8 June 2018

UK Government publishes new Brexit “backstop” plan

The UK Government has yesterday published a technical note outlining its proposal for a “backstop” plan to avoid a hard border on the island of Ireland. The document says, “The UK’s proposal is that in the circumstances in which the backstop is agreed to apply, a temporary customs arrangement should exist between the UK and the EU,” explaining that the arrangement would see “the elimination of tariffs, quotas, rules of origin and customs processes including declarations on all UK-EU trade [and place] the UK outside the scope of the common commercial policy (CCP), except where it is required to enable the temporary customs arrangement to function.” The UK would also be “able to negotiate, sign and ratify free trade agreements (FTAs) with rest of world partners and implement those elements that do not affect the functioning of the temporary customs arrangement.” The paper adds, “The UK is clear that the temporary customs arrangement, should it be needed, should be time limited, and that it will be only in place until the future customs arrangement can be introduced… The UK expects the future arrangement to be in place by the end of December 2021 at the latest.”

Prime Minister Theresa May yesterday commented that the backstop “is purely there in the circumstances where we have agreed the end-state customs arrangement but for technical reasons it’s not been possible to put that in place by the 1st of January 2021,” adding, “We expect that the end-state customs arrangement at the latest will be in by December 2021 and we will be working to make sure that it is in earlier than that.”

Commenting on the document, the EU’s chief Brexit negotiator Michel Barnier welcomed the proposal, adding, “We will examine it with three questions: Is it a workable solution to avoid a hard border? Does it respect the integrity of the SM/CU [single-market and customs union]? Is it an all-weather backstop?” The European Parliament Brexit coordinator, Guy Verhofstadt, was more critical, saying, “A backstop that is temporary is not a backstop, unless the definitive arrangement is the same as the backstop.”

Source: HM Government The Guardian The Guardian Press Association Twitter

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Ireland opposes time-limited backstop

Speaking to journalists yesterday, Irish Taoiseach Leo Varadkar rejected the hypothesis of a time-limited backstop to address the question of the border on the island of Ireland. Varadkar said, “The principle that is in the existing backstop that is supported by the 27 EU member states is that it applies at least until there is an alternative in place,” adding, “It is not something that can be just time-limited… It has to be applicable until such a time if and when there is a new relationship between the EU and UK that prevents a hard border.” Varadkar is due to visit Northern Ireland today.

Elsewhere, Ireland’s deputy prime minister, Simon Coveney, yesterday stressed that “a great deal of work” is yet to be done to achieve enough progress by the EU summit in late June. Commenting on the technical note published by the UK government on customs arrangements in the discussed backstop, Coveney said, “The [European Commission’s Brexit] task force will be assessing whether these proposals have the potential to help deliver the UK’s repeated commitment to avoiding a hard border.”

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May: Brexit-related legislation to return to House of Commons before mid-July

Prime Minister Theresa May yesterday confirmed that the UK Government seeks to return the Trade Bill and Taxation (Cross-border Trade) Bill to the House of Commons before parliamentary recess in mid-July, adding,  “these other bills are important for the future structure that we need in place” after Brexit. On the vote on the EU (Withdrawal) Bill taking place next week, May commented, “I hope what everybody will see when they come to vote next week is the importance of ensuring that we get the EU (Withdrawal) Bill onto the statute book because it’s that EU (Withdrawal) Bill that ensures that we’re able to have that smooth transition when we leave the European Union.”

Elsewhere, the UK Government has proposed its own amendments to the EU (Withdrawal) Bill, rejecting some of the amendments added by the House of Lords, reports Bloomberg’s Brexit Bulletin.

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Boris Johnson: We risk ending up in an "anteroom of the EU"

Speaking at a private dinner this week, Foreign Secretary Boris Johnson warned that there is a chance Leave voters will not get the Brexit they want, adding, “The risk is that we end up in a sort of anteroom of the EU, with an orbit around the EU, in a customs union and to a large extent the single market. So not really having our full freedoms on our trade policy, our tariff schedules, and not having freedom with our regulatory framework either.” He also said there was a “very, very difficult” internal struggle in government on Brexit, adding, “The Treasury, which is basically the heart of Remain has seized the risk – what they don’t want is friction at the borders. They don’t want any disruption. So they’re sacrificing all the medium and long-term gains amid fear of short-term disruption.” He also warned, “Unless you make the change, unless you have the guts to go for the independent policy, you’re never going to get the economic benefits of Brexit. You’ll never get the political benefits of Brexit.” Of the Irish border, he said, “It’s so small and there are so few firms that actually use that border regularly, it’s just beyond belief that we’re allowing the tail to wag the dog in this way.” Johnson suggested Prime Minister Theresa May would soon be “much more combative with Brussels” and said US President Trump’s aggressive negotiating style “might get [you] somewhere.”

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New survey: Scottish voters who support independence more likely to be pro-EU

The latest Scottish Social Attitudes Survey has found that 41% believe the Scottish economy would improve if Scotland gained independence from the rest of the UK, compared to 26% in 2014. It also found that Scottish attitudes towards independence had been affected by Brexit, with those who want to stay part of the EU more like to support breaking away from the UK. Those who backed Brexit were more likely to support the Scottish Conservative party over the Scottish National Party.

