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Grayling's Brexit Bulletin - 5 January 2018

5th January 2018


The BREXIT Bulletin: The year Brexit will begin to bite


Welcome back from the New Year break. 

As we stand, we are at stage 1.5 of the Brexit negotiations.

Transition talks will begin imminently, but looming in the background are the still as yet unsolved issues of the Irish border, the "divorce bill", and citizens' rights.

"Sufficient" progress may have been achieved for the EU, but these issues have not concretely been put to bed, nor was progress deemed sufficient on a number of other 'separation issues' including the status of goods, data protection, and ongoing customs procedures.

Looking further ahead, we can expect trade talks to begin around March, although again labelling them 'trade talks' is a misnomer. The framework of a trade agreement will be discussed, but the details will almost certainly be left to a later stage, most likely during the transition.

In any case, there can be no EU-UK trade deal until the UK has formally left transition and the jurisdiction of the acquis communitaire.

So what will 2018 bring?

Michel Barnier has stated that the Withdrawal Agreement (phases 1 and 1.5) should be agreed by October 2017 to enable sufficient time for the European Parliament to grant its consent, for the sign off by the Member States in the Council, and for the UK Parliament to ratify the text. 

Trade talks will almost certainly continue into transition, but there may already be political agreement on the framework of the future trading relationship by October. 

Transition, when it comes, is likely to be a status quo transition, as requested by the EU. The UK still appears to harbour some illusions about being able to conclude trade agreements with other third parties during this period - but whilst it can launch discussions, it cannot conclude any until it leaves the EU. It will - not for the first time - have to give some ground on this issue.

One element that sneaked under the radar before Christmas was the proposal by the EU that its existing free trade agreements may not apply to the UK during transition.

Given that the UK will in any case be subject to all EU legislation and to the jurisdiction of the Court of Justice of the EU (CJEU), it seems churlish in the extreme to remove it from the FTAs as of 29 March 2019.

Business should be doing all it can to ensure that a status quo transition really is a status quo transition - no strings attached.

It is tempting to assume that 2018 will be the year Brexit is essentially "solved" - but this time next year the Withdrawal Agreement will still have to navigate ratification - no easy task, particularly if Brexit finally does begin to bite in the UK, with business forced to make important investment decisions from Q2 2017 onwards. 

2017 was a momentous year - 2018 will be even more so. We hope you continue to enjoy this year's editions of the Brexit Bulletin, and of course if you have any comments we would be very happy to receive them. 



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 -

Grayling Brexit Unit Events 

TBC January 2018 - Seventh Installment of the Brexit Breakfast Club

Venue: Grayling’s Brussels Office, Floor 4, 46 Avenue des Arts, Brussels 1000

For more information contact Alexander Rowlatt - alexander.rowlatt@grayling.com

 

The highlights from the UK

Difficulties in capitalising on the CAP post-Brexit
On 4 January the UK Secretary of State for Environmental and Rural Affairs, Michael Gove, delivered a speech at the 2018 Oxford Farming Conference in which he outlined his vision for the future of farming in the UK. Gove also took the opportunity to provide additional detail on how he intends for agriculture to contribute to delivering his ‘Green Brexit’.
 
The Secretary of State took the opportunity to decry the failings of the EU’s Common Agricultural Policy (CAP). In particular he targeted his ire at the system of direct payments to farmers on the basis of the amount of land that they own as “unjust, inefficient and a driver of "perverse outcomes”. 
 
Gove’s policy prescriptions for rectifying these deficiencies, which will be detailed in a White Paper that will be published in due course, are as follows. The Basic Payment Scheme (BPS) will be maintained on the current basis in 2019 in England. Post-2019 the Secretary of State is proposing that the largest BPS payments would be reduced first via a cap on the level of payments or through a sliding scale of reductions.

In regard, to the environmental stewardship aspects, Gove has committed to devising a scheme that incentivise the planting of woodland, improvements in water quality, measures to increase biodiversity, and to provide new habitats for wildlife.

 
The Grayling View
The Environment Secretary’s commitments are positive. Indeed, he is correct to highlight the failings of the existing CAP framework, and there are definite opportunities to improve its functioning through domestic legislative policy post-Brexit.
 
What is interesting however is that the EU is aware of these issues and is itself at the start of a revision process that will see the CAP architecture modernised. The European Commission’s Communication on The Future of Food and Farming from November 2017 states that the “fact that 20% of farmers receive 80% of the payments … [is] a reflection of a system of where payments are linked to land which is concentrated among a minority of farmers”. It also states that stakeholder consultation has suggested that the CAP must do more in relation to its environmental elements.
 
What is more striking is that not only has the EU identified the exact same failings -  they are also proposing solutions that are eerily similar to those suggested by Gove. The European Commission’s suggestions include a compulsory cap and/or digressive payments to reduce support to larger farms. On the environment they support the creation of landscape features, measures to improve soil health, the stewardship of water resources, and biodiversity.
 
What this suggests is that perhaps the criticism by Brexiteers that the EU is a moribund, arcane institution are overblown. Perhaps in the end Brexit will just be ‘Brexit in name only’ with the UK following the policy leadership of the EU. After all policy-making at the national level is increasingly based on the search for and emulation of ideas first adopted by other countries.

 



Dates for your diary

18 January 2018 - President Macron to meet Prime Minister May
4 March 2018 - Italian General Election
22-23 March 2018 - European Council Summit
1 July 2018 - Austrian Presidency of the Council
End of October 2018 - Negotiations expected to end
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.

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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