Posts Tagged ‘European Union’

Brexit: Theresa May Again Meets EU Leaders — talks that could be hampered by divisions at home

December 14, 2017

Theresa May will urge European Union leaders to approve an agreement to move Brexit talks on to a second phase after an embarrassing parliamentary defeat.

The Prime Minister will repeat her case for moving the talks on to trade negotiations, which she sees as crucial to offering certainty for businesses.

The 27 other EU leaders are all but certain to approve the deal to move to “phase two” on Friday, after Ms May has left Brussels, launching a new stage of talks that could be hampered by divisions at home and differences with the EU.

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Brexit should be cancelled, Austrian prime minister says

Austria’s prime minister has said he hopes that Brexit can be reversed, hours after British MPs voted to give themselves a veto on Theresa May’s final deal. Arriving at European Council summit in Brussels Christian Kern said Brexit would likely throw up problems that are “not easy to solve”.

Arriving at the summit in Brussels, German Chancellor Angela Merkel said there were “still a few questions remaining open” about the terms of the UK’s withdrawal from the EU, but there was “a good chance that the second phase can now begin”.

French President Emmanuel Macron said it was “not simply a council about Brexit”, stressing that his focus was on issues of EU defence and migration policybeing discussed on Thursday evening.

UK must accept EU laws to prevent ‘dramatic and damaging’ impact on economy after Brexit, MPs warn

A transition period after Brexit where the UK continues to accept EU rules would be a “price worth paying” for economic stability, an influential Commons committee has said. Cross-party MPs on the Treasury Committee said the Government should consent to a “standstill” transition deal with Brussels, which would likely include remaining in the single market and customs union, and accepting judgements from the European Court of Justice (ECJ) after Britain leaves the bloc in March 2019.

Tory former minister who rebelled against May warns she faces second defeat

Conservative ex-cabinet minister Dominic Grieve has said he does not care about “knives being out for me” over his role in forcing changes to Theresa May’s Brexit plans, as he warned the Prime Minister she faces a second defeat.

All you need to know about the Brexit bill’s Amendment 7 and why it has just humiliated Theresa May

Theresa May’s government was handed a defeat on the Brexit bill as 11 MPs rebelled and backed an amendment to give Parliament a much greater say in leaving the European Union (EU).  Amendment seven, tabled by the former attorney general Dominic Grieve, requires any Brexit deal to be approved by a separate Act of Parliament before it can be implemented.

High Court just ruled Government policy of deporting homeless EU citizens is illegal

The IndependentThe High Court has ordered the Government to stop deporting homeless EU citizens under a controversial policy that has been ruled unlawful. Mrs Justice Lang said measures introduced last year were discriminatory and violated European law, following a challenge by two Polish men and a Latvian. The three men were all facing removal because they were found by police and immigration officers sleeping rough.

Ireland’s Foreign Affairs Minister, Simon Coveney, said a transition period needs to be closer to five years than two.
Speaking in the Dail on Thursday, he insisted that businesses need time to adapt to any new realities in the context of Brexit.
He also said that, in his view, the commitments that the UK Government has made to Ireland and the rest of the EU are “cast-iron”.

Watch the moment Theresa May was defeated by her own MPs in humiliating Brexit vote

The Independent — This is the moment that the government lost its key vote on its Brexit bill after a rebellion by 11 Conservative MPs. In front of a packed House of Commons in the end the Government was defeated by 309 votes to 305, a margin of just four votes. Cheers erupted as the result was announced.

This is from the FT’s Brussels Correspondent. Luxembourg’s PM says the EU will not renegotiate a deal with Britain if Parliament rejects the one on offer. 

Luxembourg’ PM Bettel asked if EU will renegotiate exit deal if rejected by parliament: “No”.

Tory former minister who rebelled against May warns she faces second defeat

Conservative ex-cabinet minister Dominic Grieve has said he does not care about “knives being out for me” over his role in forcing changes to Theresa May’s Brexit plans, as he warned the Prime Minister she faces a second defeat.

Asked whether the Prime Minister agreed with the Archbishop of Canterbury (see 9.22am) a Downing Street spokesman said:

“The Government understands there are strong feelings on both sides, we continue to listen to views and move forward to secure the Brexit deal the country needs.”

