Theresa May, U.K. prime minister, speaks to the media as she arrives for a European Union (EU) leaders summit in Brussels, Belgium. (Photographer: Jasper Juinen/Bloomberg)

EU Offers Muted Reaction to May's White Paper: Brexit Update

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Prime Minister Theresa May has published her long-awaited proposal for the future relationship between the U.K. and the EU, setting out proposals for a softer Brexit than she first planned. Tory euroskeptics are furious that the plan doesn’t deliver their vision of a clean split from the EU.

Differing EU Views on Equivalence Proposals (2:47 p.m.)

Germany’s finance minister isn’t in the mood to offer the U.K. much when it comes to single market access for banks. The U.K. is hoping for a super-charged equivalence regime that would include “reciprocal and close cooperation,” according to the white paper.

Entering a meeting in Brussels with his euro-area counterparts, Olaf Scholz said “the European Union must take its own decisions, independently, within the democratic structures that we’ve established.”

But EU countries don’t all agree on this. Some countries, such as Luxembourg, want to give the U.K. a far better deal. Equivalence “needs to be widened and enhanced” for “smart access on both sides,” said Luxembourg Finance Minister Pierre Gramegna, arriving for the same meeting.

There’s also more work to be done on reaching a withdrawal agreement, warned the European Parliament’s Brexit group. That deal includes the “backstop” plan to keep the Irish border invisible.

The group, which includes lawmakers from across the political spectrum, “urged the U.K. government to clarify its positions on the backstop so that the withdrawal agreement can be finalized as quickly as possible.” It also said there is “no space for outsourcing EU’s customs competences,” underscoring where the fight is likely to be focused in the weeks ahead.

Aerospace Body Says White Paper a Good Start (2:11 p.m.)

Aerospace and defense lobby group ADS noted the white paper as “a good step” toward assuaging industry concerns, in particular the commitment to a transition period and a free-trade area. It cautioned that time is ticking to determine the details needed to avoid major disruption.

Meanwhile the EEF, an industry group which represents manufacturers, said it’s “pleased with the focus on a simple movement of goods, the protection of the integrated supply chain and a lack of friction at the border.”

Business Lobby Wants Faster Pace in Talks (1:56 p.m.)

The British Chambers of Commerce, one of the U.K.’s biggest business lobby groups, chided the government for taking so long to produce its strategy. What’s needed now, it said, is “momentum and pace” from both the U.K. and EU to “translate ambition into answers to the real-world, practical questions that businesses face.”

“It is incumbent on the two sides to work pragmatically and productively on the nuts-and-bolts detail of the future relationship over the coming weeks, drawing on business experience and expertise,” BCC Director General Adam Marshall said.

Meanwhile Stephen Martin, director general of the Institute of Directors -- which represents 30,000 business people from all sizes of companies -- called for more clarity on VAT, as well as on workers’ movement.

“The government is right to prioritize an ambitious scheme on labour mobility with the EU, but businesses need to work from concrete proposals,’’ Martin said in a statement.

TheCityUK: Brexit Plan ‘Regrettable, Frustrating’ (1:39 p.m.)

Miles Celic, chief executive officer of TheCityUK, which represents the financial services industry, said it’s “regrettable and frustrating’’ that the principle of mutual recognition has been dropped from the government’s plans.

“In hundreds of discussions across the EU, the industry has never come across an unanswerable technical or commercial barrier to this approach,’’ he said in a statement. “The EU’s objections have always been political.’’

EU’s Barnier Gives Muted Response (1:36 p.m.)

EU chief Brexit negotiator Michel Barnier, who will be meeting Brexit Secretary Dominic Raab next week, gave no immediate view on the merits of the British plan. “We will now analyse the Brexit White Paper” with other EU member states, he said on Twitter.

The EU’s offer is for an “ambitious” free-trade deal, plus joint working on other issues, including security, he added. “Looking forward to negotiations with the U.K. next week.”

The EU hasn’t thrown out May’s plan on Day One -- but it’s not a particularly encouraging message.

Rees-Mogg Won’t Support Government Plans (1:25 p.m.)

Jacob Rees-Mogg, the de facto leader of pro-Brexit Conservative lawmakers, said he would not vote for the government’s plans because they don’t respect the wishes of the British people.

