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Prime Minister Theresa May on Thursday proposed to her Brexit committee to keep Britain in the EU’s single market for certain parts of the economy, The Sun reports. Under this plan, the UK would maintain close alignment with the EU on most hard goods, while having the freedom to diverge on services. The proposal has reportedly been rejected as “a plot to frustrate Brexit” by Leavers in the committee, with an unnamed conservative MP saying, “[International Trade Secretay Liam] Fox, [Environment Secretary Michael] Gove and [Foreign Secretary] Boris [Johnson] have made it clear that they will not accept single market rules, because it means being dictated by Brussels forever … It makes us little more than a colony of the EU.” According to The Sun, Johnson fears that the proposed solution would stifle innovation and limit the UK’s ability to take full advantage of the opportunities offered by Brexit, while other committee members see the proposal as offering an acceptable trade-off that ensures the free flow of goods and keeps supply chains intact.
Elsewhere, May is set to give a speech at the Munich Security Conference on Saturday, where she will discuss the UK’s future security partnership with the EU. According to The Sunday Times, May will use the speech to make a “big offer” on continued security co-operation, including maintaining British membership of Europol and the European arrest warrant. This comes as a series of keynote speeches by senior ministers is planned to deliver clarity on the government’s approach to Brexit, The Daily Mail reports. Johnson will give the first speech on Wednesday, reportedly making the case for national unity over Brexit. It will be followed by a speech on business by David Davis, a speech on Brexit’s impact on Scotland, Wales, and Northern Ireland by the Minister of the Cabinet Office David Lidington, and a speech about post-Brexit trade deals by Liam Fox.
Meanwhile, Irish Taoiseach Leo Varadkar has warned that “time is running out” in the Brexit negotiations. In an interview yesterday he said, “It is 20 months now since the Brexit referendum, 20 years since some of them started campaigning for it and we still don’t really know what Brexit means, or what the British Government wants Brexit to mean.” Varadkar added, “The UK is due to leave the European Union in March 2019, it’s a little over a year away, and I think we need clarity and urgency from London.”
Open Europe’s Aarti Shankar appeared on the Guardian’s Politics podcast last week to discuss the Brexit negotiations and why the UK should not remain in a customs union with the EU.
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Speaking in Brussels on Friday, EU chief Brexit negotiator Michel Barnier warned that a post-Brexit transition period was “not a given” if current “disagreements persist.” Barnier stressed the need to guarantee the protection of EU citizens’ rights during the transition period, calling it a “major point for us and also the European Parliament.” On the inclusion of a sanction mechanism in the agreement, Barnier said, “It is perfectly normal to provide for effective implementation mechanism to settle disputes,” adding, “We never wish to punish the UK.” He argued that the option of direct sanctions was necessary since the legal procedures normally used would take “too much time.” He added that he opposes the UK’s demand for a “right of opposition” to new EU laws implemented during the transition period. At the same occasion, Barnier warned that no transition deal could be agreed until a “precise, clear and unambiguous” solution to prevent a hard border in Northern Ireland was legally agreed. He cautioned, “It is important to tell the truth, a UK decision to leave the single market and the customs union would make border checks unavoidable.”
This comes as, according to The Sun, Prime Minister Theresa May is willing to withhold British contributions to the EU budget should the UK not obtain the right to veto new laws during the transition period. The newspaper cites an unnamed ally of May as saying that in exchange for the payments “she will insist on retaining our full voting rights … if we have no say, there will be no paying in, either.”
Separately, Ireland’s Europe Minister Hellen McEntee warned that the Irish border issue becomes “more and more difficult the more options you take off the table,” adding, “we need the UK government … to let us know what the proposals are coming from their side, what their options are.”
Elsewhere, The Telegraph reports that EU diplomats are sceptical about the terms of negotiation put forward by Barnier over the last week. French diplomats are reportedly angered at the “lack of consultation” over the draft documents published by Barnier on Wednesday, with another diplomat from an unnamed EU country suggesting that Barnier’s statements were not “written in stone” but part of a negotiation. Conservative MP Daniel Kawczynski commented, “In private, many Polish politicians are expressing regret at the Commission not treating Britain with due consideration and respect.”
The Times reports that the Home Office has “barely begun” work on a new system to register EU migrants during the Brexit transition, quoting one government source who said, “I don’t think anyone has any confidence that such a new system can be ready for March next year.” Another source also explained, “Rightly the focus has been on registering the three million nationals who are already here, and while that has been progressing well there is still a lot of work to do. But the problem is that this is a streamlined process that doesn’t question whether in future someone might not have the right to work.” The Times also reports that last month the Home Office was calling within government for EU citizens arriving during a transition to be treated the same as those already resident in the UK, but that Downing Street had rejected this proposal. A Home Office spokesperson has said, “The Prime Minister has been clear that during the implementation period there will be a registration system for EU citizens coming to the UK. The precise details of the implementation period are currently being negotiated with the EU, but planning is well under way.”