The Tories have sacked their own vice-chairman after he helped defeat the Government over Brexit

Tory MP Stephen Hammond has been sacked as a vice-chairman of the Conservative Party after he rebelled against the Government on a key Brexit vote. The former transport minister voted in favour of Dominic Grieve’s amendment seven, to back his attempt to ensure MPs have a “meaningful vote” on the withdrawal deal. Before the news broke, Mr Hammond said the rebels had been prepared to work with the Government to ensure a meaningful vote.

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Greece strikes against budget cuts, labour reforms — Live well and let others pay

December 14, 2017

AFP

© AFP | A woman walks in a train station during a 24-hour general strike in Thessaloniki on December 14, 2017

ATHENS (AFP) – A general strike in Greece on Thursday has paralysed the civil service, trains and ships and will also disrupt some domestic flights as well as the operation of public hospitals and schools.Greek unions called the 24-hour labour action against new budget cuts and plans to revamp labour mobilisation rules. Separate protests will be held in Athens and major cities during the day.

The mobilisation is aimed against the latest budget, which goes to a vote in parliament on December 22.

The Greek finance ministry is maintaining high taxation with the aim of collecting a budget surplus equivalent to 3.8 percent of gross domestic product (GDP), excluding debt payments in 2018.

The country’s EU-IMF creditors have also demanded a revision in labour law, setting a higher worker participation requirement for strikes to be held at primary union level.

Greece has tougher targets to meet this year, as the primary surplus goal mandated by its international creditors is 3.5 percent, up from 1.75 percent this year.

The ministry last month said that enough “fiscal room” has achieved to permit tax cuts after 2018, when the country is scheduled to exit its third multi-billion EU-backed bailout.

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Brexit defeat for Theresa May as MPs back curbing government powers — What Theresa May’s Brexit defeat means

December 13, 2017

LONDON (Reuters) – MPs defeated Prime Minister Theresa May’s government on Wednesday, voting to change her Brexit blueprint in a move which could complicate her efforts to sever ties with the European Union.

The parliament voted 309 to 305 in favour of an amendment to demand parliament pass a separate bill to approve any final deal with the EU.

Reporting by Elizabeth Piper; Editing by Andrew Heavens

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The Guardian

What Theresa May’s Brexit defeat means

Net giants ‘must pay for news’ from which they make billions — European press agencies say

December 13, 2017

AFP

© AFP/File | European press agencies say internet giants such as Google reap vast profit from “from other people’s work” by soaking up between 60 and 70 percent of advertising revenue
PARIS (AFP) – Nine European press agencies, including AFP, called Wednesday on internet giants to be forced to pay copyright for using news content on which they make vast profits.The call comes as the EU is debating a directive to make Facebook, Google, Twitter and other major players pay for the millions of news articles they use or link to.

“Facebook has become the biggest media in the world,” the agencies said in a plea published in the French daily Le Monde.

“Yet neither Facebook nor Google have a newsroom… They do not have journalists in Syria risking their lives, nor a bureau in Zimbabwe investigating Mugabe’s departure, nor editors to check and verify information sent in by reporters on the ground.”

“Access to free information is supposedly one of the great victories of the internet. But it is a myth,” the agencies argued.

“At the end of the chain, informing the public costs a lot of money.”

News, the declaration added, is the second reason after catching up on family and friends for people to log onto Facebook, which tripled its profits to $10 billion (8.5 billion) last year.

Yet it is the giants of the net who are reaping vast profits “from other people’s work” by soaking up between 60 and 70 percent of advertising revenue, with Google’s jumping by a fifth in a year.

Meanwhile, ad revenue for news media fell nine percent in France alone last year, “a disaster for the industry”.

– ‘Pillar of democracy at risk’ –

“Years have passed (without anything being done) and free and reliable newsgathering is now threatened because the media will simply no longer be able to pay for it,” the news agencies added.

“Diverse and reliable news sources, a pillar of democracy, risk being undermined.”

Attempts by news outlets in France, Germany and Spain to force internet giants to pay have only resulted in them coughing up a “few symbolic crumbs”, they added.

The press agencies insisted that some of the vast imbalance could be rectified if the EU gives them and other media “related rights” copyright to their work.

However, some European Parliament members were worried that the proposed directive would threaten free access to news for internet users.

