Showing posts with label deal. Show all posts
Showing posts with label deal. Show all posts
Friday, 5 January 2024
Friday, 25 December 2020
How UK-EU trade deal will change relations between Britain and Brussels
Sam Fleming and Jim Brunsden in The FT
The future relationship deal struck between the UK and the EU (24 Dec 2020) will bring far-reaching changes, as both sides are forced to adapt to the end of Britain’s 30-year membership of the European single market
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The trade agreement between London and Brussels will offer UK and EU companies preferential access to each other’s markets, compared with basic World Trade Organization rules — ensuring imported goods will be free of tariffs and quotas.
But economic relations between the UK and the EU from January 1, when the deal is due to take effect, will be on more restricted terms than they are now.
“Everyone needs to get prepared for a situation next year that will be very different to today,” said an EU official.
A trade agreement along the lines of the one negotiated between the two sides will leave Britain facing a 4 per cent loss of potential gross domestic product over 15 years compared with EU membership, according to the UK’s Office for Budget Responsibility. Failure to secure an agreement would have led to lost potential GDP of almost 6 per cent, the fiscal watchdog estimated.
Below are some of the benefits conferred by the UK-EU future relationship deal, which also includes security co-operation — and the important areas in which Britain’s links with the bloc will fall short of existing arrangements.
1. Trade in goods
The EU and UK’s starting point for the future relationship talks was that they should lead to a deal with no tariffs on trade in goods between the two sides. They also wanted no quantitative restrictions on the volume of goods that could be sold free of tariffs.
That was negotiated, meaning the deal will go beyond what the EU has done with any other advanced economy outside the European single market.
But the agreement is still a very different state of affairs to membership of the EU single market and customs union.
Once implemented, from January 1, a hard customs and regulatory border will exist between the EU and UK, and goods will face checks and controls that can be smoothed at the margins only by co-operation.
The deal will include facilitations such as co-operation on trusted trader schemes, but none of these erase border checks.
“The agreement provides for continued and sustainable air, road, rail and maritime connectivity, though market access falls below what the single market offers,” said the European Commission.
2. Fair business competition
The EU’s offer on tariff-free trade was contingent on the UK agreeing to uphold a “level playing field” on fair business competition in areas such as environmental standards.
Brussels was also keen to ensure the UK does not have unfettered scope to disburse state aid to prized industries, giving them a competitive advantage.
The agreement includes common binding principles on state aid, enforceable in both sides’ courts, which would be able to recover illegal subsidies.
It also includes a painstakingly negotiated “rebalancing mechanism” to deal with a situation where the sides’ regulations in areas such as labour rights diverge over time.
The mechanism, which would be subject to independent arbitration, would allow the disadvantaged side to impose tariffs to restore fair competition.
But, crucially for the UK, it will not be required to follow EU rules directly or be subject to the jurisdiction of the European Court of Justice.
Being outside the European single market has other regulatory consequences for Britain. For example, UK businesses will no longer be able to assume that product authorisations from British watchdogs will allow their goods to be placed on the European market.
3. Fish
The deal creates a five-and-a-half-year transition period during which EU fishermen will have guaranteed access to UK waters.
EU quotas in British waters will decline in the transition by 25 per cent compared with current levels, and this will have the knock-on effect of boosting how much UK fishermen can secure. EU boats currently catch about €650m of fish in British waters each year.
Once the transition period is over, EU boats’ access to UK waters will in principle depend on annual negotiations between both sides. Those talks will also determine the overall quantities of different species that can be caught.
Should EU boats’ access to British waters ever be revoked by the UK, the bloc will have the right to take compensatory measures. These include retaliatory closing of EU waters to UK boats, and the imposition of tariffs on British fish.
The deal also links the UK’s access to the EU energy market to access to British fishing waters.
The UK warded off EU demands for a cross-retaliation power to hit other parts of the British economy should a dispute over fish escalate.
Still, the deal does provide a last-resort “safeguard” option that would allow either side to take emergency measures to protect coastal communities, subject to dispute-settlement arrangements in the agreement.
The deal enshrines the principle that Britain is now outside the EU’s common fisheries policy: an independent coastal state with sovereignty over its waters.
4. Financial services
The City of London will exit the EU’s single market for financial services at the end of the Brexit transition period on December 31.
Both sides have said that the new market access arrangements for UK and EU financial services companies should be based on unilateral decisions by Britain and the bloc, rather than be provided for in the trade agreement.
These so-called equivalence decisions involve each side evaluating whether the other’s financial services regulations are as tough as its own.
Banks and traders have acknowledged that the proposed system is more piecemeal than existing arrangements, and less stable. The EU did not announce any fresh equivalence decisions on UK access to the bloc’s markets alongside the trade agreement on Thursday, resulting in uncertainty in key areas including share trading and derivatives.
The two sides plan to put in place a regulatory dialogue on financial services based on a separate memorandum of understanding.
5. Migration
Current British and EU expatriates have their rights safeguarded by the UK’s 2019 withdrawal agreement with the bloc, but big changes to migration arrangements take effect from January 1.
Britons will no longer have the benefit of European freedom of movement: the right to go to any EU member state and seek to work and live there on the same basis as the country’s own citizens.
Instead, Britons will rely on a visa-waiver programme to travel to the EU for short stays, and on member states’ national rules for the right to work.
Ending free movement for EU nationals in the UK was identified by the British government as one of the benefits of Brexit, allowing the country to devise a new immigration system.
6. Security
The EU and UK have been at pains to emphasise the importance of continuing co-operation in the fight against terrorism and organised crime, although talks in this area were complicated by Britain’s determination to escape the ECJ’s jurisdiction.
But ahead of the deal being finalised, EU chief negotiator Michel Barnier confirmed the sides had found ways to maintain “close co-operation” on crucial matters including the work of the bloc’s crime-fighting agencies Europol and Eurojust, and the sharing of criminals’ DNA data.
Brussels said the deal “builds new operational capabilities, taking account of the fact that the UK, as a non-EU member . . . will not have the same facilities as before”.
The deal establishes that security co-operation can be suspended if the UK breaks away from the European Convention on Human Rights.
Thursday, 13 December 2018
My plan to revive Europe can succeed where Macron and Piketty failed
Under my Green New Deal, €500bn a year can be created without raising taxes – and it may tempt Britain back to the fold writes Yanis Varoufakis in The Guardian
Macron was the European establishment’s last hope. As a presidential candidate, he explicitly recognised that “if we don’t move forward, we are deciding the dismantling of the eurozone”, the penultimate step before dismantling of the EU itself. Never shy of offering details, Macron defined a minimalist reform agenda for saving the European project: a common bank deposit insurance scheme (to end the chronic doom loop between insolvent banks and states); a well-funded common treasury (to fund pan-European investment and unemployment benefits); and a hybrid parliament (comprising national and European members of parliament to lend democratic legitimacy to all of the above).
Since his election, the French president has attempted a two-phase strategy: “Germanise” France’s labour market and national budget (essentially making it easier for employers to fire workers while ushering in additional austerity) so that, in the second phase, he might convince Angela Merkel to persuade the German political class to sign up to his minimalist eurozone reform agenda. It was a spectacular miscalculation – perhaps greater than Theresa May’s error in accepting the EU’s two-phase approach to Brexit negotiations.
When Berlin gets what it wants in the first phase of any negotiation, German chancellors then prove either unwilling or incapable of conceding anything of substance in the second phase. Thus, just like May ending up with nothing tangible in the second phase (the political declaration) by which to compensate her constituents for everything she gave up in the first phase (the withdrawal agreement), so Macron saw his eurozone reform agenda evaporate once he had attempted to Germanise France’s labour and national budget. The subsequent fall from grace, at the hands of the offspring of his austerity drive – the gilets jaunes movement – was inevitable.
The great advantage of our Green New Deal is we are taking a leaf out of Franklin Roosevelt’s original New Deal in the 1930s
Historians will mark Macron’s failure as a turning point in the EU, perhaps one that is more significant than Brexit: it puts an end to the French ambition for a fiscal union with Germany. We can already see the decline of this French reformist ambition in the shape of the latest manifesto for saving Europe by the economist Thomas Piketty and his supporters – published this week. Professor Piketty has been active in producing eurozone reform agendas for a number of years – an earlier manifesto was produced in 2014. It is, therefore, interesting to observe the effect of recent European developments on his proposals.
In 2014, Piketty put forward three main proposals: a common eurozone budget funded by harmonised corporate taxes to be transferred to poorer countries in the form of investment, research and social spending; the pooling of public debt, which would mean the likes of Germany and Holland helping Italy, Greece and others in a similar situation to bring down their debt; and a hybrid parliamentary chamber. In short, something similar to Macron’s now shunned European agenda.
Four years later, the latest Piketty manifesto retains a hybrid parliamentary chamber, but forfeits any Europeanist ambition – all proposals for debt pooling, risk sharing and fiscal transfers have been dropped. Instead, it suggests that national governments agree to raise €800bn (or 4% of eurozone GDP) through a harmonised corporate tax rate of 37%, an increased income tax rate for the top 1%, a new wealth tax for those with more than €1m in assets, and a C02 emissions tax of €30 per tonne. This money would then be spent within each nation-state that collected it – with next to no transfers across countries. But, if national money is to be raised and spent domestically, what is the point of another supranational parliamentary chamber?
