The future of the EU and the UK, post-Brexit

Boris Johnson has left the hospital and will continue his recovery at home. Presumably he is on the mend and now it is time to either finish that trade deal by summer, or get ready to go with WTO rules until the EU can get their priorities straight.

Boris Johnson leaves hospital as he continues recovery from coronavirus

British Prime Minister Boris Johnson left the London hospital where he was being treated for COVID-19, and returned home on Sunday, Downing Street confirmed. A spokesperson said he would continue his recovery at Chequers, the prime minister's country residence in the county of Buckinghamshire, to the north of London.

“On the advice of his medical team, the PM will not be immediately returning to work," they said, adding that he wanted to thank everybody at London's St. Thomas Hospital where he was treated for the brilliant care he has received."​

 

Between Brexit and the loss of revenue to the EU from the UK, and the financial devestation resulting from the government response to the coronavirus, the EU may be on the verge of unraveling. So says French President Macron:

Macron warns of EU unravelling unless it embraces financial solidarity

Emmanuel Macron has warned of the collapse of the EU as a “political project” unless it supports stricken economies such as Italy and helps them recover from the coronavirus pandemic. Speaking to the FT from the Elysée Palace, the French president said there was “no choice” but to set up a fund that “could issue common debt with a common guarantee” to finance member states according to their needs rather than the size of their economies. This is an idea that Germany and the Netherlands have opposed.

The EU faced a “moment of truth” in deciding whether it was more than just a single economic market, with the lack of solidarity during the pandemic likely to fuel populist anger in southern Europe, Mr Macron said. “If we can’t do this today, I tell you the populists will win — today, tomorrow, the day after, in Italy, in Spain, perhaps in France and elsewhere,” he said. “I believe [the EU] is a political project. If it’s a political project, the human factor is the priority and there are notions of solidarity that come into play . . . the economy follows on from that, and let’s not forget that economics is a moral science.”​

From the beginning, it has been clear to many EU leaders that for the EU to survive, it would need to become more than just a free trade zone with a common currency. It would need to become a politically integrated, United States of Europe. Of course the problem is that the cultural differences between the 27 countries are just too great. Most of the people - the non-elites - do not want to be ruled by a central, all powerful EU government.

So while these leaders are probably right about the long term survivability of the EU depending on full political integration, the fact is that there is just not support for this among the people.

President Macron believes that the issue is being forced to a decision right now, as a result of the financial weakness of the poorer countries in the EU and the need for the ability to "issue common debt with a common guarantee". This would amount to the Germans and a few other countries committing to pay this tab, because the other countries are just not going to be able to do it.

The Germans and the Dutch say no. The French say the EU will unravel if they do not. My bet is that they find a way to fudge it again, much to everyone's immense dissatisfaction, and then kick the can down the road for a few more years. But keep an eye on Italy and Greece especially. Because they are really under tremendous pressure financially and something is going to have to give at some point.

 

Trade talks between the UK and the US formally begin on Tuesday. Of course they were actually started months earlier when the leaders of the two nations announced their intentions. The trade offices of both sides have assuredly been working hard to prepare the way and to grease the skids to enable these negotiations to proceed as quickly and effectively as possible.

Britain and US launch talks for 'ambitious' free trade deal

Britain and the United States are to begin negotiations on an "ambitious" post-Brexit free trade agreement on Tuesday. Liz Truss, the International Trade Secretary, and Robert Lighthizer, the US trade representative, will open the talks with a video conference call.

The first round of negotiations will then continue for around two weeks, with around 100 negotiators on each side taking part. Further rounds will take place approximately every six weeks with talks being conducted remotely until it is safe to travel again. At official level, the talks will be led by Oliver Griffiths at the Department for International Trade for the UK and Daniel Mullaney, the assistant US trade representative for Europe and the Middle East.​

Which permanent trade deal will be done first? The one between the US and the UK? Or the one between the EU and the UK. I expect it will be the one between the US and the UK, even though it should be the opposite.

 

It appears that the trade talks between the EU and the UK are not going very well. The EU is still in denial about the UK's status as a sovereign state and is insisting that the UK concede their rights as a sovereign state as part of any trade deal.

The UK, led by Chief Brexit Negotiator David Frost, made it vividly clear today that this would not be happening and that the EU will have to drop its extraordinary colonial requirements for these negotiations to succeed.

British negotiator gives EU two-week deadline to drop 'ideological' stance

Britain’s chief negotiator in the talks over the future relationship with the EU has warned Michel Barnier that he must drop his “ideological approach” within the next fortnight, as the latest round of talks ended in stalemate. The comments from David Frost came as both sides offered a gloomy prognosis for the negotiations on trade, security and fisheries, with little sign of the teams finding common ground.

Frost said there had been “very little progress” in the latest discussions between the two sides, adding that he found it “hard to understand why the EU insists on an ideological approach which makes it more difficult to reach a mutually beneficial agreement”.

