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Grayling's Brexit Bulletin - 28 July 2017

28th July 2017


Time for business to get organised


Is business doing enough to influence Brexit on both sides of the Channel?

To date, probably not.

The UK Government has been allowed to proceed practically unchallenged in its desire to leave both the Single Market and the Customs Union, despite the fact that this will undoubtedly have the greatest impact on business in both the UK and the EU.

Perhaps one could forgive such a low-key response in the early days, as companies preferred to wait and see how the UK approached Brexit.

Now, finally, it seems that the gloves are off. 

Earlier this month, the Confederation for British Industry (CBI) came out in support of remaining in both the Single Market and the Customs Union until a final deal - including a trade deal - is in place.

This would of course require a transition period, which it seems the UK Government is beginning to realise is necessary.

During this week's Brexit Breakfast Club (BBC), hosted by the Grayling Brexit Unit in Brussels, representatives of companies across a range of sectors discussed how business could portray a united front when lobbying on Brexit and whether a new association should be created, around which business could coalesce and pool resources and knowledge.

Time is short. In three months both parties should have agreed on the three top-line issues - citizens' rights, the "Brexit bill", and Northern Ireland.

Even if this date is pushed back further due to German elections, this leaves little time for business to get organised.


The next meeting of the BBC will take place on 5 September. if you'd like to be part of the discussion or want to find out more, please contact Nick.Crosby@grayling.com.  

 



If you have any suggestions about the Brexit Bulletin or want to find out more about a specific aspect of Brexit, please do let us know. Please visit the Grayling Brussels website, follow us on Twitter @TheEULobby, and don't forget to check out our Brexit Papers and Timeline
 



This week's contents:
 

UK Highlights -

EU Highlights - 

Member State Highlights - 

The highlights from the  United Sates:

Our Reads of the Week - 

 



The highlights from the UK:
 

Pro-Brexit MPs publish ideas to ensure UK is ready to leave Customs Union
A group of pro-Brexit Conservative MPs has published a report "Ready on Day One" which lists some key actions that need to be implemented as soon as possible for the UK to be ready to leave both the Single Market and the Customs Union in March 2019. Proposed actions include renegotiating the UK's border treaty with France so that customs can also be carried out on the French side of the Channel, a law to ensure that the UK's sea ports can cope with the introduction of customs checks, and upgrading roads into the UK's Channel ports to cope with possible traffic jams. MPs involved in the report include members of the European Research Group such as arch-Brexiteer Steve Baker and Dover MP Charlie Elphicke.

In a related development, the Government has commissioned the Migration Advisory Commission to advise on the UK's immigration policy post-Brexit. The final version of the report will be published in September 2018. Home Secretary Amber Rudd this week has also tried to reassure UK businesses by promising them a three year transition period to adjust their recruitment practices when it comes to hiring EU nationals, but was later that day contradicted by Immigration Minister Brandon Lewis who said that free movement to the UK would end on the day of Brexit.

The Grayling view
It seems wise to already foresee some of the problems ahead for the UK, particularly in the customs area, once it leaves the Customs Union, and the MPs' report is based on the assumption that there will be no transition period. Whilst it is positive that MPs are thinking ahead, clearly not all their proposals can be fast-tracked and agreed overnight. Environmental groups will surely balk at widening motorways without the proper environmental checks, and getting the customs infrastructure up and running at the ports is a massive task.  

Meanwhile, there still seems confusion within the Government about free movement of people post-Brexit. In any case, this will largely depend on the result of the Brexit negotiations.


The Grayling view: A Green and pleasant Brexit land? 
Michael Gove, a leading pro Brexit Minister, is establishing himself as a policy maverick. He pulled the UK out of the 1964 fisheries agreement to demonstrate his belief in sovereignty, yet is now firmly defending the Paris agreement on climate change. He is openly disagreeing with his cabinet colleague Liam Fox on any future trade deal with the USA, refusing to allow any lowering of food standards and the importation of chlorinated chicken - but he defends Brexit as a means to throw off European regulatory shackles.