Europe is weighed down by overgrown, quasi-insolvent banks, fiscally stressed states, irate German savers crushed by negative interest rates, and whole populations immersed in permanent depression: these are all symptoms of a decade-long financial crisis that has produced a mountain of savings sitting alongside a mountain of debts. The intention of taxing the rich and the polluters to fund innovation, migrants and the green transition is admirable. But it is insufficient to tackle Europe’s particular crisis.
What Europe needs is a Green New Deal – this is what Democracy in Europe Movement 2025 – which I co-founded – and our European Spring alliance will be taking to voters in the European parliament elections next summer.
The great advantage of our Green New Deal is that we are taking a leaf out of US President Franklin Roosevelt’s original New Deal in the 1930s: our idea is to create €500bn every year in the green transition across Europe, without a euro in new taxes.
Here’s how it would work: the European Investment Bank (EIB) issues bonds of that value with the European Central Bank standing by, ready to purchase as many of them as necessary in the secondary markets. The EIB bonds will undoubtedly sell like hot cakes in a market desperate for a safe asset. Thus, the excess liquidity that keeps interest rates negative, crushing German pension funds, is soaked up and the Green New Deal is fully funded.
Once hope in a Europe of shared, green prosperity is restored, it will be possible to have the necessary debate on new pan-European taxes on C02, the rich, big tech and so on – as well as settling the democratic constitution Europe deserves.
Perhaps our Green New Deal may even create the climate for a second UK referendum, so that the people of Britain can choose to rejoin a better, fairer, greener, democratic EU.
‘Historians will mark Emmanuel Macron’s failed reform agenda as a turning point in the EU, perhaps one that is more significant than Brexit.’ Photograph: François Lenoir/Reuters
If Brexit demonstrates that leaving the EU is not the walk in the park that Eurosceptics promised, Emmanuel Macron’s current predicament proves that blind European loyalism is, similarly, untenable. The reason is that the EU’s architecture is equally difficult to deconstruct, sustain and reform.
While Britain’s political class is, rightly, in the spotlight for having made a mess of Brexit, the EU’s establishment is in a similar bind over its colossal failure to civilise the eurozone – with the rise of the xenophobic right the hideous result.
If Brexit demonstrates that leaving the EU is not the walk in the park that Eurosceptics promised, Emmanuel Macron’s current predicament proves that blind European loyalism is, similarly, untenable. The reason is that the EU’s architecture is equally difficult to deconstruct, sustain and reform.
While Britain’s political class is, rightly, in the spotlight for having made a mess of Brexit, the EU’s establishment is in a similar bind over its colossal failure to civilise the eurozone – with the rise of the xenophobic right the hideous result.
Macron was the European establishment’s last hope. As a presidential candidate, he explicitly recognised that “if we don’t move forward, we are deciding the dismantling of the eurozone”, the penultimate step before dismantling of the EU itself. Never shy of offering details, Macron defined a minimalist reform agenda for saving the European project: a common bank deposit insurance scheme (to end the chronic doom loop between insolvent banks and states); a well-funded common treasury (to fund pan-European investment and unemployment benefits); and a hybrid parliament (comprising national and European members of parliament to lend democratic legitimacy to all of the above).
Since his election, the French president has attempted a two-phase strategy: “Germanise” France’s labour market and national budget (essentially making it easier for employers to fire workers while ushering in additional austerity) so that, in the second phase, he might convince Angela Merkel to persuade the German political class to sign up to his minimalist eurozone reform agenda. It was a spectacular miscalculation – perhaps greater than Theresa May’s error in accepting the EU’s two-phase approach to Brexit negotiations.
When Berlin gets what it wants in the first phase of any negotiation, German chancellors then prove either unwilling or incapable of conceding anything of substance in the second phase. Thus, just like May ending up with nothing tangible in the second phase (the political declaration) by which to compensate her constituents for everything she gave up in the first phase (the withdrawal agreement), so Macron saw his eurozone reform agenda evaporate once he had attempted to Germanise France’s labour and national budget. The subsequent fall from grace, at the hands of the offspring of his austerity drive – the gilets jaunes movement – was inevitable.
The great advantage of our Green New Deal is we are taking a leaf out of Franklin Roosevelt’s original New Deal in the 1930s
Historians will mark Macron’s failure as a turning point in the EU, perhaps one that is more significant than Brexit: it puts an end to the French ambition for a fiscal union with Germany. We can already see the decline of this French reformist ambition in the shape of the latest manifesto for saving Europe by the economist Thomas Piketty and his supporters – published this week. Professor Piketty has been active in producing eurozone reform agendas for a number of years – an earlier manifesto was produced in 2014. It is, therefore, interesting to observe the effect of recent European developments on his proposals.
In 2014, Piketty put forward three main proposals: a common eurozone budget funded by harmonised corporate taxes to be transferred to poorer countries in the form of investment, research and social spending; the pooling of public debt, which would mean the likes of Germany and Holland helping Italy, Greece and others in a similar situation to bring down their debt; and a hybrid parliamentary chamber. In short, something similar to Macron’s now shunned European agenda.
Four years later, the latest Piketty manifesto retains a hybrid parliamentary chamber, but forfeits any Europeanist ambition – all proposals for debt pooling, risk sharing and fiscal transfers have been dropped. Instead, it suggests that national governments agree to raise €800bn (or 4% of eurozone GDP) through a harmonised corporate tax rate of 37%, an increased income tax rate for the top 1%, a new wealth tax for those with more than €1m in assets, and a C02 emissions tax of €30 per tonne. This money would then be spent within each nation-state that collected it – with next to no transfers across countries. But, if national money is to be raised and spent domestically, what is the point of another supranational parliamentary chamber?
Europe is weighed down by overgrown, quasi-insolvent banks, fiscally stressed states, irate German savers crushed by negative interest rates, and whole populations immersed in permanent depression: these are all symptoms of a decade-long financial crisis that has produced a mountain of savings sitting alongside a mountain of debts. The intention of taxing the rich and the polluters to fund innovation, migrants and the green transition is admirable. But it is insufficient to tackle Europe’s particular crisis.
What Europe needs is a Green New Deal – this is what Democracy in Europe Movement 2025 – which I co-founded – and our European Spring alliance will be taking to voters in the European parliament elections next summer.
The great advantage of our Green New Deal is that we are taking a leaf out of US President Franklin Roosevelt’s original New Deal in the 1930s: our idea is to create €500bn every year in the green transition across Europe, without a euro in new taxes.
Here’s how it would work: the European Investment Bank (EIB) issues bonds of that value with the European Central Bank standing by, ready to purchase as many of them as necessary in the secondary markets. The EIB bonds will undoubtedly sell like hot cakes in a market desperate for a safe asset. Thus, the excess liquidity that keeps interest rates negative, crushing German pension funds, is soaked up and the Green New Deal is fully funded.
Once hope in a Europe of shared, green prosperity is restored, it will be possible to have the necessary debate on new pan-European taxes on C02, the rich, big tech and so on – as well as settling the democratic constitution Europe deserves.
Perhaps our Green New Deal may even create the climate for a second UK referendum, so that the people of Britain can choose to rejoin a better, fairer, greener, democratic EU.
Sunday, 15 October 2017
What the grim reality of a ‘bad-tempered’ Brexit means
Toby Helm in The Guardian
A little over a year ago, David Davis was confident that Brexit Britain would soon strike new trade deals across the world. They could be negotiated and agreed without the difficulties and delays of which Remainers warned. All parts of the global trade jigsaw would fall quickly and neatly into place. “So be under no doubt,” the Brexit secretary wrote in an article for the ConservativeHome website in July 2016, “we can do deals with our trading partners, and we can do them quickly... I would expect that the negotiation phase of most of them to be concluded within between 12 and 24 months. Trade deals with the US and China alone will give us a trade area almost twice the size of the EU, and of course we will also be seeking deals with Hong Kong, Canada, Australia, India, Japan, the UAE, Indonesia – and many others.”
Around the same time, international trade secretary Liam Fox predicted that a free-trade deal with the EU, giving us continued access to EU markets after Brexit, “should be one of the easiest in human history”. His fellow Tory, the hardline Eurosceptic John Redwood, also saw no problems in realising this great reconfiguration of British interests around the world. “Getting out of the EU can be quick and easy – the UK holds most of the cards in any negotiation,” he declared.
This weekend, 16 months on from Leave’s narrow referendum win, the talk is no longer of quick deals, or smooth routes out. Instead, Theresa May and her cabinet are preparing the country for the possibility of “no deal” at all being reached with Brussels before the UK leaves at the end of March 2019. No deal would also mean no two-year transition of the kind that May said would be so important in her recent Florence speech. Many of the hardline Brexiters have changed their tune, and now cheer on the prospect of “no deal” as the only way to break free. None of the trade deals they envisaged have been done and none are in sight. (It is not possible to enter into them until we leave the customs union).
The EU is refusing even to begin to talk about post-Brexit trade arrangements with the UK because other issues, such as the divorce bill for leaving, are still deadlocked. In the House of Commons on Monday, May confirmed that negotiations, rather than progressing, had stalled and reality was dawning. She told MPs that “while it is profoundly in all our interests for the negotiations to succeed, it is also our responsibility as a government to prepare for every eventuality, so that is exactly what we are doing”. By which she meant: “Get ready for no deal”.
