Brexit Update 27th July 2017

By August 10, 2017 Brexit Updates

Top 3 developments

Food standards take centre-stage in UK-US talks
Trade Secretary Liam Fox’s visit to America was dominated by reports that a deal would include ‘chlorinated chicken’ and GM crops making their way to the UK, a claim categorically denied by Environment Secretary, Michael Gove.

Post-Brexit immigration study launched
An independent study has been commissioned by Government to look into immigration policy once the UK has left the EU. The Migration Advisory Committee is set to report back in September 2018, just six months before the current Brexit date.

Barnier concerned about Brexit progress
EU negotiator, Michel Barnier, declared the progress of Brexit talks was continuing at a worryingly slow pace and called for more clarity from the UK delegation, especially surrounding the financial settlement.

UK Update

What the cluck?!
UK Trade Secretary Liam Fox made a splash across the pond this week during discussions of a potential post-Brexit US-UK trade deal. The specifics of any such agreement were somewhat overshadowed by reports that they would possibly be accompanied by a reduction in food safety standards of US imports to the UK. The dreaded ‘chlorinated chicken’ is currently banned by the EU due to fears that a reliance on chemically washed meat would allow a general deterioration of food processing standards. Fox, intent on living up to Trump’s assertions of a ‘very big & exciting’ deal, urged an open mind and insisted that it was no more than a “detail” of the very end-stage of a potential free trade agreement. This left Environment Secretary Michael Gove with a bad taste in the mouth, and he promptly hit back, indicating that lowering environmental or agricultural standards would be a deal breaker. Despite having a ‘silly season’ flavour, the story highlights the complexities facing the Government when agreeing trade deals.

Brexit lads on tour
While Theresa May was so relieved at making it to recess she instantly jumped ship to Italy for a three-week walking holiday, her Brexit Bulldog/Secretary David Davis started his own European tour in Prague. On Monday, he met with Czech Foreign Minister Lubomír Zaorálek, and by Wednesday he had made it to Munich for a closed-door meeting with Bavarian Premier Horst Seehofer. Seehofer has repeatedly stressed the importance of a quick trade deal following Brexit, especially given the close economic ties between the UK and Germany’s ‘economic powerhouse’ Bavaria. Davis was also welcomed in Berlin, though wasn’t presented with an opportunity for a chinwag with Chancellor Merkel.

Meanwhile, on a trip to reinvigorate ties with New Zealand, foreign secretary Boris Johnson was distracted momentarily by calls of “Boris for PM” at a ceremony in Wellington. He responded by saying that voters want no more “political kerfuffle”, but a “government that gets on with the job and they’ve got that with Theresa.” Getting on with said job, Johnson promised that New Zealand would be “at or near the front of the queue” for a free trade deal with the U.K. once it leaves the bloc. He continued his tour down under with a two-day trip to Australia with Defence Secretary, Sir Michael Fallon.

MAC to provide foundation for Brexit immigration policy
A Migration Advisory Committee (MAC) study has today been commissioned by Government to advise on the UK’s post-Brexit immigration policy. The report will assess the costs and benefits of EU migrants on the UK economy and advise on how the UK’s immigration system “should be aligned with a modern industrial strategy”. It is due to be completed in September 2018, just six months before the UK’s scheduled leaving date. The move has been welcomed by businesses – the Confederation of British Industry heralding it as a “sensible first step” – though perhaps coming a year too late. Immigration Minister Brandon Lewis, while quick to back away from a firm date for immigration targets set out in the Conservative Manifesto, was clear that EU free movement would not continue beyond the UK’s exit, with a new system for continued migration promised for Spring 2019.

Working through Labour pains
Corbyn’s comments on Sunday, saying the issue of the UK’s membership of the customs union was “dependent on EU membership”, whipped up a storm in the shadow cabinet. Barry Gardiner (Labour’s Shadow International Trade Secretary) argued that leaving the EU would mean an automatic loss of membership of the customs union and that seeking to follow Norway’s example with membership of the EEA would result in the UK becoming a “vassal state”. He claimed that the only option left – a Turkey-style customs agreement – would be “a disaster” for the UK and would lead to an “asymmetrical relationship with the third-party countries that the EU does a deal with”. Yesterday, Shadow Brexit Secretary Sir Kier Starmer and Shadow Chancellor John McDonnell, countered by saying that “It is vital that we retain the benefits of the single market and the customs union” and emphasised the need for flexibility and not “sweep options off the table”.

