After Brexit, London and Brussels to negotiate property sharing

BREXIT – In direction of the exit and past. Between the UK and the European Union, the rupture is well and truly consummated. This January 31, the triggering of article 50 will likely be irreversible and can signal the official finish of the partnership between London and Brussels, leading to its following a one-year transition period. However as after a breakup, it’s obligatory to find out how the 2 events divide up the property or the custody of the youngsters.

As of February 25, the UK and the EU will meet for the primary time to agree on the phrases of the longer term relationship that they intend to conduct on the business, monetary and ecological ranges. All of this should be as clear as attainable earlier than December 31, 2020, the date on which European guidelines will stop to use throughout the Channel.

Everybody thus begins to develop their arguments to maneuver at greatest within the negotiations. “The final declarations of Jean-Michel Barnier –chief negotiator for the EU– and Ursula Von der Leyen mark a turning level. They tightened the sport and began publishing sector by sector, the totally different chapters of the regulatory framework for these negotiations. The European place is kind of clear, there isn’t a query of selecting within the sweet field, the laws that please or not. It's all or nothing. Which isn’t actually the place of Boris Johnson who relatively desires to barter sector by sector ”, particulars Elvire Fabry senior researcher on the Jacques Delors Institute, in control of commerce coverage, contacted by The HuffPost.

The time allotted being fairly brief – solely “eight to 10 one-week negotiation cycles” may very well be organized, “or round forty days of pure negotiation” in line with a European source- the precedence stays the institution of an settlement free commerce which might not present for extra customs taxes or quota logic.

The European Union reveals its prerogatives

As a part of the longer term commerce settlement, the first European elements printed by the European Fee on 14 and 20 January throughout working seminars clearly present the “knot of the file for Brussels”, that of the “stage taking part in subject”. A reasonably technical time period which may translate into honest competitors points. “To know this notion, it’s a must to perceive the one market as a giant hub with social, financial, environmental requirements, guidelines for public subsidies, and so on. They’re those that guarantee honest competitors between all of the Member States ”, explains Elvire Fabry.

For the EU, it’s not attainable to have a neighbor at his door whose habits would jeopardize the tranquility of the neighborhood to the purpose of inflicting property costs to spike. If, for instance, the UK have been to maneuver in the direction of a drastic deregulation of greenhouse gasoline emissions, by advantage of its proximity, the EU would inevitably be affected. For the latter, it is among the foremost points of those negotiations, that its British neighbor doesn’t decrease its requirements and preserve an alignment with Brussels.

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On this sense it’s above all subsequently regulatory negotiations that promise to be “non-financial”. The extra the 2 events diverge, the extra the results will likely be customs, illustrates Catherine Mathieu, economist on the OFCE and specialist in Brexit, additionally contacted by The HuffPost, taking the instance of phytosanitary requirements. “Within the absence of an settlement, the UK may decrease its requirements, for instance phytosanitary, we consider chlorinated rooster … It will be obligatory to bolster the customs controls on the products, to hold out controls, as a result of the European Union doesn’t solely permit merchandise that adjust to the requirements it has set to enter its market ”. So many “frictions” which might entail a value for commerce which in tremendous would have an effect on business gamers and customers. “Within the meals sector, the UK has been saying for 3 years that it’s dedicated to requirements, however on this case there isn’t a written document of this dedication,” factors out Elvire Fabry.

Wager that this query of stage taking part in fields is the spine of future negotiations, the EU couldn’t afford to have at its door a rustic that’s training wild social dumping and would threat jeopardizing the attractiveness of the one market. A low threat, nonetheless, notes Catherine Mathieu: “Inside the EU itself, there are only a few guidelines that forestall a rustic from reducing its taxation, as the instance of Eire reveals. I don't see the UK doing even much less, ”she says.

“Lengthy stay the free UK”.

What about Boris Johnson? The Prime Minister has campaigned for Brexit on the theme of “Take again management”. In contrast to its predecessor, whose negotiated settlement offered for respecting the stage taking part in fields, Bojo will not be inclined to line up sine die. Nevertheless, it shares an goal with the Europeans: a zero quota settlement and nil customs tariff. As a result of above the 2 sides nonetheless hover the concern of an exit with out settlement which might power to use the principles offered by the World Commerce Group, with customs duties which exceed 50%. Suffice to say, an economic earthquake for the area.

Confronted with this free commerce settlement, many discuss with the precedents on this space, just like the Canadian mannequin illustrated by CETA, or the Singaporean mannequin, ie aggressive competitors with robust state support, and deliberate progress. . “A Singapore on the Thames will not be an choice. Tax havens are typically small international locations. Boris Johnson is unable to chorus from taxing British companies. The UK already has a 19% company tax, however it should be capable of go away room for budgetary maneuver. We may relatively concern regulatory competitors and the strengthening of monetary ties between the UK and former colonies which have turn out to be tax havens ”, explains Vincent Vicard, economist at CEPII, joined by The HuffPost.