Brexit secretary David Davis: not making much progress in negotiations, contrary to expectations. Photograph: Dominic Lipinski/PA
In evidence to the Treasury select committee on Wednesday, chancellor Philip Hammond declared that the possible “no deal” outcome could come about in one of two ways. The first would be quite friendly. But the other would involve a “bad-tempered breakdown”.
“If it is [that we move to] a World Trade Organisation regime with no deal, there are then two further potential levels that you have to consider. One is no deal – WTO – but a friendly agreement that we are not going to reach a deal, but we will work together to cooperate to make things run as smoothly as possible,” Hammond said.
“But, bluntly, we also have to consider the possibility of a bad-tempered breakdown in negotiations where we have non-cooperation, and, worst-case scenario, even a situation where people are not necessarily acting in their own economic self-interest. So we need to prepare for a wide range of scenarios.”
That sounded like an ugly trade war. Hammond insisted it was too early for him to be committing hundreds of millions of pounds to preparations for this “no deal” scenario – as hardline Brexiters were saying he now should – only to be slapped down hours later by May, who told MPs that £250m was being allocated to government departments to help do just that. The cabinet – split from top to bottom about what kind of Brexit deal it wants – was even split about whether, and how, to prepare for the potentially disastrous outcome of not getting an EU deal at all.
If there is no UK-EU deal before March 2019, the consequences would be huge and immediate. The return of customs checks would mean a return to the hard border between Northern Ireland and the republic. For trade, the UK would default to WTO rules, meaning tariffs would be imposed on goods leaving the UK for the EU and on those sold into the UK market by the remaining 27 member states. The government has said it wants the continuation of “frictionless” trade with EU countries. But a WTO regime would, by contrast, mean tariffs of between 2% and 3% on many industrial goods. They would be far higher in others sectors: 10% for cars and 20% to 40% for many agricultural products. The British Chambers of Commerce and other business groups are warning that some British companies will consider moving abroad and that investment in the UK could suffer.
Hammond said last week that there was also a prospect of flights between UK and EU airports being grounded as the UK would no longer fall inside the EU’s aviation regulatory regime. The right of EU nationals to stay in the UK could also disappear, as would those of UK citizens living in EU countries.
The hard-Brexit supporting right wing of the Tory party was arguing only a year ago that Brexit would be relatively smooth and simple. Now that it has proved to be anything but, and talks with Brussels have hit the buffers, many of them are encouraging this “no deal” option as somehow a pure form of Brexit. It means a clean break. They blame the EU and the Remainers for blocking the way to the kind of future they sold to the British people as possible and desirable before the Brexit referendum last year.
The big question now is whether the public take the same attitude, or begin to coalesce more around the view that “no deal” is a very bad deal for them.
Will jobs be lost?
Tens of thousands of jobs are linked to seamless trade with the European Union. Multinational firms fly staff to Ireland, France, Germany and the low countries without interference from border control officials.
Then there is the example of the crankshaft used in the BMW Mini, which crosses the Channel three times in a 2,000-mile journey before the finished car rolls off the production line. It is one of the classic trips made by hundreds of car parts that would be stopped at the border in the event of a no-deal Brexit.
Northern Ireland would be one of the worst-affected regions, as food manufacturers use ingredients from south of the border and sell the final product in the republic too.
The CBI gives the example of a Northern Irish bread-maker that buys flour from Ireland, makes the product in the north, and then transports bread to Dublin. Even if the UK continues to recognise the EU HGV licence used by the Polish driver (for example) and the EU food standards that determine the bread’s shelf life, after Brexit the loaf could be inedible by the time it has reached its destination or so expensive that local bakeries quickly step in and win the day.
Nissan is among the carmakers to say that they have already started getting their parts from the UK to offset the effects of a hard Brexit that involves restrictions on immigrant labour and tight border controls. But its scenario-planning cannot cope without a deal of some sort.
Unemployment could be pushed up by the loss of ‘frictionless’ trade with the EU. Photograph: Oli Scarff/Getty Images
Will prices go up?
One of the aims of free-market supporters in the Brexit camp is to cut the cost of goods in stores. They believe the EU is a closed shop that protects expensive EU food and consumer goods with tariffs on cheaper alternatives from outside the single market or customs union.
This is what lies behind international trade secretary Liam Fox’s aim of sealing tariff-free-trade deals with as many countries as possible.
But if the UK crashes out of the European Union without a deal, the months immediately afterwards could see trade damaged, unless border checks are dropped – which is unlikely when the fallout from open borders is uncontrolled immigration.
Trade would be hit because most large supermarket chains have supply chains that allow staff to place orders from depots on the continent and have them fulfilled within hours. Ports such as Rotterdam and Zeebrugge dispatch containers at a moment’s notice across the North Sea or through the Channel to satisfy next-day deliveries. More than twice as much agricultural produce is imported as the UK exports, much of it from the Netherlands, making it a real possibility that supermarket shelves will be empty within days.
White goods imported from China would be less affected, and oil and gas tankers from the Gulf states would dock using existing documentation. Pipelines from Norway would stay open.
Nevertheless, without partners in the EU prepared to agree the legal terms of trade and the level of insurance needed before an order is agreed, no amount of contingency planning, whether it involves vast lorry parks or storage facilities, would remove the risk of shortages or spiralling prices.
A little over a year ago, David Davis was confident that Brexit Britain would soon strike new trade deals across the world. They could be negotiated and agreed without the difficulties and delays of which Remainers warned. All parts of the global trade jigsaw would fall quickly and neatly into place. “So be under no doubt,” the Brexit secretary wrote in an article for the ConservativeHome website in July 2016, “we can do deals with our trading partners, and we can do them quickly... I would expect that the negotiation phase of most of them to be concluded within between 12 and 24 months. Trade deals with the US and China alone will give us a trade area almost twice the size of the EU, and of course we will also be seeking deals with Hong Kong, Canada, Australia, India, Japan, the UAE, Indonesia – and many others.”
Around the same time, international trade secretary Liam Fox predicted that a free-trade deal with the EU, giving us continued access to EU markets after Brexit, “should be one of the easiest in human history”. His fellow Tory, the hardline Eurosceptic John Redwood, also saw no problems in realising this great reconfiguration of British interests around the world. “Getting out of the EU can be quick and easy – the UK holds most of the cards in any negotiation,” he declared.
This weekend, 16 months on from Leave’s narrow referendum win, the talk is no longer of quick deals, or smooth routes out. Instead, Theresa May and her cabinet are preparing the country for the possibility of “no deal” at all being reached with Brussels before the UK leaves at the end of March 2019. No deal would also mean no two-year transition of the kind that May said would be so important in her recent Florence speech. Many of the hardline Brexiters have changed their tune, and now cheer on the prospect of “no deal” as the only way to break free. None of the trade deals they envisaged have been done and none are in sight. (It is not possible to enter into them until we leave the customs union).
The EU is refusing even to begin to talk about post-Brexit trade arrangements with the UK because other issues, such as the divorce bill for leaving, are still deadlocked. In the House of Commons on Monday, May confirmed that negotiations, rather than progressing, had stalled and reality was dawning. She told MPs that “while it is profoundly in all our interests for the negotiations to succeed, it is also our responsibility as a government to prepare for every eventuality, so that is exactly what we are doing”. By which she meant: “Get ready for no deal”.
Brexit secretary David Davis: not making much progress in negotiations, contrary to expectations. Photograph: Dominic Lipinski/PA
In evidence to the Treasury select committee on Wednesday, chancellor Philip Hammond declared that the possible “no deal” outcome could come about in one of two ways. The first would be quite friendly. But the other would involve a “bad-tempered breakdown”.
“If it is [that we move to] a World Trade Organisation regime with no deal, there are then two further potential levels that you have to consider. One is no deal – WTO – but a friendly agreement that we are not going to reach a deal, but we will work together to cooperate to make things run as smoothly as possible,” Hammond said.
“But, bluntly, we also have to consider the possibility of a bad-tempered breakdown in negotiations where we have non-cooperation, and, worst-case scenario, even a situation where people are not necessarily acting in their own economic self-interest. So we need to prepare for a wide range of scenarios.”
That sounded like an ugly trade war. Hammond insisted it was too early for him to be committing hundreds of millions of pounds to preparations for this “no deal” scenario – as hardline Brexiters were saying he now should – only to be slapped down hours later by May, who told MPs that £250m was being allocated to government departments to help do just that. The cabinet – split from top to bottom about what kind of Brexit deal it wants – was even split about whether, and how, to prepare for the potentially disastrous outcome of not getting an EU deal at all.
If there is no UK-EU deal before March 2019, the consequences would be huge and immediate. The return of customs checks would mean a return to the hard border between Northern Ireland and the republic. For trade, the UK would default to WTO rules, meaning tariffs would be imposed on goods leaving the UK for the EU and on those sold into the UK market by the remaining 27 member states. The government has said it wants the continuation of “frictionless” trade with EU countries. But a WTO regime would, by contrast, mean tariffs of between 2% and 3% on many industrial goods. They would be far higher in others sectors: 10% for cars and 20% to 40% for many agricultural products. The British Chambers of Commerce and other business groups are warning that some British companies will consider moving abroad and that investment in the UK could suffer.
