brexit news

Brexit talks ‘risk stalemate’ if no progress on key issues
Jennifer Rankin, Groon, May 26 2020

Brexit talks risk reaching a stalemate if there is no progress in the next round of negotiations between the EU and the British government, EU sources have said. The two sides are due to resume talks next week, the final round scheduled before a “high-level conference” in June to assess progress before the end-of-year deadline. After the chief negotiators, Michel Barnier and David Frost, exchanged testy letters last week, a senior EU official said there was a risk of stalemate if the EU did not see progress on its vital interests, including how to ensure fair competition, or a level playing field, between British and EU companies under a free-trade deal. the official said:

That is a crucial round. If there is no parallel progress, level playing field, protection of fundamental rights and governance, then we risk going into July with a major problem, the stalemate Barnier warned about.

Earlier this month, the EU’s chief negotiator said “parallelism is a condition for progress,” meaning that talks had to advance in all areas, including priorities for the EU, such as the level playing field and an agreement on fishing rights. Frost argues the UK has set out a “comprehensive set of proposals” to prevent unfair competitive advantages, but multiple EU sources say the British ideas are inadequate. In a setback for Frost, EU diplomats have rejected calls for the union to change its approach to the negotiations. One of several diplomats who spoke to the Guardian and were opposed to the idea of rewriting the negotiating mandate, said:

A large majority of member states, maybe all of us, think that we have to stick to the mandate at this point of time, and I don’t see a lot of movement. There are not many lights in the tunnel.

In a further blow to the UK, diplomats also backed Barnier’s accusation that the British were trying to “cherry-pick” benefits from the EU single market that were not available to other countries with a free-trade agreement, such as Canada and Japan. A second EU diplomat said:

The demands of the UK government at the moment are very unilateral. They want to keep the things that are suiting them, but give away things in our interest.

The diplomat referred to British interest in an agreement on professional services, such as law and auditing, that goes beyond what the EU has done with other trade partners, and said:

To have British lawyers providing services around the EU, I am not sure that is of interest to our lawyers, especially when you don’t want to be in the common ecosystem, common controls and rules.

EU diplomats are tired of the repeated reminders from Frost’s team about the importance of UK sovereignty, pointing out that their governments are also sovereign. The EU official said:

The EU accepts that the UK is sovereign, but that is not the issue. The issue is what you as a country are going to commit to to get access to our market. That is the real question.

A UK government spox said:

It’s expected at this stage in a very difficult negotiation that both sides are making their case robustly and ensuring it is understood. We will continue to approach negotiations constructively, but our position hasn’t changed. We won’t agree to any EU demands for us to give up our rights as an independent state. And we’ve never asked for anything special, bespoke or unique. We’re looking for a free-trade agreement based on precedent and similar to those the EU has already got with other countries like Canada.

Adding to pressure on Barnier not to concede on fishing rights, on Monday night the European parliament’s fisheries committee threatened to veto any deal with the UK that did not include a “balanced” agreement on fish quotas, allowing EU fleets continue access to British waters. François-Xavier Bellamy, the French centre-right MEP, drew up a report that was adopted with near unanimity by the committee. He said:

No fisheries agreement means no post-Brexit agreement.

UK and EU clash over crime-fighting database in Brexit talks
Jennifer Rankin, Groon, May 23 2020

EU officials have accused the British government of threatening to weaken security cooperation with the bloc unless the UK gets an equivalent to a major crime-fighting database. The UK is set to lose access to the Schengen Information System (SIS II), a massive EU database, where police across the continent share millions of pieces of information on criminal suspects, at the end of the year. The EU has said it is legally impossible for non-EU countries not respecting free movement of people to access the database and has proposed more basic information sharing. In the latest round of Brexit talks, UK negotiators told their EU counterparts that the offer wasn’t good enough. According to EU sources, the UK government threatened to walk away from information sharing if it could not have an equivalent to the SIS II database, which is used by British police every day. One EU official said:

The UK basically said it was not interested in what the EU suggested, and that if they can’t have it, then they would rather have nothing. So they are playing hardball.

A second EU source said:

We have opened discussions on this. They were not interested in anything that does not replicate the benefits of SIS II.

A UK government source described the EU account as “highly misleading” but did not deny rejecting the lesser offer. The source said:

What we are seeking is a future internal security agreement with the EU which provides capabilities similar to those delivered by SIS II, but I’m afraid the EU’s alternative proposals on data sharing are nowhere near reminiscent of this and are of limited operational value.

