17 May 2018

Government White Paper will show progress on key Brexit objectives, says Theresa May

Speaking at the House of Commons yesterday, Prime Minister Theresa May said the government would publish a white paper “in a few weeks” on the future UK-EU relationship that “will show how much progress we are making.” On the customs arrangements, May said, “We have set three very simple objectives… Achieving those objectives is not easy… There will be some who will say actually, forget about an independent trade policy…There may be some who say don’t worry about the Northern Irish border. That is not the position of this Government.”

Elsewhere, speaking at the House of Commons European Scrutiny Select Committee, Northern Ireland Secretary Karen Bradley yesterday confirmed the UK government’s commitment to “no new checks or controls at the border,” adding, “We have said there will be no ANPR [automatic number plate recognition] cameras, no new cameras, we have been clear that there will be no new physical infrastructure.” Commenting on the government’s two proposals for post-Brexit customs arrangements, Bradley said there were “defects” with both options and both were still being studied, while pointing out that, “There is no doubt that the question of the Irish border is resolved by the customs partnership in an easier way than [by the] maximum facilitation [model].”

Separately, Irish Prime Minister Leo Varadkar said on Tuesday that “the customs partnership is closer to being made workable than the maximum-facilitation proposal,” warning, “We are not drawing up any plan for a border between Northern Ireland and Ireland, full stop… I have made it very clear to my counterpart in the United Kingdom and the other EU prime ministers that under no circumstances will there be a border.”

Source: The Guardian Press Association The Times

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Government will ask the EU for a customs union extension

Bloomberg and the Telegraph report that ministers on Tuesday agreed on plans on a new post-Brexit customs arrangement that they believe could represent an alternative to the EU “backstop” scenario. The new alternative “backstop” option would involve keeping European Union customs rules for years after Brexit and would apply to all of the UK, not just Northern Ireland. The option is reportedly opposed by Foreign Secretary Boris Johnson and Environment Secretary Michael Gove. The two were however “outgunned” during a Tuesday meeting of the Brexit ‘war cabinet’, according to a pro-European Cabinet source quoted in the Telegraph. Jacob Rees-Mogg, leader of the European Reform Group, said, “The risk of the Government using all its mental energy on the fall-back position is that they create a position that is more attractive than a permanent deal,” adding, “We have gone from a clear end point, to an extension, to a proposed further extension with no end point. The horizon seems to be unreachable.”

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ECB could allow banks more time for Brexit planning

The European Central Bank (ECB) and national Eurozone authorities “may allow more time for banks to meet certain supervisory expectations…and to move to an adequate and balanced business organisation within the euro area” before Brexit, according to an ECB statement. The ECB said they would examine each bank’s operating plans on a case-by-case basis to decide how much flexibility to grant, but warned that banks should not use the transition period as a reason to delay Brexit planning.

Elsewhere, the European Parliament’s Economic and Monetary Affairs Committee (ECON) yesterday adopted a motion that would allow Britain-based clearing houses to remain outside the EU after Brexit, provided that they cooperate closely with EU regulators. The bill now has to be approved by the member states.

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European Commission considers responses to US steel tariffs

The European Commission announced it will notify the World Trade Organisation (WTO) this Friday over its plans to introduce retaliatory tariffs should the US impose punitive tariffs on EU steel and aluminium.  The Commission has also yesterday approved a list of retaliatory measures to be implemented in case the EU is not granted a permanent exemption from the tariffs.

This comes as European Commission President Jean-Claude Juncker reportedly told EU leaders at an informal dinner yesterday that if the EU is granted a permanent exemption from the tariffs, the Commission would be ready to engage in negotiations, an approach that EU leaders supported, including German Chancellor Angela Merkel and French President Emmanuel Macron who were previously divided on the issue.  The Commisson would be ready to offer eliminating reciprocal tariffs on industrial products, deepening the EU-US energy relationship, particularly in the area of liquefied natural gas, voluntary regulatory cooperation “on an ad-hoc basis” and engaging with the US “in meaningful WTO terms.” The EU leaders agreed that the EU would “be ready to initiate” negotiations with the US only after the EU was granted a permanent exemption from tariffs.

Elsewhere, President of the European Council Donald Tusk yesterday said “the capricious assertiveness of the American administration” presented a new global political challenge. He added, the “EU should be grateful” for US President Donald Trump’s “latest decisions” of leaving the Iran nuclear deal  and threatening punitive tariffs on European goods, “Thanks to him we got rid of all illusions. We realise that if you need a helping hand, you will find one at the end of your arm.”

