3 July 2018

The Telegraph: The EU will “shoot down” May’s Brexit White Paper

European Union officials have indicated they will reject the UK’s upcoming White Paper on the UK-EU future relationship, according to The Telegraph. Theresa May is due to deliver the White Paper to the European Commission next week after a cabinet summit at Chequers this Friday. It has been reported that the White Paper will propose a “third way” on customs, as well as proposals to remain closely aligned to the single market on goods regulations whilst retaining the freedom to diverge on services. However, a senior EU negotiator has said of this proposal, “We will shoot it down, because it provides unfair advantage to British companies.” EU economists argue that because a large proportion of modern goods trade is based on services, allowing the UK to diverge on services would undermine European competitors. “Even a 1% or 2% difference makes a huge difference across the board”, added the negotiator, “and small EU states that do a lot of trade with the UK are adamant they won’t let that happen.” The EU also objects to the separation of goods and services, which they consider to be cherry-picking. Jean-Claude Piris, a former head of the EU Council’s legal service, said, “If you fudge the internal market by allowing a third state to choose what they want … it is the beginning of the end.”

Reports suggest that EU expectations of a breakthrough after the Chequers summit are low. One negotiator told the Guardian, “The real problem is that if the result of Chequers is not unambiguous, the reality is that a lot of time… will be lost… it increases the chances of a no-deal.”

Additionally, The Telegraph reports that the EU will look to push back against the UK government’s refusal to countenance a border in the Irish Sea. “The question is whether sensible devolutionary carve-outs are really a mortal threat to the constitutional integrity of the United Kingdom as May and Davis pretend,” says one EU diplomat close to the talks. “That assertion has not properly been tested.”  Elsewhere, the Guardian reports that the EU is preparing to offer a year’s extension to the transition period in order to mitigate their likely rejection of the UK’s White Paper.

Source: The Telegraph The Guardian

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May suggests new customs plan is a “significant step forward”, amid reports cabinet ministers kept in the dark

Speaking in the House of Commons yesterday, Prime Minister Theresa May said that the government’s new customs plan, known as the “third way”, will be a “significant step forward” and will offer “the best of both worlds” – allowing for an independent trade policy and highly-integrated trade. However, some ministers, including Brexit Secretary David Davis, were reportedly not involved in drawing up this proposal. Eurosceptic ministers are also reportedly concerned that the so-called “third way” on customs will simply be a rebrand of May’s “new customs partnership”, with an ally of one of the ministers telling the Financial Times, “There is a sense that a big sellout is on its way.” Another Cabinet source told the Telegraph that Number 10 is “treating the Cabinet like idiots… it feels like they’re trying to bounce us into the Customs Partnership by calling it something else.” May also yesterday refused to rule out continuing to apply the EU common external tariff after the end of the Brexit transition period in 2020. Elsewhere, a former minister told the Daily Express, “Pro-Brexit MPs are ready and willing to pull the trigger. Friday looks as though it could be the day that decides the Prime Minister’s fate.”

Separately, Jacob Rees-Mogg, the Chairman of the European Research Group of pro-Brexit Conservative MPs, was criticised by ministers and other Conservative MPs yesterday for his Telegraph article on Sunday, in which he warned Theresa May that she risked splitting the Conservative Party if she softened her Brexit policy. He was yesterday publicly rebuked by Foreign Office Minister Alan Duncan, who said Rees-Mogg’s “lecturing and threatening the PM is just too much… The ideological right are a minority despite their noise and should pipe down.” Fellow Foreign Office Minister Alastair Burt said he was “tired of this endless threat and counter-threat”, while Business Minister Richard Harrington said his colleagues should “stop putting their own dogma above the good of the country and the party”. However, the Foreign Secretary Boris Johnson defended Rees-Mogg, tweeting, “It’s vital that all MPs are able to air their views on Brexit.”

Meanwhile, Conservative MP Vicky Ford told the BBC’s Radio 4 Today Programme yesterday, “If this becomes a binary choice between staying in the single market and customs union or no deal, then I do not believe there is a majority for no deal.”

