Brexit Bulletin: A Concession and a Nudge
(Bloomberg) -- Today in Brexit: The EU is offering the U.K. a say in trade policy if it agrees to stay in the customs union, seeking to address one of the disadvantages of the idea.
As the debate about staying in the customs union rages, the European Union has dropped a strong hint that it would be prepared to make staying in the bloc’s trading regime a bit more attractive.
The problem with the customs union is that Britain would essentially outsource its policy on goods trade to the EU. That would mean that in future trade deals between the EU and other countries, the U.K. would be at risk of having its interests sold out by EU negotiators who aren’t too concerned about defending Britain. Turkey is in the customs union and has many complaints.
But the EU would be prepared to offer the U.K. a say in trade policy by setting up a U.K.-EU dialog, according to an EU official who spoke on condition of anonymity. The EU would be pragmatic in its approach to such a setup, the official said. This could go some way toward easing some of the concerns about staying in, although the U.K. still wouldn’t have a seat at the negotiating table when the bloc strikes its next trade deal.
The offer echoes comments made by EU officials back in February, when Labour leader Jeremy Corbyn came out in favor of staying in a customs union on the condition that the U.K. would get “a say in future trade deals.” EU officials said the bloc would probably accept that request, Ian Wishart reported at the time.
Prime Minister Theresa May meets with her Brexit war cabinet on Wednesday and the future relationship will be on the agenda. She’s under increasing pressure to stay in the customs union, with business, some people in her government, and probably a majority of Parliament in favor of it. The EU is also keen, and its willingness to compromise a bit makes that even clearer. Staying in would also help solve the Irish border issue, which at the moment is the biggest obstacle to an orderly divorce.
As May prepares for the meeting, it’s worth noting that none of the likely suspects in her Cabinet has publicly threatened to resign if she stays in the customs union. But there’s plenty of noise from elsewhere in her party. Tune in for Brexit Secretary David Davis at 9:15 a.m. at the Brexit Committee – they tend to be pretty good at extracting news from him.
- Airbus warned that Brexit might mean Britain loses out on future contracts, and said it’s in talks with suppliers about stockpiling components to guard against Brexit-related delays.
- The European Commission spurned U.K. calls for a legislative fix to the threat Brexit poses to trillions of dollars of financial contracts, telling banks and insurers to solve the problem themselves.
Brexit in Brief
Unprepared | The Department for Business, Energy and Industrial Strategy, one of the key ministries affected by Brexit, has made “virtually no attempt to re-order its priorities” to prepare for the divorce, according to Parliament’s Public Accounts Committee. The department “appears to be operating in a parallel universe where urgency is an abstract concept,” committee chair Meg Hillier said. “We have grave concerns about this apparent complacency.”
Lloyd’s of Brussels | Lloyd’s of London, the world’s oldest insurance market, has started hiring for roles in finance, operations, compliance, HR and underwriting for its Brussels subsidiary to prepare for Brexit.
Verhofstadt’s Concerns | European Parliament Brexit coordinator Guy Verhofstadt said EU lawmakers have many “questions and recommendations” for the British government about how it plans to register EU citizens in Britain. The Guardian reports that the app created for the process won’t work on iPhones, causing consternation among MEPs who met the Home Office team.
‘Cretinous’ Policy | Arch-euroskeptic Jacob Rees-Mogg called the government’s proposal for a post-Brexit customs agreement with the EU “cretinous” and accused those who want to stay in the existing customs union of trying to reverse Brexit. He questioned Theresa May’s commitment to Brexit, and also called for a tax cut for high earners and said he was intrigued by Donald Trump’s tax policy.
Farage for Rees-Mogg | Nigel Farage was delighted by Rees-Mogg’s comments and is now backing him for prime minister. In an article in the Telegraph, Farage slams May for her lack of enthusiasm for Brexit and warns the Tories will lose the next election if they backtrack on the customs union.
Scottish Fight | More trouble north of the border for May. Scottish First Minister Nicola Sturgeon said she couldn’t allow her government to sign off on a proposed government amendment to the EU Withdrawal Bill in the House of Lords that would see devolved powers returning to London from Brussels for up to seven years. But the Labour-led Welsh Assembly administration said it would accept the government’s amendments, Kitty Donaldson writes.
Coming Up | David Davis speaks to Brexit Committee at 9:15 a.m., Prime Minister’s Questions at noon, Chancellor Philip Hammond speaks to Treasury Committee at 4 p.m., Theresa May chairs her Brexit war cabinet. In Brussels, representatives of the EU27 meet to discuss the Brexit state of play.
©2018 Bloomberg L.P.