There is now a working assumption on the UK side that it will take a summit between Boris Johnson and the commission president, Ursula von der Leyen, in mid-June to break the impasse.​

If this article is correct, then the last chance at a deal will come down to a summit meeting scheduled in mid-June between UK PM Boris Johnson and EU Commission President Ursula von der Leyen.

The EU has pushed as hard as it can and now it is up to them to decide whether they would prefer a standard trade deal with the UK, or would they prefer to trade with the UK on WTO terms. Those are the choices that are available now. It will be one or the other.

Although it looks increasingly unlikely now, it still seems to me that that most likely outcome is a last minute trade agreement agreed to in the fourth quarter of this year.

 

EU Lead Negotiator for Brexit Michael Barnier has presented an open letter to Remainer leaders in Westminster effectively offering a two year extension of the transition period for the trade arrangements. This period was agreed to end on December 31, 2020 in the current Brexit Deal, signed and agreed to by all required parties of both the UK and the EU in January 2020.

Michel Barnier says the EU is 'open to two-year Brexit extension'

In his letter on Wednesday, Mr Barnier said: "Such an extension of up to one or two years can be agreed jointly by the two parties. The European Union has always said that we remain open on this matter. Any extension decision has to be taken by the Joint Committee before July 1, and must be accompanied by an agreement on a financial contribution by the United Kingdom."

Mr Blackford wrote on Twitter: “Thank you Michel Barnier for your letter today confirming the EU is open to a two-year extension to the Brexit transition period. Time is running out. Boris Johnson must put his responsibilities to jobs and the economy first – agree an extension to prevent another crisis.”

The desperate plea from the SNP chief was met with an angry response by many users on Twitter – who in no uncertain terms reminded Mr Blackford what 17.4 million people voted for. One user said: “This is anti-democratic. It’s been four years since the UK voted to leave.”​

SNP Leader Ian Blackford tweeted his welcome of the proposal by the EU lead negotiator and was promptly excoriated by many other posters who are exasperated that this process is not finished yet.

Meanwhile, a spokesperson for Boris Johnson indicated that there would be no extension and that December 31, 2020 would be the end of the transition period, one way or another.

The Prime Minister has already knocked back any suggestion of a new timetable for talks and insisted the UK will honour the December 31 deadline.

Responding to Mr Barnier, a spokesman for the Prime Minister said: "No change to the government's position. The transition period will end on December 31."

Boris Johnson’s chief negotiator David Frost, said it was "firm policy" of the Government to honour the current timetable.
​

Please take note that it is the EU pushing for an extension here and not the UK.

 

Looks like chlorinated chicken may be back on the menu in the UK, as the UK is poised to allow chlorinated chicken imports from the US, albeit at a higher tariff rate than other "higher quality" production methods.

Britain ready to allow import of chlorinated chicken from US

Britain is prepared to permit imports of chlorinated chicken from the US but will slap high tariffs on cheaply-produced food in order to minimise the impact on British farmers. The latest Government proposal for a trade deal with the US is for a "dual tariff" regime that imposes different levels of duty on imported foods, depending on whether they comply with UK animal welfare standards.

Hormone-fed beef, chlorinated chicken and other foods that use techniques banned in Britain will be allowed across the Atlantic, but ministers want to use tariffs to make it uneconomical for US producers to export them to the UK. High-quality foods, such as organically-reared free range meat, would be subject to lower tariffs in order to encourage foreign producers to lift their animal welfare to British levels.​

One other step the British could take would be to require labeling or notifications of 'substandard' products. At the end of the day, the only way that any of these products get imported into the UK is if UK companies place orders to buy them.

 

The fourth round of the trade agreement talks between the EU and the UK ended today, without 'significant' progress. In fact, there has been no progress at all, as they have still not agreed on what they are trying to negotiate.

‘No significant progress’ in Brexit talks

The fourth round of talks on the future relationship between the EU and the U.K. ended Friday with both sides agreeing little progress had been made. "There has been no significant progress this week," the EU's chief Brexit negotiator Michel Barnier said at a press conference.

Negotiators failed to advance discussions on any of the four points that the EU considers most important: fish, level playing field, governance, and law enforcement and security matters. "I don't think we can go on like this forever," Barnier said.

U.K. chief negotiator David Frost also said in a statement that progress "remains limited."

“We are close to reaching the limits of what we can achieve through the format of remote formal rounds," the statement said. "If we are to make progress, it is clear that we must intensify and accelerate our work. We are discussing with the Commission how this can best be done."​

Again, this is all posturing at this point. The EU realizes that it is actually way too soon to be making any concessions yet. The real negotiations will not start until October or November. They have been part of a free trade block for 40 years and have been working on Brexit and the trade and other arrangements for Brexit for almost exactly four years now. They know each other and these issues EXTREMELY well.

