Brexit Update 12th October 2017

By October 26, 2017 Brexit Updates

Top 3 developments  

  1. Fifth round of Brexit talks end without substantial progress.
  2. Government sets out its post-Brexit customs and trade plans in white papers.
  3. Chancellor refuses to commit addition funds for no-deal Brexit.

UK Update

Fifth round of talks end without substantial progress

The fifth found of Brexit negotiation talks have failed to break the stalemate on key points of contention between the UK and EU. The fifth round held this week was supposed to be a breakthrough for the stalled negotiations, but chief EU negotiator Michel Barnier says there is still a “disturbing” deadlock between the two sides. Speaking at a press conference closing the fifth round, Barnier said May’s change of tone in Florence is important and has created “new momentum”, but criticised the UK’s refusal to move beyond “technical” discussions to detail exactly which financial commitments will be met. Barnier said the two sides have also failed to reach agreement on family reunification and the export of benefits. He ended by saying that, with political will, “decisive progress” could be made by Christmas.

Brexit Secretary David Davis offered a somewhat more optimistic account of the fifth round, saying there has been “tangible progress”. On citizens’ rights he said that, although the UK and EU have not yet reached an agreement on how to enforce the rights, he said various options have been discussed and he is confident they will reach a deal soon. He reiterated that the process for administering the new settled status will be simple and cheap. On the divorce bill Davis said the UK has undertaken a rigorous examination of the technical issues, but maintains that the final settlement will be a “political issue”. In closing, Davis urged the remaining EU27 to expand Barnier’s negotiating mandate.

The ailing talks come ahead of an EU summit meeting next week, when the remaining EU27 leaders will decide if sufficient progress has been made to progress on to the future terms of trade. Germany is thought to be cold on this prospect, and wants to ensure the UK meets as many of its financial commitments as possible, before negotiations turn to trade.

Government publishes trade and customs white papers

The Government has published two white papers on trade and customs, both of which entertain the possibility of a no-deal scenario. The trade paper says the Government is currently working on preparations to allow the UK to sign trade deals swiftly with non-EU states in the event of no deal. The paper reads, “we want to make provision for a legislative framework that will enable future trade agreements with partner countries to move quickly from signing to implementation and then to ratification, whilst respecting due process in Parliament”. Importantly, the paper does not lean towards either remaining closely aligned with the EU in the future, or giving priority to forging relationships with non-EU states such as the USA or China. Both papers reiterate that a comprehensive deal is achievable, but that it is only “prudent” to prepare for a no-deal outcome.

The customs paper sets out a contingency plan in which traders would be required to present goods for inspection “as inland as possible” because of space and traffic constraints at ports. It claims that some negative impacts of a no-deal scenario could be mitigated by introducing measures to replace border checks – including businesses “pre-notifying” or “self-assessing” imports. The paper also says the Government is making preparations to introduce emergency customs, VAT and excise systems in the event that a deal is not brokered. However, the paper’s feasibility has been questioned by tax officials in Dublin, who have taken issue with the implementation of a “virtual” border. An Irish document – dated September 2016, but leaked yesterday (in the wake of the Government’s customs white paper) – says that “a completely open border is not possible”.

Chancellor rules out additional Brexit funding

The Chancellor of the Exchequer has said the Treasury must be prepared for a no-deal scenario, but that he is not prepared to allocate additional Brexit funds before it is needed. Appearing in front of the Treasury Select Committee yesterday, Hammond said “what I am not proposing to do is allocate funds to departments in advance of the need to spend. Every pound we spend on contingent preparations for a hard customs border is a pound we can’t spend on the NHS, social care, education or deficit reduction”. Hammond defied calls from some Tory MPs to increase Brexit contingency spending, saying it would be wrong to do so “just to make some demonstration point”. He did, however, confirm that the Treasury has released £250m from the Government’s reserves to help departments carry out a limited degree of preparation for a no-deal scenario. The Chancellor also said the Treasury does not intend to publish an assessment of the fiscal impact of a no deal scenario on public spending. Addressing the Chancellor’s remarks, the Prime Minister sought to reassure MPs by telling the House of Commons that “where money needs to be spent it will be spent” to prepare for Brexit.