Lib Dems call for citizens’ rights to be ringfenced in negotiations
The fate of EU citizens in the UK still hangs in the balance according to Liberal Democrat Shadow Home Secretary Sir Ed Davey. In a letter to the PM, he criticised the EU’s negotiating approach of ‘nothing is agreed until everything is agreed’, saying that this would cause continuing turmoil, and the issue of citizen’s rights should be ringfenced into a separate negotiating track to provide an earlier outcome. The letter, also signed by Lib Dem Brexit spokesman, Tom Brake, urged May to consult with the main umbrella groups representing EU citizens in the UK and provide assurances that a ‘no deal’ scenario would not result in them losing their rights.

Growth in the slow lane, but Mini isn’t stalling
The Office for National Statistics (ONS) reported a 0.3% growth in the economy this quarter, up from 0.2% in Q1 of 2017. While an incremental increase, this represents a “notable slowdown” from last year however according to the ONS, with construction and manufacturing performing worst overall. It was not all doom and gloom however, as the statistics came alongside news of various companies committing to the UK. Mini locked down its Oxford base as the site for the construction of its new electric cars, above its alternative manufacturing base in the Netherlands. The move was hailed by Greg Clark, UK Business Secretary, as a “vote of confidence”, and was mirrored by Amazon’s pledge to double its R&D team in the capital.

Aberdoom
Aberdeen was found to be the UK city predicted to be most negatively affected by Brexit in a report by LSE’s Centre for Economic Performance (CEP) and Centre for Cities. In both a ‘soft’ and ‘hard’ Brexit scenario, Aberdeen came top, followed by Southern English cities including Worthing, Reading and Swindon. The paper highlighted the negative impact especially on cities with a high rate of employment in private sector knowledge-intensive services, predominantly based in the south, which are likely to be hit by increased trade costs after the UK’s exit.

European Update

Divorce bill slowing down separation
Chief EU negotiator, Michel Barnier, outlined fears to EU ambassadors in Brussels that there will not be ‘sufficient progress’ in negotiations with the UK before the October deadline. Barnier pointed to a lack of clarity from the UK camp and the ongoing tussle over the ‘divorce’ bill. He called for the UK to substantiate its proposals on a financial settlement and proposed to speed up the timeline of negotiations to keep the talks on track. A DExEU spokesperson stood firm, saying that the negotiations had so far “made good progress on a number of issues.” It is thought that David Davis would welcome the chance to meet EU officials more regularly than the current once a month schedule allows as March 2019 gets ever nearer.

Going cold Turkey
Turkey’s prospective membership of the European Union was the subject of a tense round of talks between EU officials and senior members of the Turkish government on Tuesday. EU’s foreign policy chief, Federica Mogherini, accepted that Turkey “clearly is and stays a candidate country”. However, the Government’s crackdown on opposition in the last year highlighted that, as Turkey’s Foreign Affairs Minister, Mevlüt Çavuşoğlu, stated, the two have “a different mindset on certain issues”.

British staffers to remain when the UK leaves
Britons working in the European Commission have had assurances from Günther Oettinger, the European commissioner for the budget and human resources, that they will be able to remain once the UK exits the EU. The 1,000 British staffers were told that, while they will not be asked for their resignation, they will likely be subject to a reshuffle, including being removed from EU delegations, to avoid conflicts of interest, come March 2019.

Fly on the wall
Calls for the UK to take up observer status in at EU ambassador meeting have been amplified by Spanish foreign affairs secretary Ann Palacio this week. The idea, championed by former foreign Secretary, William Hague, among others, has taken a back seat in negotiations focused on stickier divorce issues of money and citizens’ rights. Palacio warned Britain risked being “hung out to dry in the international arena” without the EU, and cementing their place for the future of EU-UK co-operation. Lady Ashton, former EU high representative for foreign affairs, warned that the plans would require “a huge amount of goodwill” from member states.

Timeline

  • 21st July – 4th September – parliamentary recess
  • 28th August – third round of talks
  • 18th September – expected start of fourth round talks
  • 24th – 27th September – Labour Party Conference
  • 1st – 4th October – Conservative Party Conference
  • 9th October – expected start of fifth round talks
  • 19th October – EU Summit