionless” trade post-Brexit is not possible says EU’s chief Brexit negotiator

EU chief Brexit negotiator Michel Barnier has warned that it is not possible to “leave the single market and build a customs union to achieve frictionless trade.” Addressing an EU committee, Barnier argued, “Only a combination of the customs union and the rules of the single market make it possible to trade freely without friction between our countries. You don’t get the one without the other…You cannot leave the single market and then opt into those sectors you like most…You cannot be half in or half out of the single market.” He added, “The future of Europe is a lot more important than Brexit.”

In Open Europe’s seminal report, ‘Nothing to declare – A plan for the UK-EU trade outside the Customs Union,’ Open Europe argues that leaving the EU’s Customs Union is the only logical step for the UK to pursue an independent trade policy and achieve a truly ‘Global Britain’ and outlines recommendations on how to help minimise disruption to trade.

Meanwhile, Labour leader Jeremy Corbyn will have an “extended meeting” with Barnier on 13 July to “outline what our issues are.” In a Bloomberg interview, he said, “Fundamentally we want to make sure there’s tariff-free trade access to the European market, that’s crucial. We accept the result of the referendum. The single market is a concept that requires membership of the EU so what we’re looking for is tariff-free access.”

Separately, International Trade Secretary Liam Fox told the House of Commons yesterday, “If we put trade and investment impediments into the European economy that do not exist today, it’ll cause ripples across the global economy that are felt well beyond our own borders.” Fox also argued, “We don’t explicitly need free trade agreements in order to trade. There are lots of other ways in which the trading environment is regulated, mutual cooperation agreements and so on.”

Source: Open Europe Press Association Bloomberg

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CBI calls for UK to remain in EU customs union and single market while final trade deal is negotiated

The Confederation of British Industry has called for the UK to remain within the European Union’s customs union and the single market for a transition period until it has negotiated its ultimate trading relationship with the EU. Speaking at the London School of Economics, Carolyn Fairbairn, Director-General of the CBI, said, “Our proposal is for the UK to seek to stay in the single market and a customs union until a final deal is in force. The goal should be a framework for the new trading relationship before we exit in March 2019.” She continued, “If agreed soon, firms here and from elsewhere in the EU will know they face greater stability for a number of years and will carry on investing. They will know they won’t have to adapt twice – first to the transition and then to the final plan… This is not about whether we are leaving the EU, it is about how.” In practical terms, she said that the transition “would mean the UK would adhere to the EU’s common trade policy, for both internal and external trade, for the duration of the transition period,” while seeking what she described as “the most ambitious and comprehensive free trade deal ever agreed in history.”

Responding to the announcement, Open Europe’s director Henry Newman said, “Open Europe backs a transition period as we leave EU as long as it is just that – a transitional period that actually takes us out the EU. We are completely clear the UK must ultimately leave both the Customs Union and the Single Market; to remain in either would be the worst of both worlds. The CBI are right to back a transition arrangement, but completely wrong to say the UK should remain in the Single Market and Customs Union until a free trade agreement is secure. Promising to stay in the Single Market and Customs Union until the UK-EU trade deal is agreed hands negotiating cards to the EU and risks making an unsatisfactory position permanent.”


Daily Telegraph: British officials agree EU citizens’ rights will be enshrined in international law

The Telegraph reports that British officials have told their EU counterparts that EU citizens’ rights will be enshrined in international law post-Brexit. The offer is a bid to alleviate fears that the UK would renege on its commitments post-Brexit. This concern is thought to be behind EU demands for the European Court of Justice (ECJ) to continue to have legal jurisdiction over citizens in the UK. A source told The Daily Telegraph, “If the Withdrawal Agreement is arbitrated in international law then many member states accept they really have nothing to fear. The grounds for demanding ECJ jurisdiction disappear.”


Donald Tusk: Japan shows EU is more and more engaged in global trade

Speaking at a press conference in Brussels on the recently signed EU-Japan free trade deal, European Council President Donald Tusk said, “In the context of the discussion about Brexit, we have heard statements claiming that it isn’t worth being in the EU, as it is easier to do global trade outside of the EU. Today we have shown that this is not true.” Tusk warned against “isolationism and disintegration,” adding that the EU is “more and more engaged globally” with a number of trade negotiations underway around the world. Downing Street welcomed the trade agreement, saying, “We believe that the EU-Japan deal could potentially be a starting point for an agreement between ourselves and Japan when we leave the EU.”