“This is the greatest vassalage since King John paid homage to Phillip II at Le Goulet in 1200,’’ Rees-Mogg said in a statement. “There are very few signs of the prime minister’s famous red lines.

Rees-Mogg said the white paper would make Britain subject to EU laws with no say in their creation. The fact that the U.K. is seeking to collect and hand over EU taxes “is an unwarranted intrusion into the control of our border,” he said.

“It is not be something I would vote for, nor is it what the British people voted for.”

Meanwhile pro-Brexit Conservative lawmaker Marcus Fysh tells Bloomberg: “This
white paper is beyond pathetic -- it’s not even WTO-rule compliant. What a load
of garbage.”

Former Tory leader Iain Duncan Smith also attack the proposals. “Having voted to leave, I don’t want to half-leave,” he said.

Raab: EU Must Respond to U.K. ‘Good Will’ in Kind (13:15 p.m)

In the House of Commons, the Brexit Secretary Dominic Raab says the EU should show the same spirit of “friendship” that Britain is demonstrating in its approach to Brexit. But if the bloc fails to do so, the U.K. will be ready to leave without a deal, he warned.

Speaker Suspends Sitting and Complains to Raab (12:56 p.m.)

In the House of Commons, where Brexit Secretary Dominic Raab was supposed to be announcing the policy, the sitting had to be suspended for five minutes after complaints that members of parliament hadn’t got copies of the document. In extraordinary scenes, members ran out when they heard that it was available, and then came running back in carrying boxes of the document, and handing them out to colleagues while Raab was trying to speak.

John Bercow, the Commons Speaker, was clearly irritated, telling Raab it’s a source of “considerable unhappiness” that MPs didn’t get sight of the proposals sooner.

It’s a sign of trouble to come that Raab doesn’t seem to have much support in the chamber. Parts of his speech that he might have hoped would raise cheers from Tories behind him - on leaving the EU’s customs union and single market - were heard in silence.

May Unveils Soft Brexit Plan, But Banks Cut Loose (12:48 p.m.)

Theresa May released the most contentious document of her two-year premiership on Thursday, vowing to push through her plan to keep the U.K. closely tied to the European Union single market after Brexit.

Despite the resignation of two pro-Brexit Cabinet ministers and a growing rebellion from within her own party, May published a 98-page “white paper” setting out in detail the deep trading partnership the U.K. wants with the EU.

At its heart is a proposal for a new U.K.-EU “free trade area,” with interlinked customs regimes, and identical regulations for industrial goods and agri-food. While there would be “no tariffs on any goods,” the U.K.’s vast services sector will suffer significant disruption. Banks in particular will lose their current access to the EU market, as the government gives up on its earlier plan for both sides to recognize each other’s regulations.

May faces a huge task trying to persuade EU negotiators to accept that the proposals are viable, while also keeping her Conservative party and Parliament on side. Time is running out to reach an exit agreement by the self-imposed October deadline, and May’s plan has nothing new about the critical issue that’s holding up progress: avoiding customs checks at the border with Ireland.

Even U.S. President Donald Trump took a view. Hours before he is due to touch down in the U.K., he lobbed a verbal hand grenade at his host, saying May isn’t giving voters the Brexit deal they wanted.

“I would say Brexit is Brexit,” Trump said Thursday at a news conference at the NATO summit in Brussels. “The people voted to break it up so I would imagine that’s what they would do, but maybe they’re taking a different route -- I don’t know if that is what they voted for.”

May appealed to European negotiators to “engage” with her blueprint in the same spirit of respect that she said her government was taking toward the EU’s own principles and red lines.

“Our proposal is comprehensive. It is ambitious. And it strikes the balance we need -- between rights and obligations,” May wrote in the foreword to the white paper. “It would deliver a principled and practical Brexit that is in our national interest, and the U.K.’s and the EU’s mutual interest.”

The U.K. has also set out a complicated structure for supervision of the new relationship that would allow the two sides to discuss rule tweaks and include a mechanism for solving disputes.

The British prime minister, European leaders and ministers would establish a “governing body” to set the direction of the future relationship, while a joint committee of officials would provide the day-to-day running of the agreement.

Crucially, in a move that could anger Brexiteers, if there’s a dispute over the interpretation of EU rules that the U.K. has agreed to adhere to, the European Court of Justice could have the final say.

©2018 Bloomberg L.P.