brexit farrago for friday

Brexit: France says idea of Australia-style deal is ‘for the birds’
Lisa O’Carroll, Groon, Feb 28 2020

France has mocked Boris Johnson’s claim that the UK can have an Australia-style deal with the EU after Brexit as “for the birds”, warning an extra six months may be needed to strike an ambitious trade deal. Its European affairs minister told an audience in London that such a deal did not exist and it was time for both sides to realise the next phase of Brexit was “for people … not for politicians.” Amélie de Montchalin also warned that the EU would not be pressured into signing any trade deal by an “artificial deadline” created by Johnson, and if Europe needed an extra six months to achieve a good deal for both sides then that is what should happen. In a speech to Chatham House, she indicated that France was prepared to take a robust approach to the UK’s decision not to extend the transition period beyond December. She said it would be virtually impossible to do a deal in 11 months if the UK were to diverge completely on regulations, as that would require a hugely complicated “line by line” negotiation on tariffs and border controls. The only way to achieve a deal in the time given was through close regulatory alignment, she said, warning that a crash-out would be the UK’s choice and not the EU’s. she said:

We are not ready to sign any kind of deal on Dec 31 at 11pm. We cannot let our level of ambition be affected by what I would call an artificial deadline. If the UK decides to shorten the negotiating period, it will be the UK’s responsibility. It will not be our choice on the European side.

The prime minister has repeatedly projected a readiness to crash out at the end of the year, claiming that if talks collapsed the UK would at least have an “Australia-style deal.” This has been rubbished by many who point out that Australia does not have a deal with the EU and therefore this is just a euphemism for no deal. De Montchalin said:

The idea that they’re good to be an alternative to a free trade agreement, an honest level playing field, based on the Australia model (which by the way does not exist) is for the birds as you say in the UK.

She mocked the UK’s rejection of the notion that the geographical proximity of the EU and the UK was a valid argument for a “special relationship” that did not look like a Canada- or Australia-style deal. She said if the UK wanted a special relationship with Pindopstan, it would still have to take account of the distance between the two nations. She said:

Our future relationship will necessarily be a special relationship. You are not Canada, you are certainly not Australia, first of all because you can get here by train. You are the UK, and no matter what happens the UK will remain a strong economic power on the doorstep of the EU, geographically and economically. Paris and London are 300 miles apart. Boston and London are 3,000 miles away. It could be more difficult.

Her comments come a day after the UK unveiled its own negotiation mandate, warning that it would prepare for no deal if an agreement did not look likely at a stock-taking exercise in June. She emphasised that the UK must remember that when it was negotiating with the EU it was negotiating with 27 member states, which like the UK were “sovereign” nations that had to protect the interests of their own citizens. If the UK were to recognise that it was sovereign states in play rather than an enemy EU, then a space would be opened up for a deal, she indicated. The issue of state aid, which is expected to be the subject of a major clash, was a case in point, she said. While the UK wanted to be free to give subsidies to British businesses without any deference to the EU, it was in both sides’ interests to have an agreement in this area. she said:

Businesses will not invest in the UK if they are not protected by massive subsidies in the EU. It does not make sense. So this whole thing about reciprocity is important.

UK says it will consider walking away from Brexit talks in June
Rowena Mason, Groon, Feb 27 2020

Boris Johnson is asking the EU for a Canada-style trade deal but will consider whether to walk away from talks in June and prepare for an “orderly” exit from the transition period. Setting out its negotiating mandate for EU talks, Downing Street said it wanted “regulatory freedom” from the EU and would not accept any role for the European Court of Justice in dispute resolution mechanisms. The government said:
We hope to achieve the broad outline of an agreement by June, with the aim of finalising a deal by September. If not enough progress has been made by June, we will need to decide whether the UK’s attention should move away from negotiations and focus solely on continuing domestic preparations to exit the transition period in an orderly fashion.

The threat sets the UK on course for leaving the transition period on WTO terms at the end of the year unless either or both sides make major concessions within four months. While the UK wants to be free to set its own rules, the EU wants some degree of regulatory alignment, with the option of imposing tariffs if one side reneges. It would also like a role for the ECJ. Downing Street says this would restrict the UK’s sovereignty more than in the EU’s offers to other nations such as Japan, Canada and Pindostan. The UK’s negotiating mandate asks for:

  • A liberalised market for trade in goods, with no tariffs, fees, charges or quantitative restrictions on trade in manufactured or agricultural products.
  • Competition and subsidies to not be subject to the final agreement’s dispute resolution mechanism, which had been previously signalled in the political declaration.
  • A separate agreement on fisheries that would allow for annual negotiations on access to each other’s waters, including allowable catch and shares. The EU wants fishing to be considered as part of the overall agreement.
  • An agreement on equivalence on financial services to be decided before the end of June.
  • No participation in the European arrest warrant but a similar extradition agreement as the EU has with Iceland and Norway (a position likely to cause alarm among law enforcement bodies).

Addressing the House of Commons, Michael Gove, the Cabinet Office minister in charge of Brexit planning, said:

I’m confident that those negotiations will lead to outcomes which work for both the UK and the EU. However, Parliament, Brussels and the British people should be in no doubt: at the end of the transition period on Dec 31 the UK will fully recover its economic and political independence. We want the best possible trading relationship with the EU, but in a pursuit of a deal we will not trade away our sovereignty.