The Schengen Information System was created in 1995 by countries that had abolished internal border controls. In 2015 Theresa May, who was then the home secretary, took the UK into the database, securing an unprecedented special deal for a country outside the EU passport-free travel zone. During the EU referendum campaign experts warned Brexit imperilled access to the database and would damage the UK’s ability to fight terrorism and crime. British police and border guards are the third heaviest users of the database, making 571m searches in 2019 (a figure that includes automated bulk data sweeps) to look for wanted people or stolen goods. UK forces issued 36,680 alerts on people and 259,824 on vehicles in 2019, essentially a request to other police to carry out checks. The government wants a system with “capabilities similar to those delivered by SIS II” meaning access to real-time data on tens of thousands of people. The EU offer, it argues, would add nothing to the UK’s law enforcement capability. EU negotiators want to maintain police data sharing with the UK, but say their hands are tied because of case law from the European court of justice (ECJ) that limits what can be offered to an outsider. European diplomats also cite political factors such the UK’s refusal to countenance a role for the ECJ and opposition to any reference to the European court of human rights (ECHR) in the EU-UK treaty. Both institutions are seen by European governments as providing crucial safeguards over the transfer of data or in the case of the European arrest warrant, people. An EU diplomat cited the absence of guarantees on the ECJ and ECHR and said:

We wanted of course to have an exchange of data, but it cannot be SIS as such.

The Brexit clash comes after a prominent MEP accused the UK government of “behaving like cowboys” earlier this year, after a leaked EU report concluded that British authorities had illegally copied SIS II data. The report fuelled complaints that the UK wants the benefits of EU systems without offering reciprocal aid – a charge strongly rejected by the government. In 2018 the UK responded to 7,000 alerts put on the SIS II system by other countries, while it issued more than 22,500 alerts that led to responses around the EU.

Brexit talks: Britain accuses EU of treating UK as ‘unworthy’ partner
Daniel Boffey, Groon, May 19 2020

Britain’s chief negotiator, David Frost, has accused Brussels of treating the UK as an “unworthy” partner by offering a low-quality trade agreement that he says would force the country to “bend to EU norms.” In an extraordinary letter to the EU’s chief negotiator, Michel Barnier, the prime minister’s envoy says Brussels’ proposal that EU state aid rules be part of British law is “egregious” and “simply not a provision any democratic country could sign.” He further accuses Barnier of demanding unprecedented oversight over British laws and institutions through “novel and unbalanced proposals”, in an intervention that will heighten fears that the talks are now destined to fail. The letter, sent shortly after the publication of the UK’s draft trade and security treaty, highlights the tension at the heart of the negotiation over Britain’s future relationship with the EU after a series of poor rounds of videoconference talks. The British negotiator seeks to reassure Barnier that he is not trying to negotiate with the member states through publication of the legal text but to “clear up any misunderstandings about the purpose and effect of what we have put to you.” Frost says the EU demands would tie the UK to Brussels’ labour, environmental and social standards while offering a trade deal that fails to match those signed with others in reducing barriers to trade in animal products, motor vehicles, medicinal products, organics and chemicals. He writes that the UK government’s proposed free trade deal is very close to that signed with Canada. The draft fisheries proposal is akin to that between the EU and Norway, he claims, and on aviation he says the UK is not seeking more than that given to other non-EU countries.He continues:

Given this reality, we find it perplexing that the EU, instead of seeking to settle rapidly a high-quality set of agreements with a close economic partner, is instead insisting on additional, unbalanced and unprecedented provisions in a range of areas, as a precondition for agreement between us. Overall, we find it hard to see what makes the UK, uniquely among your trading partners, so unworthy of being offered the kind of well-precedented arrangements commonplace in modern FTAs.

In response to the EU argument that proximity and levels of trade require the UK to remain close to Brussels rules, Frost says:

Britain is less integrated than Switzerland, Norway or Ukraine and the argument on geography amounts to saying that a country in Europe cannot expect to determine its own rules, and that it must bend to EU norms.