Separately, the German daily Sueddeutsche Zeitung quotes a diplomatic source as saying that the trade deal could still fail to be finalised, as it “will be painful for some sectors [mainly agriculture and the automobile industry]- the prospect of ‘sabotage’ from their side cannot be excluded, the situation remains fragile.”


Barclays boss confident euro clearing will remain in London

Barclays Chairman, John McFarlane, has said that the “right thing for the EU and for the UK is to retain a significant proportion” of euro-related business in London. He continued, “We’re pretty confident that quite a degree of wholesale activity, even clearing activity…fund management, will remain in the UK and London in particular.” In a speech at TheCityUK annual conference, he said, “If the price is shared regulatory oversight, then it is a price worth accepting,” as fragmenting the “current superior offering in London will inevitably lead to higher costs and capital and is undesirable in practice, whatever the politics.”


Lord Hague: UK will lose global influence post-Brexit

Former Foreign Secretary Lord Hague yesterday told a House of Lords committee that the UK will lose foreign policy influence in Brussels and Washington post-Brexit. He said, “If you are less influential in crafting the overall approach of the EU you end up with less influence in the rest of the world,” adding, “I hope we can give leadership in a place such as Somalia but we will have to sweat a bit more to do so.” He also suggested that Brexit would lead to a “weakening and a diluting of the EU’s foreign policy,” and that “without the UK at the table” it would be more difficult for the EU to agree sanctions on countries such as Russia.


New poll: Labour hold 8-point lead over Conservatives

A new YouGov poll for The Times on voting intention finds Labour are 8 points ahead of the Conservatives, with 46% and 38% respectively. The results also show the Liberal Democrats on 6% and UKIP on 4%.


Trump warns Western civilisation is at risk in Warsaw speech

In his keynote speech in Poland, US President Donald Trump warned that “the fundamental question of our time is whether the West has the will to survive.” Criticising Russia, he urged Moscow to “join the community of responsible nations in our fight against common enemies and in defence of civilisation itself.” Trump will meet Russian President Vladimir Putin for the first time in Hamburg at the G20 summit today. Trump also reiterated the US stands “firmly behind Article 5, the mutual defense commitment.”


European Parliament calls for suspension of Turkey accession talks

The European Parliament yesterday called for Turkey’s EU accession talks to be suspended if the Turkish government fully implements its planned expansion of President Recep Tayyip Erdoğan’s powers. The new powers, on which Erdoğan won a referendum in April, are designed to help tackle security concerns but have attracted criticism from EU leaders. While the Parliament has no powers to suspend talks, it passed a resolution which “calls on the Commission and the member states…to formally suspend the accession negotiations with Turkey without delay if the constitutional reform package is implemented unchanged.” The Turkish EU Affairs Ministry said in a statement, “This decision, which is based on false claims and allegations, is trampling the reputation of the institution in question. This decision is of no value for us.”


Stephen Booth: What to expect from the government’s Repeal Bill

In a new blog piece, Open Europe’s Stephen Booth explains what to expect from the government’s Repeal Bill, due to be presented in parliament next week. He writes, “The fate of the Repeal Bill rests on a delicate mutual understanding amongst MPs and Peers in the House of Lords that if anyone seeks to use its passage through Parliament either to water-down or build on the rights and protections of existing EU legislation, then the whole process could easily blow up. This pact will not be easy to maintain.” However, he adds, “The wider politics of Brexit and the attitude of the Labour leadership to date strongly suggest that Labour will not seek to defeat the Government on Third Reading of the Bill. It is extremely likely to pass into law.” He concludes, “There is plenty of scope for a rocky ride for the Repeal Bill. There could well be large number of almighty rows and even a few symbolic Government defeats on amendments. But ultimately everyone recognises this Bill is necessary to avoid a legal vacuum post-Brexit and, given Labour’s record on Brexit votes so far, the main thrust of the Bill is likely to pass.”

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