Whatever the outcome of the talks, businesses have been warned to expect disruption at the border from Jan 1 2021 because the UK will not extend the transition period and will therefore be leaving the EU’s single market and customs union. It is estimated that at least 50,000 new customs officials will be needed to cope with the changes. However, leaving on WTO terms would mean trade tariffs and barriers on a large scale. On the issue of Northern Ireland, Gove insisted the government “respects the protocol” in the withdrawal agreement, which leaves Northern Ireland in some alignment with the EU on customs. This suggests there will need to be some checks on goods crossing the Irish Sea, even though the UK government has repeatedly said there will not, under any circumstances, be any new border infrastructure between Northern Ireland and the rest of the UK. Experts have questioned whether this is possible. Responding to the UK white paper, the EU’s chief negotiator, Michel Barnier, made a pointed comment on Brussels’ intention to honour the 26-page political declaration on the future relationship, signed by Johnson six months ago. The government has said it does not regard the commitments made in the paper, including on level playing field provisions, as being binding.
Barnier, whose frustration with Downing Street left him thumping his lectern during a press conference earlier in the week, tweeted during a trip to Poland:

We take note of the UK’s mandate published today and will discuss our respective positions on Monday. We will stick to all our prior commitments in the political declaration. We want an ambitious & fair partnership with the UK in the future.

EU sources close to the negotiation said they did not believe the UK was “bluffing” in threatening to walk away in June if Brussels did not budget on its opening position. The diplomatic source added:

But France in particular will not give the UK the deal they are asking for at the moment. They are not going to suddenly go soft. There is a danger here that everyone is talking ourselves towards tariffs on goods at the end of the year, even though there is a potential landing zone if there is the political will.

A second diplomat noted that the white paper was “notably political” and that both sides were engaged in grandstanding. He said:

We are going to get a lot of noise for a bit but a deal is there to be had.

The former French EU affairs minister Nathalie Loiseau MEP said:

There is a paradox in asking for a prompt agreement and starting the negotiation so far away from a possible agreement. Drivers know that driving a long way at high speed increases the risks of a car crash. There is a safer path for businesses and citizens alike, which is well described in the political declaration signed by both sides.

Paul Blomfield, a shadow minister for exiting the EU, said the offer was “underwhelming” and pressed the government on why there was no commitment to publishing an economic impact assessment of the deal it was seeking with the EU. SNP spox Pete Wishart said:

This offer to the EU is a load of bunkum, baloney and codswallop. This is nothing other than a routemap to the cherished no-deal, the real ambition of these Brexit zealots. They’re even now prepared to break international law in order to achieve this outcome.

Frances O’Grady, the TUC general secretary, accused the government of planning to water down people’s employment rights and safety standards. she said:

The government is recklessly endangering working people’s jobs and rights. By abandoning the level playing field, ministers are deliberately undermining important protections, like the right to paid holidays and safe limits on working hours.

The UK rejected the EU’s negotiating mandate when it was set out on Tuesday. Downing Street said it did not recognise the need for a “level playing field” for competition. It said Brussels was trying to impose “onerous commitments” that would undermine the UK’s legal autonomy and right to set its own regulations.

UK races to find extra 50,000 staff for post-Brexit paperwork
Lisa O’Carroll, Groon, Feb 29 2020

A race to hire 50,000 people in the next six months to process Brexit paperwork is under way after the government confirmed they would be needed for border operations. But experts have warned it will be a challenge to train enough people in time to be competent in the complexity of customs declarations and the second layer of red tape involving entry and exit declaration forms that are mandatory for trading with the EU. The Road Haulage Association has warned that the number of declaration forms for tariffs alone will rocket from the current 50m a year to 200-250m a year. In addition, the exit and entry forms introduced after 9/11 to ensure safety on ferries and planes will involve another 100 to 125 million forms being processed every year. Michael Gove, who is responsible for readying the country for full Brexit at the end of the year, confirmed in parliament on Thursday afternoon that the RHA estimated 50,000 new recruits would be needed in the next six months. Rod McKenzie, the managing director of policy and public affairs at the RHA, said:

We have been told by a large freight company expert in the field that they get a productivity of around 4,000 clearances a year per staff member. That makes sense given the complexity of many transactions. Worth noting, that is with skilled, trained, experienced labour. So if we are dealing with 200m extra declarations, at a productivity rate of 4,000 per year that equals 50,000 staff needed on day one, and probably more.

Gove has access to about £7.5m to fund new HRMC customs agents, but may seek funds from the wider Border Delivery Group cross-department initiative to prepare for Jan 1 2021. Neighbouring countries including France, the Netherlands and Ireland launched customs officials recruitment drives last year, with six-month training schedules considered a minimum. Agents in Dover who deal with lorries coming in from the Ukraine, Turkey and other non-EU countries have warned that the skills base around customs disappeared with the creation of the single market in 1991, with just a handful of customs agents now operating in offices in Dover. The emergence of the human resource needed puts into perspective the scale of the task. The number of staff needed dwarfs the 12,000 people estimated to work in the fishing industry, a sector emblematic of Brexit. Government sources have said the new recruits would largely be “intermediaries,” agents who help businesses process their export and import paperwork with HMRC. The tax authorities will also recruit government agents to process the paperwork and guard against tariff evasion on borders. The FTA and the RHA have been pressing the government for the past three years to wake up to the realities of a hard Brexit. The FTA said Thursday’s publication of the government’s negotiating goals gave some “hope” in that it provided confirmation that the government was not pursuing frictionless trade. However, it called for “more ambition” to help road, aviation and rail transport prepare to minimise the disruption from Jan 1. It said in a statement:

Over recent months, the FTA has repeatedly requested the UK government prioritise the needs of logistics in its negotiations around the future trading relationship with the EU or risk a devastating effect on the UK’s highly interconnected supply chain. The business organisation has also warned of knock-on effects on UK plc’s future productivity, and on the economy as a whole but these concerns seem to have been overlooked.

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