Meanwhile, German newspaper Handelsblatt reports that the European Commission plans to revive a “blocking regulation” that forbids EU companies from complying with reinstated US sanctions on Iran. It reportedly also aims to use the European Investment Bank funds to support EU companies trading with Iran.

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European Monetary Fund could serve as “common backstop“ for Eurozone, says Merkel

Speaking in the German parliament, German Chancellor Angela Merkel yesterday said that France and Germany would “reach an agreement [on EU reform] in time for the June [European Council] summit.” She said it was “good and right to  further develop the European Stability Mechanism (ESM), to give it tasks that come close to those of an international monetary fund,” adding that this European Monetary Fund could in the future serve as a “common backstop” for the Eurozone. Merkel also warned that Eurozone countries shouldn’t be satisfied with the current economic growth ”because we all know at the moment that the European Central Bank is running a policy that won’t continue like this indefinitely”. On Germany’s financial contributions to the bloc, Merkel stressed that although Germany was willing to contribute more, it could not increase payments into the general EU budget and a special Eurozone budget at the same time.

Meanwhile, German President Frank-Walter Steinmeier yesterday warned that ”the window of opportunity [for EU reform] is small,” adding, “I expect that this is being worked ambitiously.”

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BoE: UK companies face recruitment problems due to EU labour shortage

The Bank of England (BoE) yesterday published a report in which it warned that UK companies are facing a labour shortage and recruitment difficulties “partly due to the reduced availability of EU migrant workers.” The report adds, “Employment intentions had ticked up in manufacturing but remained weak in consumer services, due to higher labour costs and weak sales.” This comes as figures from the Office for National Statistics (ONS) on Tuesday showed a drop by 1.2 percent in the number of EU nationals employed in Britain.

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UK considering veto on EU Galileo contract tenders

The UK is considering vetoing the release of new contract tenders for the EU’s Galileo satellite navigation system should the bloc fail to relax its stance on restricting Britain’s access to the program post-Brexit, Bloomberg reports. Bids on €400 million of contracts to design and develop the next set of satellites for the program were initially planned for next year, but may be brought forward to a European Space Agency meeting in mid-June – which would give the UK a veto, as decisions must be made unanimously. According to Bloomberg, the UK view is that if contracts are tendered now, UK companies will be discouraged from bidding due to uncertainty over the UK’s future involvement in the program. Instead, the UK wants time to broker a compromise that enables continued involvement for the country and its space industry, which would give businesses the confidence to bid. Britain maintains that it wishes to remain fully involved in the Galileo project; the EU Commission takes the view that the UK will become a third country after Brexit and that its participation will therefore be subject to a new agreement.

Open Europe’s Aarti Shankar has written on the future of the UK-EU defence and security relationship, in the light of the recent dispute over the Galileo Programme.

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Trump to pressure UK to pay more for NHS drugs as part of future trade deal

US President Donald Trump could pressure the UK to pay more for NHS drugs from American pharmaceutical companies as part of a future UK-US trade deal. Trump last week claimed that foreign governments were “extorting unreasonably low prices” from US drugs companies, and urged US trade representative Bob Lighthizer to make addressing this “a top priority with every trading partner.” However, a representative for the Association of the British Pharmaceutical Industry said, “How much the UK spends on healthcare and on medicines is a matter for the UK government and it is not clear to us how the US or any other government would influence this.”

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Commission still hopeful agreement on immigration can be achieved by June Council

European Commissioner for Migration Dimitris Avramopoulos yesterday said that the Commission is still “trying to convince the last remaining [member states] to join our comprehensive migration policy,” which he referred to as “the only pragmatic answer to a real problem we are confronted with.” He added that he hoped a compromise could be reached at the next summit of European leaders in June but stressed that “There are three or four countries that have different ideas.” Avramopoulos also confirmed the Commission’s intention to “expand, enhance and beef up the European borders and coast guard in the future, and have a fully integrated EU border management system, with a standing force of 10,000 border guards,” pending agreement on the subject in negotiation for the next EU budget.

Elsewhere, the International Organisation for Migration (IOM) data shows a drop in arrivals of asylum seekers in the EU this year, but with an increase in the numbers of people crossing the border between Turkey and Greece.

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Belgium rejects Spain’s extradition request for former Catalan ministers

A Belgian court yesterday rejected Spain’s requests to extradite three former Catalan ministers. The ruling attributes to “faults” in the European Arrest Warrants issued by the Spanish government the reason informing the decision. Commenting on the ruling, former Catalan President Carles Puigdemont said it was a sign “Europe grants [the ministers] the right to a fair trial, regardless of political opinions.”

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