Hammond said last week that there was also a prospect of flights between UK and EU airports being grounded as the UK would no longer fall inside the EU’s aviation regulatory regime. The right of EU nationals to stay in the UK could also disappear, as would those of UK citizens living in EU countries.
The hard-Brexit supporting right wing of the Tory party was arguing only a year ago that Brexit would be relatively smooth and simple. Now that it has proved to be anything but, and talks with Brussels have hit the buffers, many of them are encouraging this “no deal” option as somehow a pure form of Brexit. It means a clean break. They blame the EU and the Remainers for blocking the way to the kind of future they sold to the British people as possible and desirable before the Brexit referendum last year.
The big question now is whether the public take the same attitude, or begin to coalesce more around the view that “no deal” is a very bad deal for them.
Will jobs be lost?
Tens of thousands of jobs are linked to seamless trade with the European Union. Multinational firms fly staff to Ireland, France, Germany and the low countries without interference from border control officials.
Then there is the example of the crankshaft used in the BMW Mini, which crosses the Channel three times in a 2,000-mile journey before the finished car rolls off the production line. It is one of the classic trips made by hundreds of car parts that would be stopped at the border in the event of a no-deal Brexit.
Northern Ireland would be one of the worst-affected regions, as food manufacturers use ingredients from south of the border and sell the final product in the republic too.
The CBI gives the example of a Northern Irish bread-maker that buys flour from Ireland, makes the product in the north, and then transports bread to Dublin. Even if the UK continues to recognise the EU HGV licence used by the Polish driver (for example) and the EU food standards that determine the bread’s shelf life, after Brexit the loaf could be inedible by the time it has reached its destination or so expensive that local bakeries quickly step in and win the day.
Nissan is among the carmakers to say that they have already started getting their parts from the UK to offset the effects of a hard Brexit that involves restrictions on immigrant labour and tight border controls. But its scenario-planning cannot cope without a deal of some sort.
Unemployment could be pushed up by the loss of ‘frictionless’ trade with the EU. Photograph: Oli Scarff/Getty Images
Will I be able to take out cash abroad?
Banks were among the first to plan for a hard Brexit that might deny them the “passporting” rights that allow money transfers and derivatives transactions to happen seamlessly across borders.
The last year has seen a succession of UK banks and insurers set up offshoots in what will remain of the EU, allowing them to bypass Britain if they need to. Foreign banks that have based their European HQs in London have done likewise.
This level of contingency planning means that it is most likely that British travellers will be able to withdraw funds abroad and transfer money the day after Brexit, whatever the outcome. But a last-minute decision to crash out of the EU is likely to send the pound tumbling, meaning that Brits abroad will find the ATM gives them a fraction of what they expected. And there could be extra charges to compensate for the higher administration costs faced by banks.
Other service industries are unlikely to be quite as prepared, even though they collectively account for 40% of EU trade, up from 23% in 1999. And to show its importance to UK firms, this rise of almost a quarter compares with a 6% increase in non-EU trade over the same time period.
The CBI says: “Exports of business services, such as design, advertising and architecture, together with financial services, account for over half of the UK’s overall growth in services exports.And these sectors may be particularly vulnerable to a sudden re-emergence of trade barriers with the EU.”
Will planes still fly?
Banks were among the first to plan for a hard Brexit that might deny them the “passporting” rights that allow money transfers and derivatives transactions to happen seamlessly across borders.
The last year has seen a succession of UK banks and insurers set up offshoots in what will remain of the EU, allowing them to bypass Britain if they need to. Foreign banks that have based their European HQs in London have done likewise.
This level of contingency planning means that it is most likely that British travellers will be able to withdraw funds abroad and transfer money the day after Brexit, whatever the outcome. But a last-minute decision to crash out of the EU is likely to send the pound tumbling, meaning that Brits abroad will find the ATM gives them a fraction of what they expected. And there could be extra charges to compensate for the higher administration costs faced by banks.
Other service industries are unlikely to be quite as prepared, even though they collectively account for 40% of EU trade, up from 23% in 1999. And to show its importance to UK firms, this rise of almost a quarter compares with a 6% increase in non-EU trade over the same time period.
The CBI says: “Exports of business services, such as design, advertising and architecture, together with financial services, account for over half of the UK’s overall growth in services exports.And these sectors may be particularly vulnerable to a sudden re-emergence of trade barriers with the EU.”
Will planes still fly?
Ask Ryanair’s chief executive, Michael O’Leary, and the answer will be no. He says that without a deal at least six months before the March 2019 deadline, there will be chaos at British airports.
O’Leary said at best he would need to place “health warnings” on flights. At worst he will be forced to rejig routes so that they bypass UK airports altogether.
“If Britain gets pushed out of the EU, it is absolutely the legal position that flights must stop. You’ve got to negotiate that bilaterally,” he has said. “If we don’t know the legal basis for which they’re being operated, we’ll be forced to cancel those flights by December 2018, so we can put those flights on sale in Europe.”
There are Tory backbenchers who treat his comments as scaremongering, but the recent collapse of Monarch is held up as a good example of the threat to aviation when the paperwork and legal niceties get in the way of business.
Monarch passengers asked why the collapsed company’s grounded planes couldn’t take them home from their holiday destinations. The answer was that they were in the hands of administrators, and legal flight information on them was therefore invalid.
O’Leary is saying that without a reciprocal deal, a flight from the UK to France would be in breach of French and EU rules, leaving itself open to being sued by the authorities and passengers.
O’Leary said at best he would need to place “health warnings” on flights. At worst he will be forced to rejig routes so that they bypass UK airports altogether.
“If Britain gets pushed out of the EU, it is absolutely the legal position that flights must stop. You’ve got to negotiate that bilaterally,” he has said. “If we don’t know the legal basis for which they’re being operated, we’ll be forced to cancel those flights by December 2018, so we can put those flights on sale in Europe.”
There are Tory backbenchers who treat his comments as scaremongering, but the recent collapse of Monarch is held up as a good example of the threat to aviation when the paperwork and legal niceties get in the way of business.
Monarch passengers asked why the collapsed company’s grounded planes couldn’t take them home from their holiday destinations. The answer was that they were in the hands of administrators, and legal flight information on them was therefore invalid.
O’Leary is saying that without a reciprocal deal, a flight from the UK to France would be in breach of French and EU rules, leaving itself open to being sued by the authorities and passengers.
Will prices go up?
One of the aims of free-market supporters in the Brexit camp is to cut the cost of goods in stores. They believe the EU is a closed shop that protects expensive EU food and consumer goods with tariffs on cheaper alternatives from outside the single market or customs union.
This is what lies behind international trade secretary Liam Fox’s aim of sealing tariff-free-trade deals with as many countries as possible.
But if the UK crashes out of the European Union without a deal, the months immediately afterwards could see trade damaged, unless border checks are dropped – which is unlikely when the fallout from open borders is uncontrolled immigration.
Trade would be hit because most large supermarket chains have supply chains that allow staff to place orders from depots on the continent and have them fulfilled within hours. Ports such as Rotterdam and Zeebrugge dispatch containers at a moment’s notice across the North Sea or through the Channel to satisfy next-day deliveries. More than twice as much agricultural produce is imported as the UK exports, much of it from the Netherlands, making it a real possibility that supermarket shelves will be empty within days.
White goods imported from China would be less affected, and oil and gas tankers from the Gulf states would dock using existing documentation. Pipelines from Norway would stay open.
Nevertheless, without partners in the EU prepared to agree the legal terms of trade and the level of insurance needed before an order is agreed, no amount of contingency planning, whether it involves vast lorry parks or storage facilities, would remove the risk of shortages or spiralling prices.
Sunday, 4 June 2017
Britain is being led to an epic act of national self-harm
Will Hutton in The Guardian
Every day in Britain, 14,000 trucks come from and head to the European Union. If there is no Brexit deal with the EU, is every one of those trucks going to be inspected as they bring vital food and goods into the UK to see that the right tariff is being charged and correct regulation observed? If some trucks get delayed or traffic volumes plummet, who will organise food rationing in our supermarkets? Five days before a general election called to give the government a negotiating mandate for leaving the EU, is anyone aware of the risks?
Equally, a quarter of British exports with the EU pass through one single port, Calais – £3bn a month – with zero border controls or inspection. Who in Calais is going to inspect these goods to see if they correspond to EU rules if we crash out with no deal? Has France any interest in investing quickly in the customs structure to keep British exports flowing? The M20 and M2 will become gigantic truck parks as drivers wait to be inspected. You might think that, just as a precautionary measure, as the prospect of the exit talks collapsing is less than two years away, the UK government would be investing in customs inspection depots in our great ports and along the land border with Ireland and also offering to build similar structures in France to ease the inevitable congestion on UK roads. Surely someone, somewhere might have asked these questions?
Nothing is being done at all. Mrs May and her breezy lead negotiator, David Davis, offer platitudes about Britain embracing the globe and no deal being better than a bad deal, but even the most innocent negotiator in the EU team can see this is vainglorious posturing. They are betting on a deal being struck – negotiators with few cards, nor making sure they hold better ones. As matters stand, the consequence of no deal would be calamitous.