Gove’s speech
‘Delivering a Green Brexit, safeguarding our future’ was long on the imagery of environmental destruction and the wish to be a global environmental leader, but short on the policies or the mechanisms to deliver them. Gove supports science as a root to policy - but who can be against evidence? He invokes the CAP (Common Agricultural Policy) and CFP (Common Fisheries Policy) as bad policies, forgetting that environmental damage also occurs in other less managed systems. There are no easy answers. Gove sees the benefit of "international co-operation to deal with climate change" yet is happy to leave one of the most sophisticated and effective set of international organisations currently addressing the challenge.
 
What this signals is a lack of clarity or detail at the heart of British European and environmental thinking. Clients are well advised to examine Gove’s agenda with meticulous care and to demand evidence- not literary flourishes- in building his policy.

 


 

 

The highlights from Brussels:

Commission says it won't ask British officials to resign
European Commissioner for Budget and Human Resources Günther Oettinger this week said that the Commission will not be asking its British employees to resign, but admitted that some UK staff working in DG Trade and Heads of the EU's Delegations could be moved from their positions. However, he did confirm that British officials in Director-General and Deputy Director-General roles could remain for the time being.

The Grayling view

Good news for British Commission officials - but good news too for lobbyists, particularly those who have built up relationships with British officials within the Commission. Unless they work in DG Trade, these individuals will still retain some influence within the institution, possibly even after Brexit. In time, of course, it is likely that British officials will be phased out altogether, but in the short-term at least, there will be minimal change.



Negotiating Citizens’ rights: baby steps and more toys in the pram
There has been some limited progress on this key topic; some hardening of positions; and more complications.

Both sides have agreed a joint
‘technical note’ which establishes areas of (dis)agreement.  Helpfully, issues are colour coded to guide even the most distracted of negotiators to the important bits. Meanwhile, the European Parliament’s Brexit taskforce reiterated its opposition to the UK position in its dialogue with Mr Barnier on July 25th. It reinforced its messages: “The European Parliament specifically seeks to fully safeguard the rights concerning family reunion, comprehensive healthcare, voting rights in local elections, the transferability of (social) rights and the rules governing permanent residence ... Simultaneously, we seek to avoid an administrative burden for citizens and want proposals which are intrusive to people’s privacy off the table, e.g. proposed systematic criminality checks.” The Parliament will also itself judge when ‘sufficient progress’ has been made in phase 1 to move onto phase 2. Previously this decision rested solely with the Council and Commission. The issue was further complicated when Croatia entered the fray, seeking behind the scenes to allow its citizens full freedom of movement rights in advance of the UK’s departure. Currently Croatian citizens are limited in their rights as part of a phasing in of their EU membership.

The Grayling view

It always helps to know from where one is starting. However, the European Parliament has reinforced its position, and the Commission has not moved. Croatia adds another wrinkle, but interestingly a cooperative step has been agreed, namely the joint note. It will be important to see if this can be replicated with the issue of the financial settlement. Little by little the UK is succumbing to the process of the Commission, and if you control the process, one often controls the outcome.

 

 

The highlights from the Member States:

Ireland gets to grips with the bleak impact of Brexit
In a recent Senate report to the Irish Parliament entitled “Brexit: Implications and Potential Solutions”, the Chairman of Ireland’s Brexit Special Select Committee, Senator Neale Richmond, didn’t mince his words. “Put simply, for Ireland, the decision of the people of the United Kingdom to vote to withdraw from the European Union is a bad thing.” The UK’s withdrawal could have an impact of up to 3.5% of Ireland’s GDP, totalling €9 billion in a precarious period of shaky economic recovery. The report also stated that the “hardest Brexit of all” would be “no deal”, where political inflammations and egos on both sides lead Britain to simply walk out the door with no divorce agreement in place.
 