PM offers ECJ climbdown

The Prime Minister has conceded that the UK will have to accept the jurisdiction of the ECJ during any transitional arrangement. Responding a question by Jacob Rees-Mogg, May said that an orderly withdrawal “may mean we will start off with the ECJ governing the rules that we are part of”. Whilst she said it is “highly unlikely” that any new EU rules will be implemented during a transition period, she refused to rule out the possibility. The Prime Minister’s admission has not been well-received by hard-line Tory Brexiters, who have attacked her position as overly “generous”. Nonetheless, it will be seen as a welcome climbdown by Brussels, and possibly as a small but consequential indication that the Government is necessarily becoming more pragmatic and realistic.

Government likely to concede on EU (Withdrawal) Bill

The Prime Minister looks increasingly likely to agree concessions to the Government’s EU (Withdrawal) Bill, as opposition from Conservative MPs grows. 15 Conservative MPs and a number of Labour colleagues have supported an amendment to the bill which would create a new parliamentary committee to oversee the Government’s use of so-called Henry VIII powers. Pro-Brexit MP John Penrose (who supports the amendment) said, “the amendments are gathering support and adherence and people now understand why they are important and responsible”.

PM meets Business Advisory Council

The Prime Minister met with the Government’s Business Advisory Council this week to discuss her proposals for an implementation period and future trading relationship post-Brexit. Businesses attending Monday’s meeting included GlaxoSmithKline, Vodafone and HSBC. A Downing Street spokesperson said, “at the meeting, the Prime Minister set out the importance of the range of Government’s engagements with businesses to date, and that these have informed our proposal of an implementation period and commitment to continue to attract the right talent to the UK workforce”.

UK negotiating team dwarfed by Americans

Newly released documents show that members of the UK’s trade delegation to the US led by Liam Fox earlier this year were outnumbered nearly 3 -1 by their American counterparts. The documents, obtained through a FOI request by Greenpeace, also show that the 27 British officials who travelled to Washington had next to no experience of negotiating trade deals – in contrast to the highly experienced American team led by Robert Lighthizer.

Speaker defends right of MPs to oppose Brexit Commons Speaker John Bercow has said that MPs have the right to oppose or block Brexit, and that no MP should feel obliged to vote in line with the referendum result. Speaking to the Hansard society, Bercow said “there will be some members of parliament who say: ‘I want to be able at the end of all this if I’m not satisfied, to say no, to try to persuade other members of parliament to say no, and to hope that no might delay Brexit or prevent Brexit. Do they have a right to argue that point of view? They absolutely do”. He maintained that it is an “opinion, rather than a constitutional fact” that MPs were obliged to vote in favour of Brexit because of the referendum result.

European Update

Brussels rejects May’s call to progress talks Addressing the Commons on Monday, the Prime Minister urged Brussels to progress to the next stage of talks, saying “the ball is in their court”. European Commission President Jean-Claude Juncker was quick to douse May’s hopes, saying “the ball is entirely in the UK’s court”. He added, “there’s a clear sequencing of these talks and there’s been so far no solution found on step one”.

Denmark intervenes in Brexit “game” Denmark’s Finance Minister Kristian Jensen has called on Brussels to end its “game” over the UK’s divorce bill, and pursue a swift political compromise. Speaking to the Guardian, Jensen said that London and Brussels should both be ready to progress to trade talks after the concessions made in Theresa May’s Florence speech. He said, “we are now on the same page… In my view it is rather important we get into a more close and more speedy process on concluding some of the issues”.

UK and EU reject USA’s post-Brexit WTO concerns The UK and EU have formally notified members of the World Trade Organisation (WTO) about how they intend to divide the EU’s tariff quotas and farm subsidies post-Brexit. In a letter to the WTO, the UK and EU suggest that the EU’s existing agricultural quota commitments will be “apportioned” based on historical trade flows, and the current ceilings on support for farmers will be maintained. International Trade Secretary Liam Fox said, “this is the start of our open and constructive engagement with the WTO membership and sets out our intentions regarding EU quotas to forge ahead and establish the UK as an independent WTO member”. The plan dismisses opposition voiced by Washington in recent weeks, which argues that the proposed method of dividing quotas is unfair because it would allow the UK and EU to reduce their obligations as WTO members.

Timeline

  • 16th October (w/c)– Jeremy Corbyn to visit Brussels
  • 19th – 20th October – EU Summit
  • 14th December – EU Council Summit

 

 

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