For there are multiple areas where the same logic applies. It could be landing rights at EU airports or the export of drugs, suddenly to be treated as needing regulatory approval because they will come from a foreign country. There is the vast trade in dealing in euros in the City of London, surely certain to be repatriated to an EU member state. British universities will be barred from bidding for research grants. Some 55,000 EU nationals work in the NHS: are they to return and who is to replace them? An estimated 5,500 firms in financial services hold 330,000 passports to allow them to sell financial products across the EU – one of our few successful exports – with no questions or inspections asked. Again, this privilege is about to go in under two years. Companies with multiple operations around Europe, including Britain, will find that freely moving parts, people and data suddenly cannot be done.
For more than 40 years, Britain’s industrial policy has, in effect, been membership of the EU; 485 multinationals have their global or regional headquarters in the UK and core parts of manufacturing have been revived by foreign investment. At best, that now stagnates; at worst, they leave. There is no corner of British economic life that does not face disruption bleeding into mayhem as a consequence of no deal. The politician who declares that no deal is better than a bad deal is either supremely ignorant – or lying.
Which is why any economic forecaster who looks coolly at the facts has to project a fall in British trade. The World Bank believes that if Britain switches from single market membership to trading with the EU on World Trade Organisation terms – the “no deal” option – then British trade in goods with the EU will halve and trade in services will fall by 60% as these effects work through.
Yet that is only the beginning of the disaster. To keep exports of goods and services flowing to the rest of the world on the same terms as now, even before negotiating new deals, Britain will have to renegotiate 759 agreements with 168 countries that are now held by the EU, as the Financial Times disclosed last week. That is 759 opportunities for other countries, knowing our plight, to try to negotiate something better.
The clock is ticking. Decisions on where companies place exports and source imports in 2019 have to be taken in 2018. In reality, Britain has to find solutions to all these issues in less than 12 months.
It simply can’t be done within the time, nor is any network of replacement deals going to be superior to the ones we already have. Britain’s growth rate is at the bottom of the G7 and investment is falling. The Conservative manifesto commitment to leave the single market and customs union and seek a trade relationship outside any of the EU’s frameworks – not the EEA or even Efta – is a declaration of economic war upon ourselves. We are heading towards a first-order economic debacle. In Whitehall, morale is at rock bottom. Any civil servant who dares brief the prime minister or her inner circle on these realities is frozen out.
The EU could negotiate a British specific trade deal if it chooses, but there will be a high budgetary price. Britain, in essence, will be required to carry on contributing to the EU budget at current or even higher levels if it wants to keep vital goods flowing into the country in a customs deal, no less vital exports flowing out and some transitional arrangement during which we can try to renegotiate 759 trade agreements. Services, ranging from finance to the creative industries, in which Britain has a competitive advantage, can just take their chance. All influence on EU decisions will be lost. Some “deal”.
Britain will have to accept whatever the EU offers at whatever price. If the right of the Tory party and its media allies declare it unacceptable, the EU will shrug its shoulders and walk away. In any case, the European parliament, whose assent is required under article 50, will want tough terms to deter others from leaving. Nor will the government find popular support for no deal: Leavers voted to take back control, not for economic calamity.
A YouGov poll reports that 50% believe Britain should stay in the single market – only 29% do not and a narrow majority would even accept freedom of movement as the price of staying in. On these questions, Mr Corbyn and his party have been limp.
Britain is about to embark upon a national act of self-harm on an epic scale. The country, as it makes its decision on who it wants to lead the most important negotiations since the war, deserves to be warned. Instead, silence reigns.
Every day in Britain, 14,000 trucks come from and head to the European Union. If there is no Brexit deal with the EU, is every one of those trucks going to be inspected as they bring vital food and goods into the UK to see that the right tariff is being charged and correct regulation observed? If some trucks get delayed or traffic volumes plummet, who will organise food rationing in our supermarkets? Five days before a general election called to give the government a negotiating mandate for leaving the EU, is anyone aware of the risks?
Equally, a quarter of British exports with the EU pass through one single port, Calais – £3bn a month – with zero border controls or inspection. Who in Calais is going to inspect these goods to see if they correspond to EU rules if we crash out with no deal? Has France any interest in investing quickly in the customs structure to keep British exports flowing? The M20 and M2 will become gigantic truck parks as drivers wait to be inspected. You might think that, just as a precautionary measure, as the prospect of the exit talks collapsing is less than two years away, the UK government would be investing in customs inspection depots in our great ports and along the land border with Ireland and also offering to build similar structures in France to ease the inevitable congestion on UK roads. Surely someone, somewhere might have asked these questions?
Nothing is being done at all. Mrs May and her breezy lead negotiator, David Davis, offer platitudes about Britain embracing the globe and no deal being better than a bad deal, but even the most innocent negotiator in the EU team can see this is vainglorious posturing. They are betting on a deal being struck – negotiators with few cards, nor making sure they hold better ones. As matters stand, the consequence of no deal would be calamitous.
For there are multiple areas where the same logic applies. It could be landing rights at EU airports or the export of drugs, suddenly to be treated as needing regulatory approval because they will come from a foreign country. There is the vast trade in dealing in euros in the City of London, surely certain to be repatriated to an EU member state. British universities will be barred from bidding for research grants. Some 55,000 EU nationals work in the NHS: are they to return and who is to replace them? An estimated 5,500 firms in financial services hold 330,000 passports to allow them to sell financial products across the EU – one of our few successful exports – with no questions or inspections asked. Again, this privilege is about to go in under two years. Companies with multiple operations around Europe, including Britain, will find that freely moving parts, people and data suddenly cannot be done.
For more than 40 years, Britain’s industrial policy has, in effect, been membership of the EU; 485 multinationals have their global or regional headquarters in the UK and core parts of manufacturing have been revived by foreign investment. At best, that now stagnates; at worst, they leave. There is no corner of British economic life that does not face disruption bleeding into mayhem as a consequence of no deal. The politician who declares that no deal is better than a bad deal is either supremely ignorant – or lying.
Which is why any economic forecaster who looks coolly at the facts has to project a fall in British trade. The World Bank believes that if Britain switches from single market membership to trading with the EU on World Trade Organisation terms – the “no deal” option – then British trade in goods with the EU will halve and trade in services will fall by 60% as these effects work through.
Yet that is only the beginning of the disaster. To keep exports of goods and services flowing to the rest of the world on the same terms as now, even before negotiating new deals, Britain will have to renegotiate 759 agreements with 168 countries that are now held by the EU, as the Financial Times disclosed last week. That is 759 opportunities for other countries, knowing our plight, to try to negotiate something better.
The clock is ticking. Decisions on where companies place exports and source imports in 2019 have to be taken in 2018. In reality, Britain has to find solutions to all these issues in less than 12 months.
It simply can’t be done within the time, nor is any network of replacement deals going to be superior to the ones we already have. Britain’s growth rate is at the bottom of the G7 and investment is falling. The Conservative manifesto commitment to leave the single market and customs union and seek a trade relationship outside any of the EU’s frameworks – not the EEA or even Efta – is a declaration of economic war upon ourselves. We are heading towards a first-order economic debacle. In Whitehall, morale is at rock bottom. Any civil servant who dares brief the prime minister or her inner circle on these realities is frozen out.
The EU could negotiate a British specific trade deal if it chooses, but there will be a high budgetary price. Britain, in essence, will be required to carry on contributing to the EU budget at current or even higher levels if it wants to keep vital goods flowing into the country in a customs deal, no less vital exports flowing out and some transitional arrangement during which we can try to renegotiate 759 trade agreements. Services, ranging from finance to the creative industries, in which Britain has a competitive advantage, can just take their chance. All influence on EU decisions will be lost. Some “deal”.
Britain will have to accept whatever the EU offers at whatever price. If the right of the Tory party and its media allies declare it unacceptable, the EU will shrug its shoulders and walk away. In any case, the European parliament, whose assent is required under article 50, will want tough terms to deter others from leaving. Nor will the government find popular support for no deal: Leavers voted to take back control, not for economic calamity.
A YouGov poll reports that 50% believe Britain should stay in the single market – only 29% do not and a narrow majority would even accept freedom of movement as the price of staying in. On these questions, Mr Corbyn and his party have been limp.
Britain is about to embark upon a national act of self-harm on an epic scale. The country, as it makes its decision on who it wants to lead the most important negotiations since the war, deserves to be warned. Instead, silence reigns.
Wednesday, 3 May 2017
You can’t just cut and run from Europe, Theresa May – it’s illegal
Helena Kennedy in The Guardian
Leaders of Britain’s 27 EU partner countries have now thrown down the gauntlet: no discussions on a trade deal will take place until there’s progress on the UK’s divorce bill, the Ireland-UK border and the rights of EU citizens.
We are told there is a document on the table relating to UK citizens living in Europe and those of citizens from other EU countries who live in Britain, but the UK is not prepared to sign. No reason has been given as to why.
The problem for our prime minister is that at every turn her head hits the hard wall of law and the role of the European court of justice (ECJ). Theresa May has cornered herself by insisting that the UK withdraw totally from the court and its decisions. Nobody explained to her that if you have cross-border rights and contracts you have to have cross-border law and regulations. And if you have cross-border law you have to have supranational courts to deal with disputes.