Earlier in the day, Michael Gove had said that success in the fourth round of the talks starting on Jun 1 depended upon “the EU recognising that the UK is sovereign,” after a notable lack of progress in last week’s talks. Barnier welcomed Downing Street’s “transparency” after being blocked by the British government during the recent negotiations from sharing the text with the member states, adding that the bloc had already made its text public “over two months ago.” Pedro Silva Pereira, who is part of a cross-party group of MEPs overseeing the talks on behalf of the European parliament, said:

The negotiations need a political wake-up call, and it is Boris Johnson who needs to wake up.

The last chance to agree an extension to the transition period will come in June but Frost writes that the government does not believe it would be in British interests to stay in the customs union and single market after the end of the year. Without a replacement deal, both sides will fall back on the WTO’s most favoured nation tariffs, which means duties on everyday food items from cheese to beef of more than 40%. The UK’s 291-page draft comprehensive free trade agreement was among the multiple Brexit papers made public by the government covering everything from aviation and fisheries to social security coordination and law enforcement. On level-playing-field provisions, so central to the EU’s proposal, the UK text contains a cut-and-paste from the EU’s trade deal with Canada stating merely that it would be “inappropriate to encourage trade or investment by weakening or reducing the levels of protection” in current labour laws and standards. Neither the EU or the UK could “waive or otherwise derogate” from its own laws if the motivation is to win an economic advantage but there is nothing to prevent Britain from lowering its standards if it wished to do so. On state aid, a significant interest within the EU, the UK’s paper simply affords Brussels the right to “express its concerns” and request consultation. the document says:

The responding party shall afford full and sympathetic consideration to that request.

UK told to pay EU’s costs after being sued over City tax breaks
Daniel Boffey, Jennifer Rankin, Groon, May 14 2020

The British government has been ordered to pay the European commission’s legal costs after being successfully sued for granting City traders a tax break without EU permission. The European court of justice ruled that the UK breached an EU directive by failing to notify Brussels of a zero rate of VAT given to commodities traders over the last four decades. The UK is now expected by Brussels to seek the authorisation of the 27 member states or drop the policy, which it is claimed has unfairly boosted the City of London at the expense of other EU financial centres. A Treasury spokesperson said:

We are reviewing the decision of the European court of justice and will provide further details on next steps in due course. The decision does not require businesses to pay any VAT on historic transactions, and the law applying to derivatives trades today means no VAT is due. That will remain the case while the UK considers next steps in light of the ruling.

Separately, the EU has launched infringement proceedings against the British government for failing to comply with EU law on the free movement of its citizens and their family members. The government is accused of limiting the rights of first-time jobseekers from other EU countries, as well as putting restrictions on the rights of their family members. The charges, which date back to 2014, also include imposing “illegal” lifetime re-entry bans on some people. The British government has been given four months to notify the commission that it has fully transposed EU laws on free movement into UK law. There are concerns that the gaps might affect the implementation of citizens’ rights under the withdrawal agreement after the end of the Brexit transition period. The UK left the EU on Jan 31 but under the terms of the withdrawal agreement the country remains under the jurisdiction of the bloc’s court in Luxembourg until the end of the transition period on 31 December 2020. Legal cases launched by Brussels will remain live for four years once the transition period is over, and for eight years when concerning citizens’ rights. The European court of justice could in theory fine the government even when the UK is long gone from the EU’s structures. The twin legal developments will inevitably fuel the arguments of those opposed to an extension of the transition period, during which the UK remains in the single market and the customs union.

The row over the tax breaks began in 2018 when the commission claimed that the UK had been gradually extending the scope of VAT zero rates initially given to trades in the future prices of metal, rubber, coffee, sugar, vegetable oil, wool, silver grain, barley and cocoa granted in the late 1970s. The UK government accused the commission of not understanding a “complex series of restructurings” of the trade in so-called futures and of being overly “formalistic”. The EU’s executive disputed that claim, arguing that the extension of zero-rating to a new range of trading was “not purely formal and were not undertaken simply to take account of the restructuring process” but had allowed “increasingly complex types of instruments, traded on increasingly complex markets” to escape the tax. It was claimed the VAT zero rate had been extended without due notification to trades on the London potato futures market, the International Petroleum Exchange of London, the London meat futures market, the London platinum and palladium market, the London Securities and Derivatives Exchange Ltd and the London bullion market. The court’s judges, led by a French jurist, Jean-Claude Bonichot, agreed with the commission that the lack of notification did amount to a breach of the EU’s directives. The court added that the judgment held no sway on whether authorisation should be given if it was sought.

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