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Grayling's Brexit Bulletin - 12 January 2018

12th January 2018


The BREXIT Bulletin: Brussels gets back to work on Brexit 


After the quiet of the New Year holiday, Brexit was back with a bang in Brussels this week.

Diplomats had the opportunity to discuss the Commission’s proposal on transition, with some countries already calling for it to be extended beyond 31 December 2020.

This deadline put forward by the Commission fits nearly with the end of the current EU budgetary period, but is shorter than the two years called for by Theresa May and much shorter than what business is hoping for.

Meanwhile, Michel Barnier gave a speech in which he laid out the EU’s negotiating stance as it stands, reiterating that "the only model possible is a free trade agreement.” 

Financial services could be included in this agreement within the context of “regulatory cooperation” but that’s as far as it will go – at least for now. 

Finally, some Brexiteers were in town this week, although curiously not all on the same day.

Nigel Farage was the first to meet Mr Barnier and left saying that the UK should have a second referendum to settle the matter for good – for which he was heavily criticised by UKIP. 

Could Farage and the Liberal Democrats join forces in calling for a second referendum?

The next day there arrived UKIP MEP Steven Woolfe, Digby Jones, international businessman and member of the House of Lords, Labour activist and entrepreneur John Mills, and John Longworth, a former head of the British Chambers of Commerce and co-chairman of the campaign group “Leave Means Leave”. They appeared to be calling for both the importance of a trade deal, as well as reminding the EU negotiator that the country could still walk away from the talks.
 
The next few months are key for Brexit (aren’t they all though?) 

Negotiations with the UK on transition will take place next month, with the aim of being finalised at the March EU Summit to pave the way for trade talks.

One would expect the EU to eventually agree to lengthen the 20 month transition, but in return for the UK being subject to the full EU body of law, and of course ECJ jurisdiction.

 
Indeed it should be remembered that Barnier’s so-called tough negotiating stance is just an opening. The EU will have to give some ground somewhere, but only if the UK also comes down from the clouds and begins to acknowledge that transition can only be a continuation of the status quo but without political representation (although this latter point could also be up for grabs).

The ebb and flow of negotiations mean that both sides’ positions will move – slightly for the EU, significantly more for the UK – in the coming months.
 



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:

 

The view from the UK

The view from Brussels

The view from Poland

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 view from the UK 

May's reshuffle indicative of her weakness
Theresa May has, as expected, marked the beginning of the Parliamentary year with a two-day reshuffle. It was doubtless intended as a sign of strength following an agreement on Phase One of the Brexit negotiations and a “successful” Budget. However, wall-to-wall negative press coverage has ensured that this reshuffle will be remembered as indicative of her weakness, with accusations of poor communication from No 10 as papers were forced to back-track on pre-briefed speculation. The outcome has been a renewed scrutiny of the Prime Minister and speculation about her longevity.
 
In the Cabinet, there was no change in the main Offices of State and similarly prominent Brexiteers Liam Fox and Michael Gove remain in place. In light of the widely reported troubled relationships which May holds with colleagues such as Philip Hammond and Boris Johnson, this clearly indicates the imperative placed on continuity in the key Brexit departments. However, further evidence of the PM’s weakness was made evident when Health Secretary Jeremy Hunt refused to move to the Department for Business, Environment and Industrial Strategy (BEIS). He instead walked out of the meeting with an increased Ministerial remit of social care. The PM was also reportedly unable to move Greg Clark from BEIS forcing a reorganisation of other changes, culminating in Justine Greening challenging Theresa May to leave her in place at the Department for Education or she would leave. Greening walked in a chain of events that left party members bemoaning the fact that a northern female in a same-sex relationship who represents a marginal seat had left.
 
At a junior ministerial level, the stars of the future from the 2015 and 2017 intake have predictably been given their first proper rung on the ladder. Appointees include Lucy Frazer, Rishi Sunak, Kemi Badenoch, Oliver Dowden and Suella Fernandes. These appointees were also designed to evidence the diversity of the Conservative parliamentary party, although some sceptics have noted that of those “old, pale, male and stale” Ministers who have been moved on, it is those that represent remain-voting areas and would be most likely to cause trouble on the backbenches who have survived.
 