Call it what you like, but in the end you need rules as to conduct, and arbiters for disagreement. Even the World Trade Organisation has a disputes court.
But May has had a bellyful of European courts after her run-in with the totally separate European court of human rights when, as home secretary, she was trying to deport the fundamentalist preacher Abu Qatada to Jordan. Jordan’s use of torture on political opponents proved a handicap to his expulsion. However, although all this related to a quite separate legal regime, the words Europe and court in the same sentence still invite obstinate opposition from May.
This is now a problem in the Brexit negotiations, because all the preliminary matters raised by EU leaders involve legal commitments from which we cannot walk away. Calls to cut and run without paying a penny in the Brexit settlement are unlawful and unethical. It is not surprising that the other 27 want to see the colour of our money up front.
There is talk of a special deal to be negotiated for Northern Ireland, whatever the rest of the UK does, by possibly joining the European Economic Area (EEA) with some additional border arrangements between Northern Ireland and the rest of the UK. EEA membership is a semidetached position that Norway, Iceland and Liechtenstein have signed up to, whereby they have the benefits of the EU single market but not the full obligations. However, it also has legal implications. You cannot trade without the protection of law because things can go wrong. EEA members have to sign up to the European Free Trade Association court, a special supranational judicial body which deals with EEA disputes; it sits in Luxembourg, and is run largely according to EU law and ECJ judgments. Of course, such law is made without the input of EEA states, which makes it a solution that would be hard for many Brexiteers to swallow.
In preparation for the negotiations, EU representatives have been appearing before Lords and Commons committees and meeting Brexit ministers. They are invariably bemused. They say they keep being told the UK wants to continue to be part of various arrangements, including the European arrest warrant and Europol – yet nobody in London seems to understand that such collaboration requires the ECJ to have ultimate jurisdiction and for EU law to apply.
It seems obvious to them that cross-border collaboration requires supranational legal arrangements covering everything from financial services, trade, farming, fishing, security, environment, employment and maternity rights to industry standards and consumer rights. Intellectual property law, for instance, covers a huge array of research, entrepreneurship, invention and creativity; the European patent court has only recently been built here in London and was due to be opened. What happens to it now, they ask.
For years the British public have been subjected to a barrage of tabloid mendacity suggesting that we are victims of an onslaught of foreign-invented law and interference by foreign courts. In fact, a vast amount of incredibly advantageous law has been created in the EU in the past 40 years. And here’s the rub: we have been major contributors to that law. The British are good at law. We have had a strong hand in the creation of EU law.
The committee I chair in the House of Lords has heard overwhelming evidence about the benefits to business of being able, for instance, to secure a judgment in a British court against a recalcitrant debtor in Poland and know it will be enforced anywhere in the EU.
A mother can secure a maintenance order against her children’s renegade father who has sloped off to continental Europe, and have the order enforced. A holiday accident in Spain can lead to swifter resolution and compensation by virtue of EU law. A British father can get access to his kids by order of a court in Munich. Cross-border relationships require cross-border law, and agreements on mutual enforcement are fundamental.
No wonder the European commission president, Jean-Claude Juncker, is reported to have said Theresa May is on another galaxy in imagining she can retain the best bits of Europe without its institutions or legal underpinnings. Her fantasy that the “great repeal bill” will fix the problem by bringing EU law home, or that a deal can be done without the need for any European court, is unravelling. These legal arrangements require reciprocity. The courts of EU countries do things for us because we do likewise for them. A piece of unilateral legislation on our part does not secure that mutuality which is embodied in many regulations.
Harmonising law across Europe has raised standards – to our advantage. Europe-wide law is integrated into our lives. In the “new order” of trade agreements with China and others, none of these safeguards will exist. My guess is that if May does secure a deal with the EU, we will find ourselves quietly signing up to a newly created court or tribunal, a lesser ECJ.
The law, judges and courts are under attack in many democracies – from Trump’s America to Poland, Hungary and Turkey. It is the currency of our dangerous times. Be warned: good law is a protection we have to preserve. The price of its loss will be very high indeed.
Leaders of Britain’s 27 EU partner countries have now thrown down the gauntlet: no discussions on a trade deal will take place until there’s progress on the UK’s divorce bill, the Ireland-UK border and the rights of EU citizens.
We are told there is a document on the table relating to UK citizens living in Europe and those of citizens from other EU countries who live in Britain, but the UK is not prepared to sign. No reason has been given as to why.
The problem for our prime minister is that at every turn her head hits the hard wall of law and the role of the European court of justice (ECJ). Theresa May has cornered herself by insisting that the UK withdraw totally from the court and its decisions. Nobody explained to her that if you have cross-border rights and contracts you have to have cross-border law and regulations. And if you have cross-border law you have to have supranational courts to deal with disputes.
Call it what you like, but in the end you need rules as to conduct, and arbiters for disagreement. Even the World Trade Organisation has a disputes court.
But May has had a bellyful of European courts after her run-in with the totally separate European court of human rights when, as home secretary, she was trying to deport the fundamentalist preacher Abu Qatada to Jordan. Jordan’s use of torture on political opponents proved a handicap to his expulsion. However, although all this related to a quite separate legal regime, the words Europe and court in the same sentence still invite obstinate opposition from May.
This is now a problem in the Brexit negotiations, because all the preliminary matters raised by EU leaders involve legal commitments from which we cannot walk away. Calls to cut and run without paying a penny in the Brexit settlement are unlawful and unethical. It is not surprising that the other 27 want to see the colour of our money up front.
There is talk of a special deal to be negotiated for Northern Ireland, whatever the rest of the UK does, by possibly joining the European Economic Area (EEA) with some additional border arrangements between Northern Ireland and the rest of the UK. EEA membership is a semidetached position that Norway, Iceland and Liechtenstein have signed up to, whereby they have the benefits of the EU single market but not the full obligations. However, it also has legal implications. You cannot trade without the protection of law because things can go wrong. EEA members have to sign up to the European Free Trade Association court, a special supranational judicial body which deals with EEA disputes; it sits in Luxembourg, and is run largely according to EU law and ECJ judgments. Of course, such law is made without the input of EEA states, which makes it a solution that would be hard for many Brexiteers to swallow.
In preparation for the negotiations, EU representatives have been appearing before Lords and Commons committees and meeting Brexit ministers. They are invariably bemused. They say they keep being told the UK wants to continue to be part of various arrangements, including the European arrest warrant and Europol – yet nobody in London seems to understand that such collaboration requires the ECJ to have ultimate jurisdiction and for EU law to apply.
It seems obvious to them that cross-border collaboration requires supranational legal arrangements covering everything from financial services, trade, farming, fishing, security, environment, employment and maternity rights to industry standards and consumer rights. Intellectual property law, for instance, covers a huge array of research, entrepreneurship, invention and creativity; the European patent court has only recently been built here in London and was due to be opened. What happens to it now, they ask.
For years the British public have been subjected to a barrage of tabloid mendacity suggesting that we are victims of an onslaught of foreign-invented law and interference by foreign courts. In fact, a vast amount of incredibly advantageous law has been created in the EU in the past 40 years. And here’s the rub: we have been major contributors to that law. The British are good at law. We have had a strong hand in the creation of EU law.
The committee I chair in the House of Lords has heard overwhelming evidence about the benefits to business of being able, for instance, to secure a judgment in a British court against a recalcitrant debtor in Poland and know it will be enforced anywhere in the EU.
A mother can secure a maintenance order against her children’s renegade father who has sloped off to continental Europe, and have the order enforced. A holiday accident in Spain can lead to swifter resolution and compensation by virtue of EU law. A British father can get access to his kids by order of a court in Munich. Cross-border relationships require cross-border law, and agreements on mutual enforcement are fundamental.
No wonder the European commission president, Jean-Claude Juncker, is reported to have said Theresa May is on another galaxy in imagining she can retain the best bits of Europe without its institutions or legal underpinnings. Her fantasy that the “great repeal bill” will fix the problem by bringing EU law home, or that a deal can be done without the need for any European court, is unravelling. These legal arrangements require reciprocity. The courts of EU countries do things for us because we do likewise for them. A piece of unilateral legislation on our part does not secure that mutuality which is embodied in many regulations.
Harmonising law across Europe has raised standards – to our advantage. Europe-wide law is integrated into our lives. In the “new order” of trade agreements with China and others, none of these safeguards will exist. My guess is that if May does secure a deal with the EU, we will find ourselves quietly signing up to a newly created court or tribunal, a lesser ECJ.
The law, judges and courts are under attack in many democracies – from Trump’s America to Poland, Hungary and Turkey. It is the currency of our dangerous times. Be warned: good law is a protection we have to preserve. The price of its loss will be very high indeed.
Saturday, 11 March 2017
Brexit is about to get real. Yet we are nowhere near ready for it
Jonathan Freedland in The Guardian
In the coming days, perhaps as soon as Wednesday, Brexit will turn from abstract to concrete. A near-theological argument that raged in one form or another for nearly three decades will become hard and material, with a fixed deadline. Theresa May is about to trigger article 50, starting the clock on a two-year journey towards the exit from the European Union. And yet those in charge of this fateful, epochal process – and especially those who most loudly demanded it happen – seem utterly unprepared for it.