A renowned Irish diplomat Ray Bassett also posits that an Irish exit from the EU is actually not implausible. While political rhetoric in Ireland is consistently pro-EU, there are those who believe that remaining with the UK in a customs and free trade area, while negotiating a trade and investment agreement with the remaining 26 Member States, should be considered a viable option depending on how the talks progress.
 
The Grayling view

It’s often noted that the implications of Brexit are greater for Ireland than any other EU Member State, since economically, historically, culturally and geographically, the UK remains Ireland’s most important partner.


However, the far-reaching impact of the UK’s departure is only starting to come to light, with a dawning, uncomfortable awareness that it will affect almost every layer of Irish politics, economy, and society. From dairy exporters whose road freight to mainland Europe pass through the UK (almost 80% of exports) to the possibility (however slim) of a full-blown Irish exit from the EU, the outlook is not pretty.


Aside from the mammoth economic challenges Brexit raises, Irish lawmakers are kept awake at night by the contentious issue of what to do with Northern Ireland. A “hard border” would reignite decades of conflict, which is still present in certain areas of the North. As Bassett puts it, “Throw in border checkpoints and it is hard not to envisage a further deterioration”.
 
Either way, Ireland has perhaps more at stake than any other EU country and is therefore expected to be an active participant in the withdrawal process, both in London and Brussels.


 



The highlights from the  United States:

Chlorinated chicken - a cipher for other deeper issues in the bilateral relationship
In a confusing week for UK-EU relations, International Trade Secretary Liam Fox was challenged to eat a chlorinated chicken after he appeared to dismiss concerns that a UK-US trade deal would see such products enter the UK market. The next day, Environment Minister Michael Gove appeared to contradict Mr Fox, saying that chlorinated chicken would be banned under any bilateral trade deal. 

Aside from chicken products, US President Donald Trump waded in on his Twitter account, saying that he was "working on major Trade Deal with the United Kingdom", adding that the EU should "STOP" its protectionism.

The Grayling view

This is an inauspicious start to the brave new world of UK-US trade relations. Chicken was the headline, but this goes beyond poultry concerns. After all, even if chlorinated chicken is banned, other products which are banned in the EU may end up being part of a UK-US trade deal, which in turn would necessitate tight customs controls at the UK-EU border. Amongst others, this would also surely mean a return to a hard border on the island of Ireland. So there is more to this than chlorinated chicken. 

 



Dates for your diary

w/c 28 August 2017 - Third Negotiating Round
5 September 2017 -
GBU Brexit Breakfast Club
7 September 2017 - European Union Withdrawal Bill Second Reading
11 September 2017 -
European Union Withdrawal Bill Second Reading - Vote
w/c 18 September 2017
- Fourth Negotiating Round
24 September 2017 - German Federal elections
28 September 2017 - GBU Workshop - 'The Weakest Link? Brexit and your Supply Chain'
w/c 9 October 2017 - Fifth Negotiating Round
19-20 October
- European Council Summit
1 January 2018
 - Bulgarian Presidency of the Council
1 July 2018 - Austrian Presidency of the Council
End of October 2018 - Negotiations expected to end
Autumn 2018 - Spring 2019 - Possible Scottish independence referendum
1 January 2019 - Romanian Presidency of the Council
March 2019 - UK expected to leave EU

 


 

Grayling Brexit Unit

Our Grayling Brexit Unit brings together the very best consultants from across the Grayling network and includes those who have direct experience of working alongside the leading political figures charged with negotiating Brexit in London and Brussels.

The Grayling Brexit Unit is here to support, guide and inform the success of your business and identify how the political dynamics will change as a result of Brexit in both London and Brussels. We are your Brexit experts.

No task is too big, too complex, or too ambitious - please contact Robert Francis Tel +32 2739 47 34 (robert.francis@grayling.com) in our Brussels team or Jonathan Curtis (Jonathan.Curtis@grayling.com) in London for more information, and check out our brochure.


 


Robert Francis

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