16 April 2018

UK-EU future trade deal negotiations will not start before Brexit, say EU officials

Negotiations on a future UK-EU trade agreement will not begin until after the UK leaves the EU in March 2019, according to The Daily Telegraph. This comes as Brexit Secretary David Davis said last week that the UK will send hundreds of civil servants to Brussels in order to start the negotiations on the future partnership with the EU and that there would be “about 40 to 50 negotiating strands starting shortly.” An EU diplomat is quoted saying, “There will be no negotiation strands, no ‘hundreds’ of British negotiators…Trade negotiations will not start properly until after 29 March 2019. Before that we must get the fundamentals right.” The several issues blocking discussions about a trade deal include avoiding a hard border on the island of Ireland, which is likely to dominate the UK-EU talks over the next few months. An EU source told The Daily Telegraph, “We are still seeing the same solutions for the border as those the EU dismissed last year. Either the UK is hoping for a sudden change of heart or they must have accepted the ‘backstop’ clause.” A round of UK-EU talks will take place in Brussels from today until Wednesday, covering withdrawal issues, the Irish border and the future relationship. However, according to EU officials, these talks do not cover the specifics mentioned by David Davis.

Source: The Daily Telegraph The Times Bloomberg

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House of Lords expected to support amendment to stay in customs union

The House of Lords is expected to vote in favour of an amendment to the EU (Withdrawal) Bill calling for the government to negotiate a deal which “enables the UK to continue participating in a customs union with the EU.” The Lords are expected to support the amendment by a majority of over 50. A government source is quoted in The Independent saying, “The government is listening on the important aspects of the bill…There was always going to be a time when this type of amendment, the customs union amendment, was going to cause a bit of a clash. We’ll just have to see how the debate goes.” If the amendment is passed, the bill will go back to the House of Commons to vote.

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Theresa May to commit to strengthening links with the Commonwealth

At the Commonwealth Heads of Government summit in London today, Prime Minister Theresa May is expected to pledge a strengthening of the UK’s links with the Commonwealth after Brexit as part of the UK’s ‘Global Britain’ strategy. She will say, “Our Commonwealth family already accounts for one fifth of global trade and we must continue to work together to build further upon this solid foundation by building on our existing trade links and establishing new ones.” According to the Financial Times, today’s meeting will focus on promoting the strengths of the City of London, including financial services, fintech and cyber security.

Elsewhere, the chairman of the Commonwealth Enterprise and Investment Council, Lord Marland, has told The Times it would be a “dereliction of duty” for the UK to ignore the trading opportunities of the Commonwealth post-Brexit. While he stressed that the Commonwealth would not be “the post-Brexit European Union,” he said, “What’s rather exciting about the UK, from a Commonwealth point of view, coming out of the European Union, is [that] it forces it to look at alternative markets and increase its market share in those markets.”

Separately, Canada’s High Commissioner to the UK, Janice Charette, told Politico London Playbook that, “As the UK plans its exit from the EU, this opens new opportunities for partners like Canada to expand our collaboration and joint work. The UK is Canada’s largest trading partner in Europe and we already have a free trade deal [CETA]… It currently applies to the UK, and both Prime Minister Trudeau and Prime Minister May have committed to work towards a seamless transition so we can expand our trading relationship to the benefit of businesses, consumers and workers in both countries.”

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Michel Barnier: Spain has a "lever of unanimous solidarity" from the EU in post-Brexit Gibraltar negotiations

The EU’s chief Brexit negotiator Michel Barnier has said on Friday that Spain could use the “lever of unanimous solidarity” from the other 26 EU member states in Brexit negotiations with the UK over the access to Gibraltar. Barnier said, “This lever is there and the British know it well,” adding, “and I think that the lever of solidarity which we have given to Spain will be effective.” He also mentioned, “[His] scenario is that, thanks to this lever, there will be an agreement [over Gibraltar] between the United Kingdom and Spain.”

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Jaguar Land Rover to cut 1,000 jobs in the UK due to Brexit uncertainty

Jaguar Land Rover (JLR), the UK’s biggest car maker, is expected to today announce a cut of 1,000 jobs and of production at two of its UK plants, due to uncertainty over Brexit and changes to taxes on diesel vehicles. The cuts have been triggered by a 26 percent drop in JLR’s sales in the UK in the first three months of 2018, caused by weakening consumer confidence. The company’s statement said,  “In light of the continuing headwinds impacting the car industry, we are making some adjustments to our production schedules and the level of agency staff,” adding that, “We are however continuing to recruit large numbers of highly skilled engineers, graduates and apprentices as we over-proportionally invest in new products and technologies.”

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EU shows support for US, UK and France military strikes in Syria

The military strikes launched by the US, the UK and France on early Saturday against the Syrian regime in response to a suspected use of chemical weapons against civilians received support from several European leaders. German Chancellor Angela Merkel called the military action “necessary and appropriate, to ensure the effectiveness of the international ban of chemical weapons use and to warn the Syrian regime of further violations.” European Council President Donald Tusk wrote that, “The EU will stand with our allies on the side of justice.” EU High Representative for Foreign Affairs and Security Policy, Federica Mogherini, said that the EU “is supportive of all efforts aimed at the prevention of the use of chemical weapons.”