Boris Johnson and the Tories also know that the negotiations are not going to begin in earnest until this fall.

Likewise, there will be no extension proposed in June. The 'Operation Fear' mass media and the rest of the Remainer crowd will do what they can to portray this as a pathway to starvation for UK citizens, along with predictions of disasters and deprivations of every other imaginable and unimaginable kind. These people have been wrong from the start and will continue to be wrong.

So it should come as no surprise to anyone that nobody is moving or doing anything in these negotiations at this point.

 

The UK and Japan are also now pursuing trade negotiations, which they hope to have concluded this year:

Japan and U.K. begin trade negotiations with eye on deal this year

Japan and the United Kingdom formally began negotiations Tuesday on a free trade agreement, aiming to clinch a deal by the end of the year when the transition period for the U.K.'s exit from the European Union ends.

The countries will build on an existing Japan-European Union deal, with Tokyo looking to scrap auto tariffs while London has said it wants benefits for its financial services and textile industries. Foreign Minister Toshimitsu Motegi kicked off the talks in a videoconference with Liz Truss, the British trade secretary.​

There is also an apparent desire by the UK to join the 11 nation Trans-Pacific Partnership, which includes Pacific nations like Australia, Canada and Mexico.

The U.K. is also looking to join a free trade pact consisting of 11 Pacific nations including Australia, Canada and Mexico that accounted for about 13 percent of the global economy at the time of its signing.

"A trade deal with Japan will also advance the U.K.'s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which will improve market access for U.K. businesses across the Asia-Pacific region," Truss said in the statement.​

Since the UK is not a "Pacific" nation, this looks a bit awkward. But the UK believes that negotiation a trade agreement with Japan would be a first step towards pursuing membership in the TPP. I guess we will see about that.

 

The EU has today finally accepted that there will be no extension of the transition period beyond the end of this year.

EU finally accepts there will be no extension to Brexit transition period

There will not be an extension to the Brexit transition period, the European Commission said on Friday, before warning Britain it must now get ready to police the border in the Irish Sea.

Michael Gove told Maros Sefcovic, a commission vice-president, that Britain would not ask for a delay to the period beyond the end of the year in a meeting of the joint committee on the implementation of the Withdrawal Agreement.

The Chancellor of the Duchy of Lancaster "couldn't be clearer" in his formal notice to the commission, Mr Sefcovic told reporters in Brussels, "he explained this was the promise that was given to the British citizens in the electoral campaign".

"[He] was very clear, unequivocal on the fact that the UK is not going to seek the extension and because this was the last joint committee before the deadline expires we take this decision as a definitive one," said Mr. Sefcovic.​

So, there will eventually be a trade deal between the UK and the EU. Hopefully, they will get that done by the end of the year. If not, they can complete it at any time after that.

 

The UK announced a three stage process for border checks for goods entering the UK starting on January 1, 2021 through July 1, 2021:

Brexit: full controls on goods entering UK will not apply until July 2021

The government plan involves a phased implementation of controls in January, April and July next year.

In the first stage, full customs checks and tariffs will be imposed on “controlled” goods such as alcohol and tobacco. But importers of “standard” goods ranging from clothes to electronics will have up to six months to complete customs declarations and to pay tariffs, if any apply. However, they will need to keep sufficient records of imports and make preparations for VAT payments. There will also be checks on live animals and high-risk plants.

In April, the health checks will be extended to all products of animal origin including, meat, pet food, honey, milk or egg products with pre-notification of imports required by the authorities.

From July all goods will be subjected to customs declarations at the point of importation and relevant tariffs, which will be determined by the outcome of the current Brexit talks on the free-trade agreement.​

This schedule could be modified with regards to the EU, if a trade agreement is finalized before the end of the year. But for all other countries, this will be the default process while the UK gets its process refined and ironed out.

To be fair, a lot of this has been going on for a very long time. But now the UK will be operating its own processes, independent of the EU, which will result in changes in oversight at a minimum.

 

The UK government has apparently changed its mind and is going to ban Huawei technology in its 5G infrastructure. This is a good move. However, the head of the Chinese Communist Party (CCP) and President of China Xi Jinping is not going to like it.

Huawei faces 5G ban in Britain within months

Boris Johnson is poised to begin phasing out the use of Huawei technology in Britain’s 5G network as soon as this year, in a major about-turn, The Telegraph can disclose.

GCHQ is understood to have revised its previous assurance that the risks posed by the Chinese technology giant can be safely managed.

A report due to be presented to the Prime Minister this week is expected to conclude that new US sanctions on Huawei will force the company to use untrusted technology that could make the risk impossible to control.

The report, by GCHQ’s National Cyber Security Centre, has concluded that the sanctions, which bar Huawei from using technology relying on American intellectual property, has had a “severe” impact on the firm that significantly changes their calculations.​