12 July 2018

May: Chequers Brexit plan is “the best outcome” for the UK and the EU

In an op-ed for the Sun, Prime Minister Theresa May writes that the Government’s Brexit plan agreed at Chequers, which will be published in a White Paper today, will “mean an end to freedom of movement” and will allow the UK to sign its own trade deals and to be outside of the jurisdiction of the European Court of Justice (ECJ). May points out that the other alternatives – a standard trade deal or a combination of EEA membership with continued membership of the customs union – would either “break up our country” or “would not be Brexit at all.” She adds, “While we must prepare for the possibility of leaving without a deal, I’m clear that the best outcome – for both the UK and the EU – is a deal based on the ideas we are setting out on Thursday.” On a similar line, speaking at the NATO summit in Brussels, the PM insisted that the Brexit plan agreed at Chequers delivered on the ‘red lines’ set out in her Lancaster House speech and that “It delivers on the vote that people gave on Brexit… in a way that protects jobs and livelihoods and meets our commitment to Northern Ireland.”

Ahead of the publication of the White Paper, the Financial Times reveals that on financial services the document will drop demands for “mutual recognition”, in favour of a looser arrangement which calls for a strengthened “equivalence” regime, recognising that “the UK and the EU will not have current levels of access to each other’s markets,” according to an unnamed source. A policymaker is quoted saying, “Ultimately you will end up with something midway between what used to be called mutual recognition and enhanced equivalence.”

Elsewhere, the former head of the World Trade Organisation Pascal Lamy yesterday told the BBC Radio 4’s Today programme that we are “moving slowly to a recognition that whatever trade agreement will be governing the trade relationship between the UK and the EU in the future, there will be more trade frictions, and more trade costs than at present,” adding, “There will be a border, and the real question is, how thick is the border?”

Open Europe’s Henry Newman yesterday gave evidence to the House of Commons Exiting the EU Committee to discuss the Government’s Brexit White Paper published today. Newman said that the plan is welcome and that there are signs of a way through in Brexit negotiations. He added however that it remains an open question whether the EU could change its position towards the future economic relationship with the UK, adding, “Now the UK has a plan, it’s important to reflect on the absence of a plan from the other side,” referring to the words of Irish Prime Minister Leo Varadkar, who earlier this week said that the EU needs to be “flexible” on its red lines.

Source: The Sun Press Association Financial Times BBC News House of Commons

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Eurosceptic Conservative MPs table amendments that could block Chequers plan

According to the Sun, Chairman of the European Research Group (ERG) Jacob Rees-Mogg and other Eurosceptic Conservative MPs yesterday have tabled four amendments to the Government’s Trade Bill, a key piece of Brexit legislation which is due to return to the House of Commons next week. One amendment demands that the UK stops collecting taxes and tariffs on behalf of the EU unless the EU does the same, which would threaten the Government’s plan for a ‘facilitated customs arrangement’, according to Rees-Mogg. The three other amendments would force the Government to commit to avoid a border down the Irish Sea, have a different VAT regime from the EU and to pass a new bill if it wants to stay in the EU customs union. Rees-Mogg told the Sun yesterday, “Unfortunately Chequers was a breakdown in trust. Brexit meant Brexit, but now it appears Brexit means remaining subject to European laws. I believe this will help the Government stick to the promises it made.”

Elsewhere, the Guardian reports that MPs from the ERG are planning to table a “humble address” in parliament to demand the publication of former Brexit Secretary David Davis’ draft for the White Paper. The draft reportedly contains an alternative approach to May’s for the future economic relation with the EU, setting out a Canada-style free trade deal along with incorporated aspects of other agreements the EU has with other countries. A source who saw the draft is quoted saying, “You stick it all together, you get quite a good trade deal…We were turning Mansion House into hard text.”

Separately, Bloomberg reports that EU officials are warning businesses that the chances of a no-deal Brexit have risen significantly in the past three months and now stand at 50 percent. The EU is urging companies to step up their contingency planning and has said EU institutions will also increase work on no deal.