Elsewhere, Politico reports that the government now intends to bring forward the parliamentary votes on the Customs Bill and the Trade Bill, to the 16th and 17th of July respectively. Both bills contain amendments put forward by Conservative rebel MPs Anna Soubry and Ken Clarke designed to keep Britain inside the EU’s customs union.

Source: Financial Times Telegraph The Daily Express Guardian Politico London Playbook The Times

DUP tell May they “don’t give blank cheques to anyone”

The Democratic Unionist Party (DUP) has said that Theresa May cannot take their support for granted, saying they “don’t give blank cheques to anyone”. Speaking after a meeting in Downing Street with May yesterday, DUP leader Arlene Foster and deputy leader Nigel Dodds MP told reporters, “We want to see a proper Brexit which fulfils the referendum result. We have been very clear that has to be on the basis that the whole of the UK leaving the EU as one. I’m confident the PM will deliver on that.”

Source: ITV

German conservatives find compromise on “transit centres” at border with Austria

German Chancellor Angela Merkel yesterday achieved a compromise with her Interior Minister Horst Seehofer on the question of national border controls. Merkel’s Christian Democrats (CDU) and Seehofer’s Christian Social Union (CSU) agreed to the establishment of “transit centres” at the German border with Austria, where asylum seekers who have already been registered in another EU country should be stopped from entering the country. Where Germany has or will conclude a bilateral deal with the responsible country, asylum seekers would be sent back directly there, otherwise they would be sent back to Austria on basis of a potential future agreement. CDU General Secretary Annegret Kramp-Karrenbauer said, “I think this is a great solution to limit migration into Germany, while also preserving the good relations with Europe.” The CDU and CSU’s third coalition partner, the Social Democrats (SPD) would still need to agree for this to become official government policy. The chair of the SPD’s migration committee, Aziz Bozkurt, yesterday commented, “These transit centres are not part of our coalition treaty… therefore this [whether to agree to them] is not even a question, since already the coalition treaty was too much for us.”

The Austrian government this morning reacted with a joint statement by its Chancellor Sebastian Kurz, Vice-Chancellor Heinz-Christian Strache and Interior Minister Herbert Kickl, warning, “Should this agreement [between CDU and CSU] turn into the position of the German government, then we see ourselves forced to take measures to prevent disadvantages to Austria and its population.” Kurz added in a tweet, “Austria is prepared for every possible scenario, and we will respond accordingly, especially on our Southern border.”

Elsewhere, Open Europe’s Leopold Traugott told CNN that “the conflict between the CSU and CDU would continue” even if the parties reached a compromise, adding that the CSU had politicians “even more radical on this issue [of immigration]” than Horst Seehofer.

Source: Welt Sebastian Kurz on Twitter CNN

Leader of Unite union suggests support for a second Brexit referendum

Len McCluskey, the leader of the UK’s largest trade union, Unite, yesterday suggested he could support a second Brexit referendum “if indeed the political climate requires it,” noting that Labour leader Jeremy Corbyn had not ruled this out. He added, “I feel pretty clear that our union may embrace that particular approach.”

Source: BBC News

UK extends current tuition fees and loans for EU students starting in 2019

Education Secretary Damian Hinds yesterday announced that EU undergraduate students starting their studies in autumn 2019 will continue to pay tuition fees at the same rate as UK students and will have access to the same student loans for the duration of their course. Hinds said, “Students from the EU make an important contribution to the universities sector and it is a testament to our system that so many students from abroad choose to come and study here,” adding, “Today we are providing clarity and certainty on their fees for the duration of their courses.” However, the long-term post-Brexit status of EU students has not yet been decided.

Source: BBC Guardian

European Commission awards emergency migration assistance to Spain and Greece

The European Commission yesterday decided to increase emergency financial assistance with an additional €45.6 million to Spain and Greece in order to help them “respond to the migratory challenges they face.” Spain has received €24.8 million to provide healthcare, food and shelter to arriving migrants and €720,000 to improve the quality of return transfers, while the United Nations High Commissioner for Refugees (UNHCR) received an additional €20 million to improve reception facilities in Greece. Commissioner for Migration, Home Affairs and Citizenship Dimitris Avramopoulos said, “The Commission continues to deliver on its commitment to support Member States under pressure… Over €1 billion has now been awarded in emergency assistance to help Member States manage migration.”