In four words, the European strategy for the Brexit talks has to be: pour décourager les autres (Discouraging the others)
Philip Hammond’s budget on Wednesday illustrated the point neatly. The country is about to leave its largest export market, a decision with enormous economic implications. The chancellor had the floor for nearly an hour, his obligation to provide an assessment of the present and future prospects of the British economy. Did he so much as mention the imminent exit from the single market? No. Incredibly, he made just two fleeting references to the EU in the entire address.
Instead the stand-out measure, the one that has dominated political discussion since, was Hammond’s decision to take more tax from a core Tory constituency: the self-employed. Important for those individuals, most certainly; a political unforced error, no doubt. But for this to be the focus following a major economic statement on the eve of Brexit is displacement activity of the most heroic kind.
It’s as if the crew of the Titanic eyed the iceberg ahead and promptly decided to have a big squabble over whether to serve white or red.
This failure to wrestle with what’s coming goes wider. The public conversation since 23 June 2016 has barely differed from the debate before that date, each side – leave and remain – still refighting the EU referendum campaign, uncertain how to get out of the old groove.
That failing is most obvious among the Brexiteers, characterised by a refusal to own their victory and take responsibility for it. So when a voice of experience or authority dares point out the possible dangers ahead, they are either sacked, as was the fate of Michael Heseltine, attacked personally, like John Major, or else branded an “enemy of the people” who refuses to bow to the “popular will”.
Those with concerns are accused of “talking down the country” or lacking sufficient faith – as if, should Brexit make us poorer, the fault will belong to those who didn’t screw their eyes tight enough and believe. Credit to Jonn Elledge for calling this what it is: the Tinkerbell delusion.
This surely has to end with the triggering of article 50. From this moment on, the focus must be intensely practical. No more baggy rhetoric about sovereignty and “taking back control”. From now on, those who got us into this situation have to show they can get us out intact by March 2019.
That will require a major shift among the Brexiteer ministers and in Downing Street. Those close to the pre-negotiations between Britain and the remaining 27 EU states report an unwarranted hubris on the UK side that augurs ill. Too many Brexiteers cling to the campaign’s wishful thinking that we go into these talks as the stronger party, that “they need us more than we need them”, and that so long as we hang tough, the Europeans will buckle and hand us a dream deal.
Such arrogance is likely to be exposed soon. For one thing, it ignores the key structural fact that makes Britain’s negotiating prospects bleak from the start: namely, it is imperative for the EU’s own survival that the UK be left in a visibly, materially worse situation after leaving the EU than it enjoyed before. The logic is not vindictive. If the EU is to hold together it must prevent a Brexit contagion. Any divorce settlement must be ugly enough to ensure the remaining 27 stay with their spouse, no matter how loveless that marriage might feel. In four words, the European strategy for the Brexit talks has to be: pour décourager les autres.
But if British politicians are insufficiently mindful of that built-in obstacle, they are far too blithe about the sheer complexity of the undertaking that is about to begin. They are aiming to unpick 40 years of arrangements, seeking to annul them in a pact that will require the blessing of 27 other sovereign states.
To call it 27-dimensional chess understates the geometry: the final divorce settlement will have to be ratified by 38 different national and regional parliaments. To say nothing of the European parliament, commission and council. Each of these bodies has its own interests, pressures and red lines.
May will have to craft a document that satisfies every one of those competing forces, as well as both chambers of the UK parliament. She will have to do it without pushing Scotland towards a second, more winnable independence referendum or recreating a hard border between Northern Ireland and the Irish republic. And she has to get it done in roughly 18 months. Not for nothing did Dominic Cummings, the mastermind of the Vote Leave campaign, tweet with a candour rare among Brexiteers that leaving the EU was the “hardest job since beating Nazis”.
Or reflect on the supposed aces Britain is confidently looking forward to playing in the upcoming game of Brexit poker. Charles Grant, the sage director of the Centre for European Reform who predicted the leave vote, patiently explains how each one of these assets – which Brexiteers believe will make the Europeans putty in our hands – could create as much angst as advantage.
It’s true, says Grant, that the City of London is valued for the financial services it provides to the EU. But it’s also true that Paris, Madrid, Milan, Frankfurt, Dublin and others are circling, ready to feast on the City’s carcass: they want some of that business for themselves.
No 10 refuses to budge on Brexit bill, despite heavy defeat in Lords
The Brexiteers reckon the Europeans won’t want to give up London’s special relationship with Washington. But, says Grant, British “fawning” over Donald Trump alienates many Europeans, making them doubt we share their basic values. As for Britain’s contribution to European security – via its UN seat, Nato and its fabled military – that’s much admired. But not if it’s used as a threat: give us a free trade deal or we’ll pull out the 1,000 British troops recently deployed in the Polish-Baltic area. Talk like that will backfire.
Leavers should be approaching this gargantuan task with a special humility, because it was they who needlessly inflicted it upon us.
Remainers need to adjust to the new reality too. Many may be hoping that, as the price and consequences of exit become ever clearer through these talks, some among the 52% will gradually switch sides. But remainers should contemplate the less cheery prospect that the most ardent Brexiteers, and especially the anti-EU newspapers, will double down in their loathing of Brussels. When the EU 27 demand, say, serious cash for single market access, the Mail and Sun will dip their pen into an even deeper well of venom.
So remainers will need to handle these next two years carefully, readying themselves for the day when the deal is done, and ensuring they have already placed two key questions in the front of the public mind: is this deal better than the set-up we had on 22 June 2016? And if it isn’t, why are we doing it?
In the coming days, perhaps as soon as Wednesday, Brexit will turn from abstract to concrete. A near-theological argument that raged in one form or another for nearly three decades will become hard and material, with a fixed deadline. Theresa May is about to trigger article 50, starting the clock on a two-year journey towards the exit from the European Union. And yet those in charge of this fateful, epochal process – and especially those who most loudly demanded it happen – seem utterly unprepared for it.
In four words, the European strategy for the Brexit talks has to be: pour décourager les autres (Discouraging the others)
Philip Hammond’s budget on Wednesday illustrated the point neatly. The country is about to leave its largest export market, a decision with enormous economic implications. The chancellor had the floor for nearly an hour, his obligation to provide an assessment of the present and future prospects of the British economy. Did he so much as mention the imminent exit from the single market? No. Incredibly, he made just two fleeting references to the EU in the entire address.
Instead the stand-out measure, the one that has dominated political discussion since, was Hammond’s decision to take more tax from a core Tory constituency: the self-employed. Important for those individuals, most certainly; a political unforced error, no doubt. But for this to be the focus following a major economic statement on the eve of Brexit is displacement activity of the most heroic kind.
It’s as if the crew of the Titanic eyed the iceberg ahead and promptly decided to have a big squabble over whether to serve white or red.
This failure to wrestle with what’s coming goes wider. The public conversation since 23 June 2016 has barely differed from the debate before that date, each side – leave and remain – still refighting the EU referendum campaign, uncertain how to get out of the old groove.
That failing is most obvious among the Brexiteers, characterised by a refusal to own their victory and take responsibility for it. So when a voice of experience or authority dares point out the possible dangers ahead, they are either sacked, as was the fate of Michael Heseltine, attacked personally, like John Major, or else branded an “enemy of the people” who refuses to bow to the “popular will”.
Those with concerns are accused of “talking down the country” or lacking sufficient faith – as if, should Brexit make us poorer, the fault will belong to those who didn’t screw their eyes tight enough and believe. Credit to Jonn Elledge for calling this what it is: the Tinkerbell delusion.
This surely has to end with the triggering of article 50. From this moment on, the focus must be intensely practical. No more baggy rhetoric about sovereignty and “taking back control”. From now on, those who got us into this situation have to show they can get us out intact by March 2019.
That will require a major shift among the Brexiteer ministers and in Downing Street. Those close to the pre-negotiations between Britain and the remaining 27 EU states report an unwarranted hubris on the UK side that augurs ill. Too many Brexiteers cling to the campaign’s wishful thinking that we go into these talks as the stronger party, that “they need us more than we need them”, and that so long as we hang tough, the Europeans will buckle and hand us a dream deal.
Such arrogance is likely to be exposed soon. For one thing, it ignores the key structural fact that makes Britain’s negotiating prospects bleak from the start: namely, it is imperative for the EU’s own survival that the UK be left in a visibly, materially worse situation after leaving the EU than it enjoyed before. The logic is not vindictive. If the EU is to hold together it must prevent a Brexit contagion. Any divorce settlement must be ugly enough to ensure the remaining 27 stay with their spouse, no matter how loveless that marriage might feel. In four words, the European strategy for the Brexit talks has to be: pour décourager les autres.
But if British politicians are insufficiently mindful of that built-in obstacle, they are far too blithe about the sheer complexity of the undertaking that is about to begin. They are aiming to unpick 40 years of arrangements, seeking to annul them in a pact that will require the blessing of 27 other sovereign states.
To call it 27-dimensional chess understates the geometry: the final divorce settlement will have to be ratified by 38 different national and regional parliaments. To say nothing of the European parliament, commission and council. Each of these bodies has its own interests, pressures and red lines.