The logic of some moves is clear – Dowden’s experience in Cameron’s No 10 means he is ideally placed for a Cabinet Office role, Frazer is a respected QC ergo Justice, Fernandes leads a group of Conservative Brexiteers (the European Research Group) and therefore moves to DExEU. However, there are also dangers on the horizon. First, although business has broadly welcomed the continuation of Greg Clark as BEIS Secretary, there has been fierce criticism of his ability by some online, focussing on the allegedly slow pace of his decision making. It remains to be seen what impact this will have on Cabinet relationships. Second, remain supporter Caroline Nokes has been given the incredibly politically difficult immigration brief and may be challenged by Brexiteers who value reducing immigration. Third, this has been a reshuffle marked by internal movements as much as the promotion of new talent. There is a doubt that moving Ministers who have only just got their heads round their ministerial briefs is conducive to good governance. Fourth, as in any reshuffle there are losers who could cause trouble on the backbenches. Justine Greening may transpire to become another Brexit rebel whilst John Hayes could cause significant difficulties for the Government regarding transport issues.
 
When asked whether there is a message behind the reshuffle a No 10 spokesperson replied that it is “too soon to say”. Yet a clear message seems to have been communicated.

Thomas Anelay, Grayling London, www.grayling.co.uk 
 

The view from Brussels

Leveraging the art of a ‘no-deal’
On 10 January the European Commission’s Internal Market Directorate General (DG-GROW) published a Notice to stakeholders outlining the steps that they would be required to take to ensure their continued compliance with EU product legislation post-withdrawal in the case of a ‘no-deal’.
 
The Notice states that as EU product legislation requires that the Notified Bodies which conduct product conformity assessments must be established in a Member State, and be designated by a Member States authority to do so, UK bodies would cease to be able to issue such assessments, for instance on CE marking. DG-GROW’s advice to companies who wish to continue to manufacture in the UK and export to the EU-27, in what is becoming a familiar refrain, is for those holding certificates for UK Notified Bodies to apply for a new EU-27 certificate or to arrange for a legal transfer.
 
The Grayling View
The Notice is the latest in a series that the European Commission has published as part of its efforts underscored by Michel Barnier in a speech this week that “the real transition period has already started” and that business must take responsibility to make the necessary preparations. Notices have been published on Biocides, Road Transport, Company Law and just last week on Data Protection The common theme is that the European Commission’s suggestion is for companies to pre-emptively shift their compliance activities to the EU-27.
 
Increasingly, the perception in the UK is that the European Commission’s preparations for a ‘hard’ Brexit are viewed as aggressive, with the Brexit Secretary David Davis on paper complaining about this to the Prime Minister in a letter leaked to the Financial Times. Whilst the UK initiated efforts to leverage the threat of a ‘no-deal’ to its advantage, it is the European Commission that is perfecting the art form.
 
Davis may well have a legitimate complaint on this issue as precedent exists for agreements on the mutual recognition (MRA) of 3rd country conformity assessment bodies. CETA, the agreement that the European Commission has said is the most likely outcome of the negotiations, includes just such an MRA for chunks of the EU’s product legislation. The future relationship agreement would therefore probably contain a similar MRA, and as such the European Commission can perhaps justifiably be accused of negotiating in bad faith by not making this clear in its Notice. 

 

The highlights from Poland

Poland looking out for its 1 million residents in UK
Poland's main concern in the Brexit negotiations is to ensure continued rights for Polish citizens in the UK, particularly in terms of social policy. After the EU Summit on December 15, the deputy head of the Ministry of Foreign Affairs Konrad Szymański noted that Polish expectations are being met when it comes to protecting the rights of Polish citizens. PM Theresa May recently said that the UK was “building a strategic partnership with Poland that will outlast our exit” from the EU and also told Poland's PAP news agency that ensuring EU citizens’ rights in the UK and UK citizens’ rights in the EU was her “first priority. The one million Polish citizens and 30,000 Polish businesses "who have made a home in the UK have made a huge economic, social and cultural contribution to the fabric of our country… No EU citizen legally living in the UK needs to worry,” she said.

The Grayling view
Citizens' rights was seen as a critical issue in phase 1, but, notwithstanding a few details, has been largely finalised now, and Poland can indeed be happy that its objectives have been achieved. Aside from citizens' rights however, there are plenty of reasons why Poland could take over the UK's mantle to be the EU's problem child in the years ahead. As a large non-Eurozone member, it will start to take the lead in protecting the needs of other smaller non-Eurozone countries and ensure that the EU does not become centred on the Franco-German axis. However, in doing so it must not anger the European Commission to the extent that it has its voting rights taken away - still a possibility in the next few months - thanks to some controversial lawmaking concerning its judiciary. 


www.grayling.pl 


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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