Elsewhere, Open Europe’s Pieter Cleppe appeared on Chinese TV station CGTN. Discussing developments in EU migration policy, Cleppe said that the recent Council agreement to explore the possibility of “[creating] centres for asylum seekers outside the EU” was “potentially a game changer.” He added that the challenge for Europe was “not so much to stop migration… as to control migration.”

Source: European Commission CGTN

British Chambers of Commerce warns of “breaking point” over lack of Brexit clarity

In a statement today, the British Chambers of Commerce (BCC) Director General, Adam Marshall, said that companies have reached a “breaking point” over lack of clarity in Brexit negotiations and that investment is already slowing down. Marshall called for “urgent clarity on the practical, detailed issues that underpin trade.” Commenting on some cabinet ministers’ declarations in the past playing down business concerns, ha also said, “Businesses have every right to speak out when it is abundantly clear that the practical questions affecting the competitiveness of their firms and the livelihoods of millions of people remain unanswered.”

Elsewhere, a new business survey of the UK financial sector by the Confederation of British Industry (CBI) and PwC has found that a third of banks are “not so confident” they will be able to implement Brexit plans by March next year. The head of financial services at PwC, Andrew Kail, said, “Brexit continues to drive uncertainty amongst sector players… Location planning, people movements and client retention remain at the top of the agenda, despite the extra time afforded by the transition period.”

Separately, the Parliament’s Treasury Committee has asked the Bank of England and the Treasury to publish assessments on the Brexit impact ahead of Parliament’s vote on the final Brexit deal. Nicky Morgan, chair of the committee, said, “The Committee will press for robust and high-quality analysis on the consequences of Brexit for the economy and the public finances, so that parliament’s decisions can be based on the best possible evidence.”

Source: Reuters Bloomberg I Blloomberg II

European Commission launches infringement procedure against Poland over judicial reforms

The European Commission yesterday launched an infringement procedure over the Polish government’s plans to implement a new law that would force several of Poland’s Supreme Court judges into early retirement. The Commission said the planned law would “undermine the principle of judicial independence, including the irremovability of judges,” and would violate EU legislation. This comes as Polish President Andrzej Duda announced he would use the new law, coming into force today, to force the president of Poland’s Supreme Court Anna Suróvka-Pasek, as well as eleven other Supreme Court judges, into retirement. The combined judges of the court have criticised this new law as being “in breach of the constitution” and “an obvious violation by the legislative authority of one of the fundamental guarantees of independence of the judiciary,” adding that it “will soon significantly disrupt the normal functioning of the Supreme Court.”

Source: Politico

New York Times: US warns European leaders about defence spending

Ahead of the NATO leaders summit on July 11-12, US President Trump has written letters to several other leaders asking them to increase their security spending in order to meet NATO commitments of spending 2% of GDP on defence, reports the New York Times. Trump reportedly wrote to German Chancellor Angela Merkel, “There is growing frustration in the United States that some allies have not stepped up as promised…The United States continues to devote more resources to the defence of Europe when the Continent’s economy, including Germany’s, are doing well and security challenges abound. This is no longer sustainable for us,” adding, “Continued German underspending on defence undermines the security of the alliance and provides validation for other allies that also do not plan to meet their military spending commitments, because others see you as a role model.” The letter also warned, “It will…become increasingly difficult to justify to American citizens why some countries do not share NATO’s collective security burden while American soldiers continue to sacrifice their lives overseas or come home gravely wounded.”

Elsewhere, US Commerce Secretary Wilbur Ross told CNBC yesterday that it was “premature” to say whether the US will introduce new punitive tariffs on EU car imports. 

Source: The New York Times CNBC Politico Brussels Playbook