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EU downplays BoE warnings on derivatives contracts

Following warnings by the Bank of England last month that many derivatives contracts could be at risk if no special measures are put in place by the time Brexit happens, EU Commissioner for the Euro Valdis Dombrovskis yesterday downplayed the risk, saying, “Even after Brexit, the performance of existing obligations can generally continue, so there doesn’t appear to be at this juncture an issue of a general nature linked to contract continuity.” Dombrovskis added that “current analysis… suggests that preparedness by market participants can go a long way to mitigate the impact of Brexit.”

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UK should be flexible on 'red lines' to strike security agreement with EU, warns Lords committee

According to a report on the future UK-EU security treaty published by the House of Lords European Union Committee yesterday, “The UK Government’s ‘red lines’, and the EU’s response, appear to have narrowed the scope for [a future security] agreement.” The report suggests that “a security treaty that required the UK courts to take account of decisions of the [European Court of Justice] (and vice versa) might be more acceptable to the EU – and might therefore be negotiated more quickly – than an entirely bespoke solution.” In its conclusions, the committee warns that the UK could lose the right to extradite criminals from some EU member states even during the transition period and “recommends that the Government publish a contingency plan, addressing the effect of any disruption to the UK’s extradition arrangements.” It also states that “internal security practitioners should prepare for the possibility of an operational cliff-edge… in case the UK loses access to databases and other frameworks for security cooperation at the end of the transition period.”

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EMA warns medicines supply in Europe could be at risk post-Brexit

Following a survey launched in January this year, the European Medicines Agency (EMA) has warned that supply of 100 medicines manufactured exclusively in the UK could face problems after Brexit, as “there are serious concerns that the necessary actions [to keep marketing the products in Europe] will not be carried out in time.” The EMA said it was “looking in detail at those medicines where there are risks of supply shortages and will assess how critical these are.” It warned that the authorisation necessary to market the products in Europe, as well as “pharmacovigilance” [the operations to monitor drug safety], may need to be “transferred to a legal entity established in the European Economic Area,” urging “those companies who have not yet informed EMA of their Brexit preparedness plans to do so as soon as possible to mitigate any risks to the continuous supply of medicines for human and veterinary use within the EU.”

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Trump: Germany is “totally controlled by Russia”

Speaking yesterday at the NATO Summit in Brussels, US President Donald Trump asked other NATO members to spend as much as 4 percent of their GDP on defence. He in particular criticised Germany for not spending enough on defence, saying it was a “rich country” that could afford to increase defence spending “immediately.” He also accused Germany of being “totally controlled by Russia,” adding, “I think it’s very sad when Germany makes a massive oil and gas deal with Russia, where you’re supposed to be guarding against Russia and Germany goes out and pays billions and billions of dollars a year to Russia.” German Chancellor Angela Merkel rejected Trump’s criticism, saying, “I experienced the Soviet occupation of one part of Germany myself. It is good that we are independent today… We can determine our own policies and make our own decisions and that’s very good.” Merkel also said that Germany “contributes a lot” to NATO, stressing that “Germany is the second largest provider of troops, the largest part of our military capacity is offered to NATO and until today we have a strong engagement towards Afghanistan. In that we also defend the interests of the United States.”

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Germany and Italy in bilateral talks to reduce migration numbers

Following a meeting with his German counterpart Horst Seehofer, Italian Interior Minister Matteo Salvini yesterday said that both sides shared a “common objective: fewer landings, fewer deaths, fewer migrants in Italy as well as in Germany.” Seehofer said they talks were “very solution-focused,” adding that their ministries now were to launch bilateral talks “very soon.” He also said he hoped that an agreement on the return of certain asylum seekers from Germany to Italy would be done by the end of July or early August, to which Salvini responded that “before accepting a single immigrant in Italy, we want Europe to protect its external borders. When that becomes a reality we can talk about all the rest.”

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China announces new countermeasures to US punitive tariffs

The Chinese government yesterday announced it saw itself “forced to implement necessary countermeasures” to a new round of US punitive tariffs on $200bn worth of Chinese goods unveiled Tuesday. China said it was “totally unacceptable for the American side to publish a tariff list in a way that is accelerating and escalating,” adding that it would now introduce own measures “to protect the core interests of the nation and its people.” This comes as US trade representative Robert Lighthizer justified the new US tariffs on China as a response to the Chinese reaction to the previous round of punitive US tariffs.

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