But that would not be the case, the agencies insisted.

“Internet users would not be touched… simply those who now pocket a disproportionate part of advertising revenue would have to share a significant part of it with those who actually produce the information” on which the money is made.

The appeal was signed by AFP; the German agency DPA; Britain’s Press Association; the Spanish agency EFE; Italy’s Ansa; the Swedish agency TT; Belga of Belgium, Austria’s APA, and the Dutch agency ANP.

British PM facing rebellion over key Brexit bill — It’s not over until it’s over…

December 13, 2017

AFP

© AFP/File | Britain’s Prime Minister Theresa May managed to strike a deal in Brussels last week to move onto the next stage of Brexit negotiations, but is already facing more problems
LONDON (AFP) – 

British Prime Minister Theresa May was Wednesday facing a rebellion from her own MPs over whether parliament will have a “meaningful vote” on the final Brexit deal in what would be a damaging defeat.

A vote is expected later on Wednesday on an amendment to a landmark bill ending Britain’s membership of the European Union and incorporating thousands of pieces of EU legislation into the British statute books.

Dominic Grieve, an MP in May’s Conservative Party, proposed the amendment requiring any Brexit deal to be made law by a binding parliamentary vote.

Ten Tory MPs have signed Grieve’s amendment.

If the government loses, that would deal a heavy blow to May less than a week after she struck a deal in Brussels to move onto the next stage of negotiations.

“The government needs to listen to what’s being said to them,” Grieve told Sky News on Wednesday.

“Unfortunately, my impression of the last few days, when I’ve been talking to the government, is that it seems to be a bit of a dialogue of the deaf. They’ve turned this into a battle of wills.”

Keir Starmer, chief Brexit spokesman for the main opposition Labour party, has tweeted that his MPs will back the amendment if pushed to a vote.

– Government ‘committed’ to vote –

Tory MP Iain Duncan Smith, a hardline Brexiteer, earlier accused Grieve of “looking for ways to derail the bill”, saying the amendment would “tie the government’s hands” in negotiations with the EU.

The row revolves around Clause 9 of the bill, which hands the government “Henry VIII powers” to implement the Brexit deal without parliamentary approval.

Brexit secretary David Davis has promised to give MPs a final vote, and issued a statement Wednesday in a bid to head off the rebellion.

“The government has committed to hold a vote on the final deal in parliament as soon as possible after the negotiations have concluded,” he said.

“This vote will take the form of a resolution in both Houses of Parliament and will cover both the Withdrawal Agreement and the.”

The statement did not specify whether the resolution would be legally binding.

“The government will not implement any parts of the Withdrawal Agreement – for example by using Clause 9 of the European Union (Withdrawal) bill – until after this vote has taken place,” he promised.

The statement did little to appease the potential rebels as it did not spell out what would happen if MPs voted against the terms of the divorce deal.

Only if MPs approve the resolution will the government bring forward a bill to give the Withdrawal Agreement domestic legal effect.

“On first reading, the major problems with this: no guarantee of a vote before we leave the EU; and, no guarantee we get full details of terms and approve them before the PM finalises the Withdrawal Agreement,” Labour MP Chuka Umunna, a prominent pro-EU campaigner, wrote on Twitter.

EU parliament backs outline Brexit deal — Withdrawal accord will be legally binding

December 13, 2017

STRASBOURG (Reuters) – The European Parliament urged EU leaders on Wednesday to allow the next phase of EU negotiations to start, backing a motion that recognized the talks had made sufficient progress as a well a line criticizing Britain’s Brexit negotiator David Davis.

Earlier on Wednesday, the EU’s chief negotiator told lawmakers that Britain could not renege on commitments made to ensure Brexit talks with the European Union move on to discussions on the future relationship between the two.

European Union leaders are almost certain to judge on Friday that “sufficient progress” has been made on the rights of citizens, the Brexit divorce bill and the Irish border to allow negotiations to move to the next phase. The EU executive recommended last week that the leaders approve trade talks.

European Parliament — FILE photo

The European Parliament will have to approve any Brexit deal, although its motion on Wednesday was not binding.

The agreement, presented in a joint report last Friday, was in the view of some in Brussels, undermined by Brexit minister David Davis’s comment that it was more “a statement of intent” than a legally binding. Davis has subsequently said he wants the accord swiftly translated into a legal text.