The Australian High Commissioner, Alexander Downer, told BBC Radio 4 this morning, “We could build substantially more trade if we were able to negotiate a free trade agreement with the UK. If you remain in the customs union then you would have no control over an independent trade policy. In fact you’d have no control over trade policy at all. Countries like Australia, China, Japan, the US and so on would not be able to conduct trade negotiations with the UK, we would only conduct trade negotiations with the EU.” He added, “You wouldn’t be relevant to that, because you wouldn’t have a say in those negotiations, they would be exclusively conducted by the EU.” Downer also urged against introducing new tariff barriers between the UK and the EU, warning, “That would be damaging to the European and British economies but damaging to the global economy – that’s what we are worried about.”
Elsewhere, The Sunday Times reports that the government is planning to sign a “memorandum of understanding” on future free trade deals with all Commonwealth states.
According to a survey of European business leaders conducted by FTI consulting, a majority of companies expect that the UK will conclude a “soft Brexit” deal with the EU, which will see current arrangements remain largely unchanged. Of the more than 2,500 executives questioned, 58 percent believe that the City of London will maintain its “passporting” rights allowing them to operate across the EU. Specifically, more than two-thirds of the UK-based financial companies said they expect the financial passport to remain in place. 53 percent of the executives surveyed also said that their Brexit preparations will require them to make “irreversible” changes by next month. However, the businesses remained optimistic about their prospects, with two thirds expecting their turnover to increase in the first year following Brexit. According to FTI consulting, the findings “hint at a misreading of the political reality.” A member of FTI’s Brexit task force, Hans Hack, said, “Certainty remains in short supply” in the Brexit negotiations, “with little prospect of companies getting comfort on the future trade agreement any time soon.”
In a joint letter to The Sunday Times, representatives of the British food industry warns that all of its businesses “will be deeply affected by Brexit,” adding, “It is clear that the effect of the decision to leave the EU is already being felt in the sector, as uncertainty and lack of clarity impacts business confidence.” In the letter, they call on the government “to maintain free and frictionless trade with the EU and secure the benefits of existing EU preferential trade arrangements,” and “ensure ongoing access to an adequate supply of permanent and seasonal labour.” The National Farmer Union’s director of EU exit and international trade, Nick von Westenholz, warned of the additional costs the industry would face under a no-deal Brexit, adding, “We have high welfare and environmental standards in this country … If we open up our [food] markets, it will be bad for the consumer because there will be less high-quality, British-produced food.”
Elsewhere, The Sun reports that Britain’s fishing industry would be better of under all Brexit scenarios modelled in the government’s forecasts leaked last month.
Martin Schulz, leader of Germany’s Social Democratic Party (SPD), on Friday announced he would not take up any role in the coalition government his party negotiated with Chancellor Angela Merkel’s conservatives. This comes just two days after he announced that he would seek the post of Foreign Secretary in the new government, a move that caused serious backlash within his own party. He had also announced he would resign as party chairman following the vote of SPD members of the coalition agreement, the result of which is set to be announced on 4 March. According to a recent poll, 84 percent of SPD supporters want the party’s members to vote in favour of the agreement.
Meanwhile, Germany’s designated new finance minister, Olaf Scholz, told Spiegel on Saturday, “We [Germany] do not want to tell other European countries how should to develop … concerning this, mistakes have been committed in the past.” Commenting on Germany’s pledge to increase contributions to the EU budget to make up for the hole created by Brexit, he said, “Of course we will need to play a big role there, and it will be a challenge.” However, he insisted that Germany “will surely not carry [this burden] alone,” adding that no one he knew “would think this to be the right thing to do.”
Writing for Reaction, Open Europe’s Leopold Traugott explains that “No one really seems happy” with Germany’s new government, another ‘Grand Coalition’ of Social Democrats (SPD) and Conservatives (CDU,CSU). “The worst mood can, without any doubt, be found within the SPD,” he writes, adding, “Looking at the outcome of negotiations, one might be forgiven to expect the Social Democrats to be content … Among its six departments, the SPD received the prestigious Foreign Ministry, controls spending with the Finance Ministry, and occupies its core area of competence, the Ministry for Labour. It punches far above its electoral results. Nevertheless, the party is in open rebellion.” Its lead candidate during the election campaign, Martin Schulz, has resigned from party leadership and announced he would not take up any role in the new government he helped negotiate. “In the conservative camp, the mood is better, but also far from enthusiastic. Many within the CDU are shocked at how much ground has been given to the SPD in order to close the deal,” Traugott analyses, “Voices from the party’s business wing warn that the agreed policies jeopardise Germany’s economic future, while others call the coalition agreement unacceptable.”
Overall, “The new coalition does little to solve the structural issues threatening Germany’s long-term stability”, he writes, “While the coalition agreement contains good ideas, they are not nearly enough (or sufficiently credible) to assume that this government will successfully tackle key issues, such as Germany’s demographic crisis or the lack of a digital economy.” He concludes, “You should not expect too much from Germany over the next four years. While its political landscape is increasingly changing, its government is not – at least for now. Or, to put it in the words of Theresa May: Nothing has changed, nothing has changed…”