Elsewhere, Scotland’s First Minister Nicola Sturgeon has yesterday called for a vote on the UK’s air strikes in the House of Commons, arguing that it is “a serious mistake” for “the role of UK armed forces to be changed without the approval of parliament.” Labour Party leader Jeremy Corbyn also argued for parliament to vote on the strikes, saying “What we need in this country is something more robust, like a war powers act, so that governments do get held to account by parliament for what they do in our name.” UK Prime Minister Theresa May has called the military action “right and legal” retaliation, while Foreign Secretary Boris Johnson said that the strikes were “timely, appropriate and commensurate.”

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EU ready to offer the US prospect of trade deal in exchange for permanent exemption from tariffs

The EU would be ready to offer the US the prospect of a trade deal in the form of a scoping exercise, Politico reports. The move would come in exchange for a permanent exemption from the newly introduced US steel and aluminium tariffs, for which the EU has so far been granted only a temporary exemption until 1 May. A Commission spokesperson said, “In our ongoing talks with the American side, we are insisting on getting a full exemption from the announced steel and aluminium tariffs. Once that has been agreed, we would be open to discuss various possible ways of reducing trade irritants.” According to an EU diplomat, “[Trade Commissioner] Malmström is already discussing the plan with [US Commerce Secretary Wilbur] Ross.” However, the European Commission and member states remain divided on the form that such a trade deal could take, with France in particular said to be opposed to a tariff-only trade deal.

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European Commission report rejects possibility of new chapters in Turkey accession process

The European Commission will publish an assessment of Turkey’s efforts towards EU accession, in which it concludes that “Turkey has made big steps away from the EU,” and that “under the current circumstances, it’s unthinkable to open up new [accession] chapters.” The same analysis also recommends that “accession negotiations be opened with Albania and Macedonia.” The report is due to be presented tomorrow at the European Parliament plenary session.

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German government divided over Eurozone reform

The conservative faction in the German parliament, consisting of Christian Democrats (CDU) and Christian Social Union (CSU) will this week discuss a motion rebuffing many of French President Emmanuel Macron’s proposals on Eurozone reform. The motion demands that a new European Monetary Fund (EMF) would need to be controlled by national parliaments, with veto powers for national governments. Funds should be dispersed  to ailing governments only under strict conditions of reform and debt restructuring.

Deputy leader of the conservative faction, CDU MP Ralph Brinkhaus, said the “domestically not quite easy situation” prohibits the quick adoption of European reforms, adding, “I don’t see us achieving substantial progress at the [European] summit at the end of June … should it be the case that we can only take substantial steps forward with the new European Commission [in place], then that is the way it is.”

Meanwhile, the Social Democrats’ (SPD) chief whip Carsten Schneider demands, “The Chancellor [Angela Merkel] should remind her party of their own election manifesto – in there, they still wanted to establish the European Monetary Fund.” He added, “We [SPD] want to drive forward Eurozone reform … the SPD is not available for another four years of standstill and logjams.”

This comes as European Commissioner for the Budget, Günther Oettinger, himself a German member of the CDU, complains, “What we hear from the CDU-CSU faction in parliament is not acceptable … They put at risk the European renewal. I expect that the leaders of the party and the faction will rectify this in the coming days.” He added, “The Social democrats only joined another Grand Coalition [with CDU-CSU] … because of Europe.”

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Majority of Europeans believe integration of non-EU immigrants is a necessary investment

A new Eurobarometer survey on the integration of immigrants in the EU reveals that 69 percent of Europeans believe that fostering the integration of immigrants is a necessary investment in the long-term. A majority of respondents in all member states also say that the EU plays an important role when it comes to integration, especially in terms of promoting cooperation between all actors involved and of financial support. Moreover, Europeans tend to largely overestimate the number of non-EU immigrants in their countries. The survey says, “In 19 member states, the estimated proportion of the population who are immigrants is at least twice the actual proportion of immigrants.”

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Leopold Traugott: The Macron-Merkel EU reform engine is spluttering

Writing for The Telegraph, Open Europe’s Leopold Traugott argues that, “It seems increasingly unlikely that Franco-German cooperation on EU reform will live up to the high expectations initially set on it.” While the new German government “openly endorsed many of Macron’s reform ideas in its coalition treaty…so far it seems unwilling to commit to the compromises necessary to achieve much of this,” Traugott writes, adding, “Successfully reforming the Eurozone will be crucial for Macron. It was at the heart of his agenda. It is also closely entwined with his domestic reforms, e.g. on the French labour market. If one fails, momentum on the other will be lost. The big question for Berlin will be whether it can afford to let Macron to fail. Consequences for France and Europe could be grave.” He explains, “In the 2017 French Presidential elections, which Macron won, more than 40% voted for deeply Eurosceptic forces from the far left (Jean-Luc Mélenchon’s France Insoumise) and far right (Marine Le Pen’s Front National) in the first round. These forces would only grow stronger if Macron’s Eurozone reform plans fail.”