18 May 2018

May denies ‘climbing down’ over Customs Union

Theresa May yesterday denied ‘climbing down’ over membership of the EU customs union after Brexit. Speaking to reporters at the EU Western Balkans summit in the Bulgarian capital, Sofia, the Prime Minister said, “No, we are not [climbing down]. The United Kingdom will be leaving the customs union, we are leaving the European Union,” adding that the UK would have its “independent trade policy.” This came after the Telegraph reported yesterday that the Brexit Cabinet sub-committee had agreed that the UK may need to remain aligned to the customs union until beyond the end of the transition period, if this is needed to prevent a hard border in Ireland. One source dismissed the reports, saying, “There was no proposal discussed or agreed that would see us staying in the customs union beyond the implementation period.” Sources at the Department for Exiting the EU also denied the Telegraph report and said policy was still in development. This came as former Conservative Party leader and Brexit campaigner Iain Duncan Smith said it would be “very unwise” to extend membership of the customs union, and warned against believing that everything had to be perfect before the point of departure. “Perfection on departure is idiotic. Functionality is required and that already exists,” Duncan Smith said.

Some EU officials said that a possible delay in leaving the customs union could be a sign of “more realistic” thinking from the UK. “We would cautiously welcome this as a first step but would have some questions,” one EU diplomat said. “If it’s only a play for time, that’s our concern. You can’t build a future relationship on soft assumptions.” However, Lithuanian president Dalia Grybauskaitė appeared to cast doubt on the idea that the UK could extend membership of a customs union alone, without extending other aspects of the transition period. She said, “I think that negotiations are about the whole package, we cannot separate any pieces.”

Meanwhile, the UK government’s reported plan to have the “backstop” for Northern Ireland apply to the entire UK has been criticised by several EU officials. The Financial Times cites an unnamed senior official saying that applying the selective participation in the EU single market offered by the backstop “would be one huge cherry.” Another official cited says, “Some [EU leader] will be tempted [by this solution], no doubt.”

Source: The Guardian The Telegraph Financial Times Financial Times

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Any move to align the UK to the EU on customs post-Brexit would be beneficial, says Irish PM

Following a bilateral meeting with Theresa May yesterday, Irish Taoiseach Leo Varadkar said that he expects the UK to present its proposal for a future customs arrangement with the EU within two weeks, RTE reports. Varadkar told May that “any move that helped to align all of the EU and the UK in terms of customs into the future would be beneficial,” adding, “It would help solve some of the problems related to the border but not all of them. It would certainly help us continue to trade between Britain and Ireland much as we do now.” During the meeting Theresa May also “gave [Varadkar] an insight into some new thinking the UK government has in relation to customs,” the Taoiseach explained.

Speaking ahead of the bilateral meeting, Varadkar had warned, “The deadline for the Withdrawal Agreement of course is October but if we’re not making substantial progress [on the backstop solution for the Irish border] by June, then we need to seriously question if we’re going to have a Withdrawal Agreement.” He said, “We need to know that [the backstop] is workable and legally operable, but we’re yet to see anything that remotely approaches that,” adding that the UK and EU were “willing to examine” alternatives to the EU backstop proposal for Northern Ireland to remain in the EU customs territory and regulatory area. Meanwhile, speaking yesterday at a conference in Dublin, Irish Foreign Minister Simon Coveney said that “hopefully” an agreement will be reached by October, despite “mounting frustration” in the negotiations.

Elsewhere, at a press conference in Macedonia, Theresa May said that the UK will “bring forward [its] own proposal for the fall back option [to solve the Irish border issue] in due course,” as the European Commission’s proposed “fall back option [from the UK-EU December joint report]… was not acceptable to [the UK].”

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Four Labour MPs call for second referendum

The Merseyside Labour MPs yesterday called for “a People’s Vote on the Brexit deal.” In a letter, they said the government did not have “a mandate to force a bad Brexit deal on the people of Merseyside,” adding that Brexit was “much too big a deal for just 650 MPs in London to decide” without “the rest of the country having their say.” The letter comes one week after a similar demand was voiced by five North East Labour MPs.

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European Commission tells insurance industry to prepare for contracts disruption in case of a disorderly Brexit

The European Commission’s Vice President for Financial Stability Valdis Dombrovskis yesterday warned that it was the insurance industry’s responsibility to prepare for a possible disruption of insurance and derivative contracts after Brexit. Dombrovskis told the European Parliament that the Commission cannot guarantee that insurance policies bought from insurance companies in the UK would still be valid in case of a no-deal Brexit, explaining, “I would be somewhat hesitant to give guarantees because negotiations are still ongoing and the outcome is still not 100 percent clear.” However, the Commission is “working towards an orderly exit [of the UK] and to minimise disruption,” Dombrovskis added.