Image may contain: 1 person, suit

David Davis

“We will not accept any going back on this joint report. This progress has been agreed and will be rapidly translated into a withdrawal accord that is legally binding in all three areas and on some others that remain to be negotiated,” EU Brexit negotiator Michel Barnier told EU lawmakers.

Barnier said a lot more further steps were required to secure an orderly withdrawal.

“We are not at the end of the road, neither regarding citizens’ rights nor for the other subjects of the orderly withdrawal. We remain vigilant,” he said.

Barnier said the next phase of talks would focus on a “short and defined” transition period and initial discussions on a future relationship, which he stressed would not erode the EU single market and its four freedoms, including free movement of people.

Reporting by Philip Blenkinsop; Editing by Matthew Mpoke Bigg

Africa, Europe seek to boost Sahel anti-terror force

December 13, 2017

AFP

© AFP/File / by Daphné BENOIT, Jérôme RIVET | The world’s newest joint international force, the five-nation G5 Sahel, has already held operations with France’s regional Barkhane force

PARIS (AFP) – France’s Emmanuel Macron on Wednesday hosted a group of African and European leaders, including Chancellor Angela Merkel, to drum up support for a new counter-terrorism force in the terror-plagued Sahel.Two years in the planning, the force brings together troops from Burkina Faso, Chad, Mali, Mauritania and Niger in a desert region the size of Europe.

Former colonial power France is currently leading counterterrorism operations there through its 4,000-strong Barkhane force, but is keen to share the burden as its military is engaged on various fronts.

The ambitious goal is to have 5,000 local troops operational by mid-2018, wresting back border areas from jihadists including a local Al-Qaeda affiliate.

But Macron — who has had a busy week of diplomacy after a climate summit on Tuesday — has expressed frustration at delays, with the first mission only taking place last month in the volatile border zone between Burkina Faso, Mali and Niger.

“It’s an initiative that’s getting more powerful, but speed is a problem,” French Defence Minister Florence Parly told RFI radio.

“We have to go faster,” she said. “The objective is to be able to move forward faster on financing and the military structure.”

The five Sahel countries are among the poorest in the world, and funding will be high on the agenda as their presidents join Macron at a chateau in Celle-Saint-Cloud outside Paris.

Officials from oil-rich Saudi Arabia — which may confirm a $100 million (85 million euro) contribution, according to the French presidency — are notably on the guest list.

UAE officials are also attending along with the Italian and Belgian prime ministers and representatives of the European Union, African Union and United States.

Priority number one is to re-establish law and order in the border zone where several hundred soldiers, backed by French troops, carried out last month’s debut mission.

Militants have mounted repeated attacks in recent months, including an assault in Niger on October 4 which killed four US soldiers and another two weeks later in which 21 Niger troops died.

In August, gunmen stormed a restaurant in Burkina Faso’s capital Ouagadougou, killing 19 including foreigners.

– Strategic region –

The G5 force is set to work alongside Barkhane troops and the UN’s 12,000-strong MINUSMA peacekeeping operation in Mali — the most dangerous in the world, having lost 90 lives since 2013.

The International Crisis Group described the G5 force as a European efforts to “bring down the expense of their overseas operations by delegating them partially to their African partners”.

“The Sahel is politically and economically strategic, especially for France and Germany, both of which view the region as posing a potential threat to their own security and as a source of migration and terrorism,” it added in a report.

Wednesday’s talks are the latest effort by Macron to forge an influential role on the world stage, a day after he hosted an international climate summit.

They are designed to lay the groundwork for a summit in February, likely in Brussels, focused on raising funds for the G5 force.

The EU has so far pledged 50 million euros ($59 million) for the force and France another eight million, while each of the African countries is putting forward 10 million euros.

The United States has meanwhile promised to contribute a total $60 million.

But this leaves a serious shortfall, with France hoping to raise at least 250 million euros in the short-term, rising eventually to 400 million euros.

The arid Sahel region has become a magnet for Islamic militants since Libya descended into chaos in 2011.

In 2012, Al-Qaeda-affiliated jihadists overran the north of neighbouring Mali, including the fabled desert city of Timbuktu.

