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The US today introduced new tariffs on steel and aluminium imports from the EU, Canada and Mexico. US Trade Secretary Wilbur Ross said the new duties, 25 percent on steel and 10 percent on aluminium, were necessary due to reasons of national security, but added, “We continue to be quite willing and indeed eager to have further discussions with all of those parties.” European Commission President Jean-Claude Juncker criticised the tariffs as “protectionism, pure and simple,” adding, “The EU believes these unilateral US tariffs are unjustified and at odds with World Trade Organisation rules… The US now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the US. We will defend the Union’s interests, in full compliance with international trade law.” European Commissioner for Trade Cecilia Malmström said the EU had done “everything to avoid this outcome,” and would now “impose rebalancing measures and take any necessary steps to protect the EU market from trade diversion caused by these US restrictions.” The European Commission already prepared a list of US exports worth €6.4bn to be hit by retaliatory tariffs. The Mexican Economy Ministry and Canadian Prime Minister Justin Trudeau also announced they would deploy retaliatory tariffs on US goods in return.
Trade Secretary Liam Fox called the US justification of the tariffs as national security measures “patently absurd” and said, “”We absolutely do not rule out counter measures.” He warned, however, “It would be a great pity if we ended up in a tit-for-tat trade dispute with our closest allies.” Meanwhile, French Finance Minister Bruno Le Maire criticised the tariffs as “unjustified and dangerous,” adding, “Our US friends must know that if they were to take aggressive actions against Europe, Europe would not be without reaction.” The German government in a press release called the new tariffs “illegal” and warned that they may “lead to a vicious cycle of escalation that in the end harms everyone.”
Elsewhere, President of the Federation of German Industry (BDI) Dieter Kempf warned that the tariffs “risk throwing back the transatlantic partnership by several decades,” adding that Trump’s “uncompromising behaviour is short-sighted and self-defeating… [His] protectionism will not make the US steel and aluminium industries a jota more competitive.” This comes as German newspaper Wirtschaftswoche reports that Trump told French President Emmanuel Macron at a meeting in April that he wanted to drive German Mercedes cars off the US market.
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Brexit Secretary David Davis has drawn up a “maximum facilitation 2” plan in which Northern Ireland would have joint EU and UK status after Brexit in order to avoid a hard border on the island of Ireland, the Sun reports. The scheme would allow Northern Ireland to operate under both UK and EU regulations and would draw up a 10-mile wide “buffer zone” along Northern Ireland’s border with the Republic of Ireland. The area would be a “special economic zone” in which EU rules would apply in order to eliminate border checks and support local farmers who trade on the border. A senior Whitehall source is quoted describing the arrangement, “Max Fac 2 is tremendously complicated, but it’s at least something the Cabinet can unite around. Persuading the DUP [Democratic Unionist Party] and then the EU to agree to it will be a different job altogether and, let’s be honest, it will be very hard work.”
Separately, speaking at a conference in Dublin yesterday, Irish Foreign Minister Simon Coveney said he believed, in his “personal view,” that the Brexit transition period will need to be extended beyond 2020. He added that much remained to be done to achieve a “sensible” Brexit. Coveney also warned that the EU27 unity will remain intact in the negotiations, saying, “We won’t be separated from the pack.”
Elsewhere, ten Labour MPs have come out in support of a campaign asking for a vote on the final Brexit deal, thereby defying the party whip. This comes as a new tour called “Left Against Brexit” is being launched with support of Green Party co-leader Caroline Lucas and the Transport Salaried Staffs’ Assocoation (TSSA) union General-Secretary Manuel Cortes, asking Labour leader Jeremy Corbyn to back a Remain position.
The Police Federation for Northern Ireland yesterday warned that the 6,621-member Police Service of Northern Ireland (PSNI) will need to be boosted by up to 500 more personnel to effectively protect the border on the island of Ireland after Brexit, even in the event of a soft Brexit. At the federation’s annual conference on Thursday, chair Mark Lindsay said, “By this time next year – despite talk of a two-year transition period – the border will assume greater importance. We don’t possess the numbers, the security apparatus or specialist resources for increased counter-terrorist search and support duties along the border.” He added, “Stations previously earmarked for closure will now need to be retained,” and warned that it was “reasonable to assume” that any officers in charge of monitoring the border could become “terrorist targets.”
Forecasts released yesterday by the Scottish Fiscal Commission, an independent body, suggest that the Scottish economy is expected to grow by less than 1 percent a year for the next five years. Commenting on the figures, Scotland’s finance secretary Derek Mackay stressed however that, once the effect of low population growth in Scotland are removed, the expected growth comes much closer to that of the UK as a whole, adding, “This underlines the importance of this parliament having greater control over immigration.”
Following an intense day of negotiations between the leaders of the anti-establishment Five Star Movement and the right-wing League yesterday, an agreement has been reached on the composition of the would-be new Italian government. After the first proposal put forward by the two political forces was rejected by the Italian President of the Republic Sergio Mattarella over disagreement on the nomination of anti-Euro economist Paolo Savona to the post of Finance Minister, Savona has been assigned the role of EU Minister in the rearranged governing team. Mattarella yesterday signed off the proposal and the new government is expected to be sworn in today.
The Spanish parliament will today vote on a motion of no-confidence in the Spanish Prime Minister, Mariano Rajoy, after his centre-right Partido Popular got engulfed in a corruption scandal. The motion was called for by Pedro Sánchez, the leader of the main opposition party, the Spanish Socialist Party, who yesterday said the motion could be stopped “today, here and now” if Rajoy was to resign. An absolute majority is needed in parliament to oust Rajoy and make Sánchez the new Prime Minister. The Basque Nationalist Party yesterday announced its support for the motion, which could tip the balance against Rajoy. The motion is also supported by the left-wing Podemos and by other smaller parties.
In an interview with Bloomberg, Hungarian Finance Minister Mihály Varga described as a punishment the European Commission’s plan to reform the EU’s cohesion funds in order to redirect funding from Central and Eastern Europe (CEE) to member states dealing with high rates of unemployment and economic growth issues such as Portugal, Italy, Spain, Greece and Cyprus. Varga said, “We also had these issues but made efforts to tackle them…It’s unfair and unreasonable to punish developing CEE countries that have been performing well.” He also suggested that a better solution would be for the countries to implement economic reforms, saying, “We also had high unemployment, but we introduced measures to resolve the issue…Therefore, they too need to implement economic measures that help significant job creation.”
Separately, the European Commission will today reveal its plans for a reform of the Common Agricultural Policy (CAP).