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EU ready to negotiate trade liberalisation with US only after permanent steel tariffs exemption

European leaders have yesterday confirmed their common position that they would begin trade liberalisation talks with the US if the EU is granted a permanent exemption from the US steel and aluminium tariffs. Speaking at the EU-Western Balkans Summit in Sofia, European Commission President Jean-Claude Juncker said that the EU will “not negotiate with the sword of Damocles hanging over our head” and that only “if Europe obtains an unlimited exemption from the proposed tariff measures we are ready to engage in talks with our transatlantic partner.” Also speaking at the Summit, French President Emmanuel Macron stated, “It’s Europe’s economic sovereignty, and what we are demanding is that we are exempted without conditions or time limits,” while German Chancellor Angela Merkel added, “We have a common position: We want an unlimited exemption, but are then prepared to talk about how we can reciprocally reduce barriers for trade.”

Elsewhere, the Wall Street Journal reports that US President Donald Trump would be asking Germany to drop support for the construction of the Nord Stream 2 pipeline, which would bring gas from Russia via the Baltic Sea, in exchange for avoiding a trade war, according to German, US and European officials.

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Macron: “European sovereignty is the guarantor of international stability”

Speaking at the EU Western Balkans summit in Sofia yesterday, French President Emmanuel Macron said, “When challenges threaten to destabilise the world, the only solution is to join our forces to respond in one voice. European sovereignty is the guarantor of international stability.” The comments come amid growing tensions between the US and European countries over the US’s withdrawal from the Iran nuclear deal. On Wednesday night French energy giant Total warned that it would pull out of a $1 billion gas contract in Iran in the absence of an exemption from the new American sanctions, with similar announcements from insurance group Allianz and the container and shipping company Maersk.

Elsewhere, in an interview with Le Figaro, French Economy Minister Bruno Le Maire called for the “preservation” of the Iran nuclear deal and the “possibility for France and European countries to continue legitimate trade with Iran.” Criticising the US President’s decision to withdraw from the deal and reintroduce sanctions, he said, “Extra-territorial economic sanctions are not acceptable. The United States should not be the world’s economic policeman.” According to Le Maire, the EU is seeking exemptions from US tariffs and time extensions for compliance, as well as the option to uphold contracts agreed with Iran before the US decision to withdraw from the agreement. On relations with President Donald Trump, he said, “Whether it is about tariffs on aluminium and steel, or extra-territorial sanctions, the irony of the matter is that Donald Trump is penalising his closest allies, European countries such as France, and supporting China.” He also argued, “Everything that is happening at the moment, including the risk of a trade war, the question of digital taxations, the unacceptable balance of power between digital giants and our own companies, shows that Europe is at a historic turning point…Do we want to be an economic and political power capable of defending our economic and political interests?”

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EU needs to reform before further countries can accede, says Macron

French President Emmanuel Macron yesterday said he was sceptical over the countries of the Western Balkans joining the EU in the near future. While he said that he was in “favour of anchoring the Balkans in Europe and moving toward Europe,” he stressed that the EU needed “to look at any new enlargement with a lot of prudence and rigour… What we’ve seen over the past 15 years is a path that has weakened Europe every time we think of enlarging it. And I don’t think we do a service to the candidate countries or ourselves by having a mechanism that in a way no longer has rules and keeps moving toward more enlargement.” Macron said it was important there was “real reform to allow a deepening and better functioning of the European Union” before any new accessions take place.

This comes as German Chancellor Angela Merkel also spoke out against a concrete timetable for candidate states’ road to accession to the EU by 2025, saying, “I am no fan of this target date, because accession needs to be based on actual progress.”

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EU refers UK, France and Germany to ECJ for air pollution

The European Commission has referred the UK, France and Germany to the European Court of Justice for breaching air quality limits for nitrogen dioxide pollution. The Commission has also issued “letters of formal notice” to the UK, Germany, Italy and Luxembourg for not having “effective, proportionate and dissuasive penalty systems in place” to deter car manufacturers from cheating in emissions tests. A spokesperson for the UK department of environmental, food and rural affairs said, “We continue to meet EU air quality limits for all pollutants other than nitrogen dioxide, and data shows we are improving.” They also said the government will soon set out it’s Clean Air Strategy to tackle roadside emissions.

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Leopold Traugott: How Brexit will affect Germany's role in the EU

Writing for the London School of Economics’ European Politics and Policy blog, Open Europe’s Leopold Traugott argues that “Brexit is expected to have a significant impact on the political dynamics within the EU’s institutions [and] that Germany will be obliged to do more to fill the gap left by the UK… forcing Berlin to face up to crucial strategic questions.” He writes, “Brexit puts further pressure on Germany to do and invest more” while forcing the country to simultaneously “take a more inclusive approach to [European] leadership.” Moreover, Brexit may be the starting point for “a gradual shift of EU economic policy over the next years: away from where Berlin wants it to be, and closer towards Paris’ vision.”