France intervened in 2013 to drive the jihadists back but swathes of central and northern Mali remain wracked by violence, which has spilled across its borders.

by Daphné BENOIT, Jérôme RIVET

Fewer jobs expected to move from London after Brexit

December 13, 2017

FT research shows 6 per cent of staff might move, despite claims of tens of thousands

By  in London
FT — Financial Times

Image result for the city, london, financial district, photos

The UK’s biggest international banks are set to move fewer than 4,600 jobs from London in preparation for Brexit — just 6 per cent of their total workforce in the financial centre — according to Financial Times research.  The FT analysis contrasts with consultants’ original claims that tens of thousands of jobs could move from London after Brexit — including an EY study this week that claimed 10,500 could leave on “day one”.

The FT estimates are based on public statements by 15 of the UK’s biggest international institutions, interviews of more than a dozen senior bank executives about Brexit planning and industry benchmarks. In the case of Deutsche Bank, where Sylvie Matherat, head of regulation, publicly said up to 4,000 jobs could move, the FT estimates that just 350 jobs may leave by April 2019.

The figure amounts to 5 per cent of Deutsche’s London headcount, a proportion broadly in line with other big banks. Some bankers say the lower estimates emerged as they thought through how many jobs and operations would need to move to the EU if the UK loses access to the bloc’s single market.

“Every city wants thousands of people, but what are they going to do?” said one senior executive at a large US institution, adding that the thousands of people sitting in his London office “cover clients” who will mostly be remaining in the UK. Share this graphic At JPMorgan, where chief executive Jamie Dimon warned before the Brexit vote of up to 4,000 London job losses, the number leaving before April 2019 is set to be closer to 700.

Goldman Sachs, which has taken a new office in Frankfurt that could accommodate 1,000 people, expects to move fewer than 500 from London. HSBC is still planning to move “up to 1000 people”, although its chief financial officer recently said the figure could fall.  A few banks still do not know how many staff they will move. BNP Paribas, for example, says it is “too soon to speculate” on the potential reduction in its London workforce.

he UK government says it has made important recent progress on Brexit, highlighting last week’s divorce deal with the EU, which paves the way to negotiations on future ties with the bloc and a transition of about two years under current rules — keenly sought by the City. But Sally Dewar, international head of regulatory affairs at JPMorgan, said her bank’s planning “hasn’t changed to reflect anything that would look like a better [Brexit] outcome”.

A senior executive at another US bank said that a “a watertight transition period that is legally robust” was “the only way we can responsibly stop, or adjust the timing of, the implementation of our plans to ensure post-March 2019 continuation of critical services to our clients, and that needs to happen very quickly”.

Some bankers say the real impact of leaving the EU could still be dramatic. “The story has always been three to five years out, not what does it do to the City the morning after Brexit,” said Rob Rooney, chief executive of Morgan Stanley International.

“If people judge it by the numbers that move ([immediately] afterwards, they will miss the point.” Several banks say they are planning to move relatively few people in the immediate aftermath of Brexit because it will take time for their EU operations to build up.

They expect to have very small balance sheets when the EU entities begin handling client business on April 1, 2019, and to be able to run some of the risk and support functions for those small EU entities from London.

Share this graphic David Davis, Britain’s Brexit secretary, says the UK is aiming at a trade deal that includes financial services. If there is a hard Brexit that impedes financial services providers’ access to Europe, one bank’s Emea chief executive said it was “inevitable” that the flow of business from the UK to the EU “continues and continues and that the ECB when they feel the moment is right will push to have much more market risk to be run onshore”.

“It’s a real game changer . . . it will make this day one seem very small,” he added. “If we move the substance of the trading to the continent, you’re then moving risk management, product controllers, compliance legal heads . . . the numbers race to a completely different place.”  At present, banks are continuing the preparations for a ‘phase one’, the structure they will have in place immediately after Brexit. “We’re already in the process of revamping our governance of legal entities, submitting all of our documents to regulators, identifying senior managers who would have to relocate,” said Ms Dewar.

Bank of America Merrill Lynch has already announced the management of its new EU entity in Dublin — to be led by Bruce Thompson, former group chief financial officer, and chaired by Anne Finucane, a senior executive.