May will have to craft a document that satisfies every one of those competing forces, as well as both chambers of the UK parliament. She will have to do it without pushing Scotland towards a second, more winnable independence referendum or recreating a hard border between Northern Ireland and the Irish republic. And she has to get it done in roughly 18 months. Not for nothing did Dominic Cummings, the mastermind of the Vote Leave campaign, tweet with a candour rare among Brexiteers that leaving the EU was the “hardest job since beating Nazis”.
Or reflect on the supposed aces Britain is confidently looking forward to playing in the upcoming game of Brexit poker. Charles Grant, the sage director of the Centre for European Reform who predicted the leave vote, patiently explains how each one of these assets – which Brexiteers believe will make the Europeans putty in our hands – could create as much angst as advantage.
It’s true, says Grant, that the City of London is valued for the financial services it provides to the EU. But it’s also true that Paris, Madrid, Milan, Frankfurt, Dublin and others are circling, ready to feast on the City’s carcass: they want some of that business for themselves.
No 10 refuses to budge on Brexit bill, despite heavy defeat in Lords
The Brexiteers reckon the Europeans won’t want to give up London’s special relationship with Washington. But, says Grant, British “fawning” over Donald Trump alienates many Europeans, making them doubt we share their basic values. As for Britain’s contribution to European security – via its UN seat, Nato and its fabled military – that’s much admired. But not if it’s used as a threat: give us a free trade deal or we’ll pull out the 1,000 British troops recently deployed in the Polish-Baltic area. Talk like that will backfire.
Leavers should be approaching this gargantuan task with a special humility, because it was they who needlessly inflicted it upon us.
Remainers need to adjust to the new reality too. Many may be hoping that, as the price and consequences of exit become ever clearer through these talks, some among the 52% will gradually switch sides. But remainers should contemplate the less cheery prospect that the most ardent Brexiteers, and especially the anti-EU newspapers, will double down in their loathing of Brussels. When the EU 27 demand, say, serious cash for single market access, the Mail and Sun will dip their pen into an even deeper well of venom.
So remainers will need to handle these next two years carefully, readying themselves for the day when the deal is done, and ensuring they have already placed two key questions in the front of the public mind: is this deal better than the set-up we had on 22 June 2016? And if it isn’t, why are we doing it?
Sunday, 11 December 2016
Have cake and eat it too - How to beat Brexit, steal best state school pupils, get paid and retain tax charitable status
Anon
On 9 December I was perplexed to read The Telegraph headline “Private schools plan to offer 10,000 free places to children from low-income backgrounds”.
Immediately I thought, ‘This is a good idea’
A few seconds later, I remembered that we are in the era of post truth politics. So, I thought let me look behind the spin and see what the proposal actually means.
Many of the UK’s fees collecting private schools are charities according to their tax status. This status has been challenged by successive governments who have found few instances of charitable work and more instances of price rigging. These schools also face the new prospect of Brexit and fewer fee paying EU students on their rolls.
To overcome this threat, The Independent Schools Council (ISC) has proposed to teach 10,000 state school students if the government agrees to pay them £5,550 per student. This will enable the private schools to demonstrate their charitable work to retain their charitable tax status and will assure them with a steady supply of students to replace the EU nationals who may prefer to go elsewhere post Brexit.
----Also watch
No further need to do charity work: Any private school charity has to demonstrate actual charitable work in order to enjoy its tax status as a charity. The ISC hopes this proposal will enable them to overcome criticism of not doing sufficient charitable work.
Raiding state schools of better able students: State schools already feel beleaguered with budget cuts affecting their ability to teach students. This proposal will result in a further exodus of better able students who will be cherry picked by the private schools.
I feel there is no need to accept the ISC proposals. ISC members already enjoy a subsidy in the form of a charitable tax status despite not complying with the requirements of a charity.
Secondly, the above proposal if accepted will resemble the Nissan deal where the state intervenes with a sweetheart deal to once again protect privileged profit making non charitable ‘charities’.
But, I must confess the ISC have adapted well to the era of post truth politics by presenting a self preserving proposal as a charitable act. Is it a case of eating cake and having it too?
On 9 December I was perplexed to read The Telegraph headline “Private schools plan to offer 10,000 free places to children from low-income backgrounds”.
Immediately I thought, ‘This is a good idea’
A few seconds later, I remembered that we are in the era of post truth politics. So, I thought let me look behind the spin and see what the proposal actually means.
Many of the UK’s fees collecting private schools are charities according to their tax status. This status has been challenged by successive governments who have found few instances of charitable work and more instances of price rigging. These schools also face the new prospect of Brexit and fewer fee paying EU students on their rolls.
To overcome this threat, The Independent Schools Council (ISC) has proposed to teach 10,000 state school students if the government agrees to pay them £5,550 per student. This will enable the private schools to demonstrate their charitable work to retain their charitable tax status and will assure them with a steady supply of students to replace the EU nationals who may prefer to go elsewhere post Brexit.
----Also watch
Trump Fakes a deal - Trevor Noah
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In my view this proposal reminds me of the PPP (private public partnership) and PFI (Private Finance Initiative) proposals which have bled the state’s coffers and unduly benefited private firms. Here are some ways the state will be worse off by accepting the ISC initiative. No further need to do charity work: Any private school charity has to demonstrate actual charitable work in order to enjoy its tax status as a charity. The ISC hopes this proposal will enable them to overcome criticism of not doing sufficient charitable work.
Raiding state schools of better able students: State schools already feel beleaguered with budget cuts affecting their ability to teach students. This proposal will result in a further exodus of better able students who will be cherry picked by the private schools.
I feel there is no need to accept the ISC proposals. ISC members already enjoy a subsidy in the form of a charitable tax status despite not complying with the requirements of a charity.
Secondly, the above proposal if accepted will resemble the Nissan deal where the state intervenes with a sweetheart deal to once again protect privileged profit making non charitable ‘charities’.
But, I must confess the ISC have adapted well to the era of post truth politics by presenting a self preserving proposal as a charitable act. Is it a case of eating cake and having it too?
Sunday, 4 January 2015
Robert Vadra - Son in law or Son in lawless?
Shoba De in The Times of India
Oh dear! The year 2015 has not started well for Robert Vadra — once known as the nation’s son-in-law. The income tax department wants a few critical answers about certain land deals. And understandably, Mr Vadra is not amused. In fact, he is said to be rather cross. The poor guy was made to believe he belonged to a breed known as “Super Indians” which is above and beyond scrutiny . They are not to be asked any questions, nor does anybody expect any answers. It’s been this way for decades. And when a young chap gets used to some very special privileges, such as skipping security checks at airports and so on, he naturally gets annoyed when pesky IT officers want to get into his company affairs and conduct the sort of probes ordinary, law-abiding, tax-paying citizens are subjected to.
Nobody has obviously informed Mr Vadra that things have changed in India. There is a new regime in place, in case he hasn’t noticed. New netas are calling the shots in Delhi. His mother-in-law is no longer the all-powerful mataji of old. Her cronies have been cut down to size and old loyalists are looking for fresh pastures. Zamana badal gaya hai. He should ask his sweet brother-in-law-that is, if Rahul baba himself has woken up and discovered there is no chair to sit on.
Some people may call it a witch hunt and say the poor ‘damaad’ is being unfairly targeted. Or that he is being made to pay the price for being Sonia Gandhi’s son-in-law. Even if that is true, there is just one question to ask: are there gross irregularities in his land dealings or not? If he has been unfairly singled out for such scrutiny and his nostrils are clean, then, no worries! Even his most vocal critics will take back their harsh words. But if, as several investigators are claiming, there have been blatant and gross violations, then, sorry bro … it’s payback time. This is the downside of being famousnotorious. When the going is good, everything in life is tickety boo. But when the chips are down, the wheel comes full circle. The very people who once bowed, scraped and grovelled at your feet bring out the knives and dance over your grave. This is how it always goes.
It is not as if India is collectively gloating over Robert Vadra’s fall from grace. It is not just about Mr Vadra and his alleged unaccounted assets. There are other promoters and land owners who have made an even bigger killing. What most citizens are reacting to, has a different narrative. What got everybody’s goat is that Robert Vadra did not hold any official position. Nobody knows what exactly he did for a living. But everybody is aware that he was treated like a VVIP, minus any duties and responsibilities. It was this open flouting of rules that did him in. Had he been more discreet and conducted his business with more caution, had he not been as in your face, perhaps he would have received a slightly more sympathetic public reaction to his current situation.
Now what? India would like to see a logical end to these fresh investigations. People expect Robert Vadra to be treated like any other citizen. If the charges against him are established in a court of law, then he must bear the consequences like anybody else. Skylight Hospitality allegedly made Rs 50 crore in just one transaction. High-profile builders had apparently rushed to offer Vadra hefty loans. Not a single question was raised for years. When a reporter dared to ask Vadra about his business dealings, his reaction was priceless: “Are you serious … are you serious?” he asked, his expression giving away the whole story. Mr Vadra was aghast and incredulous that anybody could have had the temerity to question him.
Let’s hope someone sensible is prepping the son-in-law to face hundreds of even more pointed questions in the near future. For starters, his mother-in-law can give him a crash course in dealing coolly with lesser beings doing their jobs. Once he masters that, without flipping out, he can hire a competent lawyer — he is probably going to need one pretty soon. If Robert Vadra ever goes to jail, thousands of citizens will send up a silent cheer. Not because they are wicked or sadistic. But because they believe the law in India is the same for all!
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