The British Prime Minister has often talked about an settlement on Canadian mode which might be used. This was contained within the political declaration related to the Brexit agreement negotiated last fall.

Based on Vincent Vicard, “a traditional free commerce settlement would price three% of GDP per capita in the UK and zero.four% in France”.

Fishing and agriculture: France performs massive

As for a wedding beneath the group of products, every additionally seeks to get well their precarés. On this respect, the UK has the benefit of negotiating just for itself when Brussels has to answer the considerations of its 27 member international locations.

Sure sectors would be the topic of particular negotiating tables, “a dozen” will likely be opened “in parallel”, confirmed Michel Barnier.
Catherine Mathieu identifies two sectors that may have precedence: fishing and finance. The first subject particularly concerns France who like Denmark has requested that negotiations be superior by July 2020.

France is the first country to which the United Kingdom exports its fishery products (35 to 40%) which represents 500 million euros per 12 months. On the similar time, many French fishermen fish in British territorial waters that are notably filled with fish. “For the Norman and Breton fishermen in small boats, who fish within the French coastal areas, nothing modifications. For them, the argument would relatively be that the ardent British fishermen amassing scallops can now not come into French waters. However for big vessels, if the UK closes entry to its territorial waters, this might characterize as much as 80% decline in fishing, “analyzes Catherine Mathieu.

To that is added a political dimension: British fishermen overwhelmingly voted in favor of Brexit. The EU, for its half, has already offered aid funds. Nevertheless on this topic, the 2 events ought to converge in the direction of a consensus.

On the agricultural query extra broadly, the stakes are simply as excessive for France since the UK constitutes the third shopper of French agriculture and the nation with which Paris posts the most important bilateral surplus – 12 billion euros in 2018 , in line with the most recent annual information out there from Bercy. The nation's self-sufficiency fee is round 60%.

The dairy sector particularly ought to be notably attentive to non-tariff boundaries. For third international locations, the latter can quantity to a customs obligation equal to a number of tens of further percentages, in line with Vincent Vicard. “We will attenuate the impact or cut back them, however for that we want mutual recognition”.

Nation home and household jewellery

Relating to monetary providers, representing a necessary a part of British financial exercise, London intends to barter its little bit of fats. “Leaving the EU, the UK loses monetary passports. Contained in the eurozone, main monetary facilities hope to get well a part of town's exercise. Which we are going to do every thing to keep away from throughout the Channel clearly. The EU may settle for equivalency agreements over a brief interval of 1 12 months. These agreements would preserve entry to the EU market, however with annual renewals, the EU may tighten situations if London tries to decontrol, “mentioned Catherine Mathieu. The truth is, monetary establishments haven’t put all their eggs in a single basket and have opened branches and subsidiaries in a number of euro space international locations since 2016.

On the problem of providers total, due to “its geographic location, this is a crucial subject for the UK”. “The substitution of the European market by different international locations will not be apparent,” analyzes Elvire Fabry.

Lastly, the automotive sector working on a powerful interdependence between European international locations the place it generates practically 13.eight million jobs, finds itself notably uncovered in these negotiations. In a statement launched final September, European auto business leaders reiterated the significance of a deal for his or her sectors, estimating the price of a tough Brexit at 5.7 billion euros.

“The vehicles of the producers Bentley and Aston Martin or sure fashions of Nissan are assembled in the UK, however the parts are made in several international locations, particularly in France or in Germany”, illustrated for AFP, Isabelle Mejean, economist at CREST -Ecole Polytechnique, additionally citing the robust interdependence within the aviation sector. The equation will likely be excessive stakes notes Ana Boata, director of macroeconomic research at Heuler Hermes: “Worldwide automobile producers who had arrange their factories in the UK will now not have entry to the one market and will subsequently be tempted to settle elsewhere. On the similar time, British taxation is extra engaging and its labor market extra versatile ”.

Along with all these financial challenges, there are additionally these of safety cooperation. Which might hardly bear a sudden break. Gilles de Kerchove, EU coordinator for the struggle towards terrorism, wished to be reassuring on this topic. “The trade of knowledge will not be impacted,” he assured AFP. Collaboration between departments is already going down “outdoors the institutional framework of the Union” and non-EU states, Norway and Switzerland, are taking part, he mentioned. The UK may also be represented on this framework after its departure from the EU on January 31.

Boris Johnson will give a speech through the month of February detailing a little bit extra his ambitions for the longer term relationship. Within the virtually unanimous opinion, it’s the European Union which retains the benefit for the second, even when the tenant of Downing Road can be tempted to compete with the USA. “The logic of the USA is especially aggressive, it won’t essentially be a worthwhile technique,” mentioned Elvire Fabry. Paris additionally warned on Wednesday: the toughest half stays to be carried out.

See additionally on The HuffPost: “Be my visitor” launches Macron to Johnson for post-Brexit deal