Other banks are expected to unveil their EU leadership soon.  While many banks no longer see the first quarter of 2018 as the point of no return, they will accelerate some aspects of preparation. “By the end of [the first quarter of next year] we will start to have to take decisions around informing clients which then becomes more difficult to unravel,” said Ms Dewar.

From around April, banks will begin engaging with clients and “repapering” them to new EU entities where appropriate. Some banks are planning to move existing client positions to new EU entities from the middle of next year.

Bankers stress that how they move business will depend largely on their clients — how they structure their own international operations after Brexit and where they want to do business. Many banks are in the dark on what their clients are planning.

One senior banker said his expectation was that “stuff will go to New York, more will go to the EU, the UK has always been the loser in this, it’s just a matter of how much”.

Contains many graphics:

https://www.ft.com/content/931b1b1a-df49-11e7-a8a4-0a1e63a52f9c

Britain must obey EU environment rules for post-Brexit air deal: campaigners

December 13, 2017

AFP

© AFP/File / by Danny KEMP | As part of the European aviation area, Britain’s industry has soared, with low-cost EasyJet battling with the UK’s historic carrier British Airways.

BRUSSELS (AFP) – The EU must make Britain’s air industry sign up to the bloc’s environment rules if it wants to keep access to European skies after Brexit, a campaign group warned in a report Wednesday.Airlines should stay in the EU’s emissions trading scheme and follow rules against subsidies to prevent Britain becoming a “carbon haven”, Brussels-based group Transport and Environment said in the report seen by AFP.

The group — which has had meetings with EU Brexit negotiator Michel Barnier’s task force — warned that without a deal British planes could be unable to land in the bloc the day after the UK leaves.

“As London works out its future relationship with the EU, it should be able to keep its current level of access to Europe?s aviation market by agreeing to maintain EU rules designed to curb flying?s environmental impact,” said Kristina Wittkopp, legal analyst at Transport and Environment (T&E) who wrote the report.

The publication of the report comes on the eve of a European Union summit at which leaders are expected to approve the opening of talks on a future relationship with Britain, including on a trade deal.

T&E said Britain should stay in the European Common Aviation Area — which allows planes from EU states and some neighbouring countries to operate anywhere within the bloc — even though it would mean overriding London’s Brexit “red line” of being free from EU law.

British Brexit Minister David Davis said on Sunday that he wanted a Canada-style arrangement between Britain and the EU, with “individual specific arrangements” for sectors including aviation.

As part of the aviation area, Britain’s industry has soared, with low-cost EasyJet battling with the UK’s historic carrier British Airways.

Outside the area, Britain’s airline industry could be forced to set up new bases within EU territory. Without a Brexit deal it would not be allowed to fly there at all.

– ‘Carbon haven’ –

But the group said that if Britain does want to stay in the aviation area, the EU should make it a condition that it also remains in the EU’s emissions trading scheme (ETS), which is aimed at reducing the impact of global warming.

Under the scheme, carbon producers buy allowances to offset what they emit — currently at seven euros ($8.2) per tonne of carbon dioxide — funds from which are put back into measures to tackle climate change.

“Any deal must ensure the UK does not quit the aviation ETS so that these airlines? flights between the UK and Europe will still be required to purchase allowances,” the report said.

Britain should also remain subject to EU state aid rules, which prevent governments giving subsidies to companies, as giving handouts to British airports and airlines would “distort competition and harm the environment by spurring a growth in traffic.”

“To prevent Britain becoming a ?carbon haven? for the aviation sector post-Brexit, it is essential that EU state-aid rules continue to apply to the UK,” the report said.

It added that Britain should also become a paying, non-voting member of the European Aviation Safety Agency, which sets standards for safety and maintenance across the bloc, Transport and Environment added.

by Danny KEMP

EU Prepares to Discuss a Long-Delayed Trade Deal With Britain

December 12, 2017

Following a Brexit divorce accord, European leaders may finally authorize negotiations on the outlines of a future trade deal

By Emre Peker in Brussels and Jason Douglas and Stephen Fidler in London
The Wall Street Journal
Updated Dec. 12, 2017 12:59 p.m. ET

The biggest economic question posed by Brexit—trade—hangs unresolved almost 18 months after Britain voted to leave the European Union.

At the EU’s insistence, negotiations have until now focused on the terms of separation. But the two sides progressed on that last week.

