Brexit Bulletin: And Now to Trade

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It’s the moment Britain has been waiting for since early last year: the chance to talk about what trade ties between Britain and the European Union will look like after Brexit. 

But as discussions on the future relationship open next week, it’s still not clear how much the two sides can achieve – or want to achieve – before Brexit day on March 29, 2019. Even within the British side, there are divisions about what the U.K. should be aiming for. At stake is how much British voters and businesses will know about where they are headed post-split. So far all the talk has been about the divorce, rather than what comes next.

Brexit Secretary David Davis is still pushing for as much detail as possible on the future relationship before exit day. He raised the prospect on Thursday that Parliament could veto the divorce deal if future trade ties aren’t spelled out enough. But some U.K. officials in private say a less specific agreement is a better idea, so as not to bind their hands going into the nitty-gritty negotiation that’s due to take place during the two-year transition starting next March.

Brexit Bulletin: And Now to Trade

EU officials have long said that the agreement on the future relationship will be vague, and, as Ian Wishart wrote yesterday, many EU governments are also coming around to that idea. Remember that EU chief negotiator Michel Barnier raised the prospect earlier this week of Britain changing its mind after Brexit and going for a much closer relationship than the one it’s headed for now. 

The other reason it’s unlikely much will get done on trade this year is a lack of time, and EU officials are focused on the issue of the Irish border. They may have agreed in December that “sufficient progress” had been made on the matter for talks to move on to trade, but there’s still no agreement on how the divorce treaty will be worded on that intractable issue.

Finally, the two sides start trade discussions from distant positions. The EU says Prime Minister Theresa May’s proposals so far amount to unacceptable cherry-picking. While Davis says the individual national interests of the 27 countries on the other side will start to come into play, helping Britain, EU unity seems to be national interest No. 1 even for Britain’s closest EU friends.

Brexit Latest

Going Dutch | Brexit will lead as many as 30 “significant” financial firms to seek a license to operate in the Netherlands, according to the country’s top regulator.

Irish Progress | EU Commissioner Phil Hogan, from Ireland, was hopeful that progress is being made in talks over the Irish border. “The negotiations are intensifying and I’m very satisfied that the U.K. and the European Union are very engaged in this issue,” he said. “It’s precisely because we are at a crunch point that I’m not going to give you an opinion on this matter.”

More Time | Labour lawmaker Geraint Davies argues in the Guardian that the government should seek an extension to the March 2019 exit deadline to allow more time to hash out the future relationship. “The ‘exit, then reach a deal’ framework makes no sense. It is like slamming the door behind you without taking your keys.” We wrote last month about how Brexit opponents are already looking at this option.

Hard Brexit Risk | Irish Central Bank Deputy Governor Ed Sibley told finance firms they still need to prepare for a hard Brexit. Even in the “best-case scenario,” there’s likely to be some major disruption.

On the Markets | The pound strengthened on Thursday to the highest since Feb. 1 and traded at $1.4232 early on Friday. Bloomberg strategist David Finnerty argues sterling may be headed for a new post-Brexit high amid expectations of rate hikes.

And Finally…

As Germany’s new foreign minister gets to grips with his new role, he’s reaching back to his musical youth to help understand the threats Brexit poses for Ireland, Dara Doyle writes.

Speaking to reporters in Dublin on Thursday, Heiko Maas recalled listening to U2’s “Sunday Bloody Sunday.” Germany “understands” the history of Ireland and that everything possible must be done to avoid a “flare-up” in violence, he said.

Standing behind him was Irish Foreign Minister Simon Coveney, beaming. He promised to treat Maas to a trip to Cork, where the German backpacked in his younger days. A beautiful day no doubt.

Brexit Bulletin: And Now to Trade

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To contact the author of this story: Emma Ross-Thomas in London at erossthomas@bloomberg.net.

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