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New EU research and development project will be open to British participation post-Brexit, Commission says

The European Commission yesterday published a proposal for its new research and development programme Horizon Europe, which is set to run from 2021 to 2027. European Science and Research Commissioner Carlos Moedas said the proposal was written “in a way that can include the UK as a ‘third country’.” Moedas stressed, “It is very important for the UK and it is very important for the EU to have a relationship in science and innovation,” adding that the broader framework of the UK’s future participation was also dependent on the outcome of the Brexit negotiations overall. The proposal foresees a safeguard clause that would prevent the UK from receiving more funding out of the programme than what it contributes, and features an “automatic correction” to adjust participating states’ contributions in such a case. It also grants the EU the right to exclude third countries from certain parts of Horizon Europe if their participation threatens the programme’s aim of “driving economic growth in [the EU] through innovation.”

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Macron signals unwillingness to sign G7 summit final statement if no progress on key issues is made

French President Emmanuel Macron has signalled that he will not sign a joint statement at the end of the G7 summit, unless progress is made on tariffs, the Iran nuclear agreement and the Paris climate accord, Bloomberg reports, citing a French official in the president’s office. Speaking in Ottawa yesterday, ahead of the start of the G7 leaders’ meeting in La Malbaie, Quebec today, the French President said, “Maybe the American president does not mind being isolated today. We do not mind being six if need be.”

Meanwhile, US President Donald Trump yesterday wrote, “Why isn’t the European Union and Canada informing the public that for years they have used massive Trade Tariffs and non-monetary Trade Barriers against the U.S. Totally unfair to our farmers, workers and companies?” He warned, “Take down your tariffs and barriers or we will more than match you!”

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French Finance Minister to respond to Merkel’s EU reform proposals today

French Finance Minister Bruno Le Maire will deliver a speech in Berlin today responding to German Chancellor Angela Merkel’s recent interview on EU and Eurozone reform. He is expected to say, “Building European solidarity does not mean accepting stowaways within the eurozone. Solidarity means the ability to pull towards economic performance all the states that have decided to link their monetary destinies and therefore to renounce the facility of competitiveness through devaluation.” On the looming trade war with the US, he reportedly will say, “European states have a historic choice to make: react or suffer. Defend their economic interests collectively or negotiate them separately, with the certainty of weakening them. Build a fairer and more efficient economic order, based on multilateral regulation, or let China and the United States crush them. You can count on Europe’s total solidarity, which will continue to defend a united position.”

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Group of member states suggests moving rejected asylum seekers into camps outside EU

A small group of EU member states led by Austria is considering setting up camps within Europe, but outside the EU, to transfer rejected asylum seekers to. The group reportedly consists of Austria, Denmark, Germany and the Netherlands, and is negotiating the plan at intergovernmental level outside official EU structures. Austrian Chancellor Sebastian Kurz said, “We suggested a long time ago that it would make sense to offer protection outside of the European Union, where [migrants] get protection where it is necessary but do not have the opportunity to pick the best system in Europe,” adding that this could prevent migrants from “travelling to Europe illegally, cross through several countries and pick their favourite one to lodge their asylum claim.” Kurz stressed however that this scheme was “really not a project of the Austrian [EU] presidency [starting on 1 July]. It’s a national project we share with Denmark and a small group of other member states.” Danish Prime Minister Lars Lokke Rasmussen said the camps would “be in a country that isn’t on the migrants’ or the human traffickers’ list of preferred destinations,” adding, “Based on my discussions with other European leaders… we’ll be able to take the first step this year.”

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Sweden grants Russia permit to build NordStream2 gas pipeline through its exclusive economic zone

Sweden yesterday announced it had granted Russia the permit to lay the NordStream2 gas pipeline, which will transport gas from Russia to Germany, through its exclusive economic zone in the Baltic Sea. Swedish Minister for Enterprise and Innovation, Mikael Damberg, said, “national and international law do not give the Government scope to reject the application,” while adding that “at the same time, the Government has made clear that Sweden is critical to the Nord Stream 2 project as it risks contravening the goals of the EU’s Energy Union and not complying with applicable EU legislation.”

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Pieter Cleppe: A pragmatic plan for Brexit

Writing for CapX, Pieter Cleppe discusses Open Europe’s new proposal for a negotiated, pragmatic Brexit. Cleppe describes the proposal as “an outcome which Remainers, Brexiteers and the EU27 should find to be an acceptable compromise.” Under Open Europe’s proposal, “Britain would take over EU rules voluntarily, as Switzerland does, but not automatically, as Norway does.” Cleppe argues, “It makes sense for Britain to remain close to the EU in terms of goods regulations… Goods only account for a small part of the British economy.” On the contrary, when it comes to services, Open Europe’s proposal “assumes it will be very hard for Britain to agree” to following EU rules in return for market access. Cleppe adds, “It makes more sense for the UK to accept reality and try to limit the disruption from losing a degree of services market access. The latter is possible by trying to conclude a deal that goes further than the existing equivalence regime for financial services.”

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Open Europe event: The significance of London's financial cluster for mainland Europe

Ahead of the upcoming EU Council on 28-29 June, where Prime Minister Theresa May and the EU27 leaders will attempt to make progress on the Brexit issue, Open Europe and Thomson Reuters are hosting a panel, “The significance of London’s financial cluster for mainland Europe,” to draw attention to the importance of the City of London for financial investment in the EU27. The debate will address questions such as:

  • How crucial is London, the world’s leading financial center, for the EU27?
  • How material could be the possible loss of the UK’s financial passport post-Brexit, not only for British companies, but also for their European clients?
  • Are there ways to mitigate the risks by means of mutual recognition, equivalence or other methods?
  • Is there a risk UK clearing houses would no longer be able to clear Euros after Brexit and how may this affect European pension funds or industrial companies?
  • How could mutual divergence in services regulation be managed after the UK’s exit from the EU?

The event will take place on June 19 in Brussels. Tickets are available on Eventbrite.