At a summit this week, EU leaders may finally authorize negotiations on the next steps: a temporary transitional arrangement that will immediately follow Brexit in March 2019 and the outlines of a future trade deal.

That remains a crucial unknown for exporters across the U.K. and the European Union, the destination for almost half of British trade.

Mind the Gap

The U.K.-EU Trade Challenge

The delay has allowed the British government to sidestep its own divisions between those who want to hug the EU close and those who want to push it away to allow the U.K. to forge stronger ties with the rest of the world. In the coming week, Prime Minister Theresa May’s cabinet will formally hold its first in-depth discussions on the “end state,” her spokesman said.

Mrs. May has said the U.K. will leave the EU’s single market—its common zone of regulation—and its customs union, which sets uniform external tariffs for imports to the bloc.

Membership of both allows trade between EU members to carry on almost free of border checks. If the U.K. leaves either one without replicating the same arrangements from outside the EU, the likelihood is that a whole new raft of border bureaucracy will be required, creating delays at ports and disrupting international supply chains.

For the EU, Mrs. May’s vision has raised as many questions as they answer. “We need more clarity on how the U.K. sees our future relations, after it has left the single market and customs union,” European Council President Donald Tusk said after meeting Mrs. May last week.

Mrs. May has also said she wants trade with the EU to be free of tariffs and “as frictionless as possible.”

She has ruled out as insufficient a preferential-trade deal on the lines the EU struck with Canada in 2016. That eliminates tariffs on most goods. But it still leaves the need for significant border checks on goods imports to ensure they meet the required standards and provides only limited access to trade in services—hugely important to the British economy.

She has also rejected the so-called Norway model. For most purposes, Norway is part of the EU’s single—or internal—market. But the price is big financial contributions to the EU, acceptance of EU rules without a say in the legislation and swallowing the judgments of the EU courts, all of which Mrs. May has ruled out. Even with all this, Norway has a customs border with neighboring Sweden, an EU member, because Norway isn’t part of the EU’s customs union.

In last week’s deal, both sides agreed that to avoid the re-creation of a customs border between EU member Ireland and Northern Ireland—which is part of the U.K.—the U.K. would, if necessary, “maintain full alignment with those rules of the internal market and the customs union.”

To explain the apparent contradiction with Mrs. May’s statements, Brexit Secretary David Davis said on Sunday that full alignment doesn’t mean the U.K. plans to accept EU regulation post-Brexit. Instead, it aims to create its own regulation that will meet equivalent standards to the EU’s.

“We’ll meet the outcomes, but not do it by just copying or doing what the European Union does,” he told the British Broadcasting Corp.

But trade experts say the EU isn’t ready to accept such a halfway house, except perhaps in some limited areas—particularly since the U.K. has also said a central aim of leaving the bloc is to diverge from EU regulations. From the EU standpoint, frictionless trade is only possible if the U.K. becomes, like Norway, a regulatory satellite of the bloc.

“We want as much as possible [from a trade deal], but there needs to be a balance,” an EU official said. “The U.K. cannot have the rights of Norway but only the obligations of Canada.”

 

European Trade Commissioner Cecilia Malmstrom said last week that even with a comprehensive trade deal, EU trade with the U.K. will suffer from Brexit. “It cannot be totally frictionless because they are not in the internal market,” she said.

Fredrik Erixon, director of Brussels-based European Centre for International Political Economy, said there won’t be a big debate in Europe about cutting tariffs. “It’s the other part about regulations that will be difficult,” he said.

Mr. Erixon said the U.K. could achieve a closer deal than Canada—one that will look more like the Trans-Atlantic Trade and Investment Partnership that the EU and the U.S. were negotiating until President Donald Trump halted talks. That agreement would have gone further than Canada’s by allowing some limited EU recognition of U.S. regulation, and vice versa.

Such an outcome would mean highly restricted access for U.K. financial-services firms to the EU market and a lot more bureaucracy for exporters. It also would leave unresolved the question of how to avoid a new customs border in Ireland.

Write to Emre Peker at emre.peker@wsj.com, Jason Douglas at jason.douglas@wsj.com and Stephen Fidler at stephen.fidler@wsj.com

https://www.wsj.com/articles/eu-prepares-to-discuss-a-long-delayed-trade-deal-with-britain-1513074600