The UK announced it would file Article 50 on March 29. At that time, control over the timing and structure of negotiations goes to the EU.
It’s a symbolic victory for the EU. The bottom line is the UK can walk away anytime and there is nothing the EU can do about that.
Brexit Debate – Mish vs Financial Times
FT: Britain’s decision to invoke Article 50 on March 29 helps the EU achieve one of its Brexit goals: seizing from the UK control over the timing and structure of the negotiations.
Now that Theresa May’s government has confirmed the date for formal notification of the start of the two-year divorce process, the UK has ended a period during which the EU could do little more than watch and prepare for the start of talks.
Henceforth, the other 27 members of the bloc will have much more control.
Mish: Seizing control is nonsense. In one sense it was a given. The clock starts ticking the moment chapter 50 is filed. So nothing was seized, it was handed perforce. In a second sense, it’s not realistic. The EU is not really in control of much.
FT: In the wake of the UK’s vote last June to leave the bloc, senior EU officials were convinced that Britain would refuse to trigger the formal divorce process — because of the tactical drawbacks of working to a two-year deadline.
Instead, they expected London to try to first negotiate exit terms, then invoke Article 50 for only a “juridical minute”.
Mish: Here’s a one-word summation: wrong. More wrongness is guaranteed.
FT: “The [EU-27 leaders] understood that their strongest chip is time pressure,” said one of the principal figures involved in EU Brexit preparations. “They did not want to give that away.”
Mish: Question: Pray tell what good did it do them? Has it worked at all, in any sense?
FT: The EU’s next attempt to maximize its leverage will be through its guidelines for Brexit, which lay out the bloc’s priorities for talks. This public document is expected to be adopted by EU-27 leaders in late April or early May. Although its content will depend on Mrs. May’s notification letter, some recent drafts run to around six pages, according to diplomats.
Much of the detail will be left to separate confidential negotiating guidelines, which will take a further month to agree. But for some EU diplomats, the release of the public guidelines will be a critical moment. “This is our best chance to sober up the Brits,” said one senior EU diplomat from an anglophile northern state.
Mish: EU negotiators still think they can sober up the UK. It is the EU clowns that need sobering up.
FT: One of the main possible causes of tension is EU officials’ push to delay talks on a future trade deal until Britain has agreed on principles on an exit bill of some €60bn and the rights of EU migrants.
“It’s the British position that the negotiation for leaving and the negotiation for a future arrangement will happen in parallel, whereas it was the European position up to now that this would be sequenced,” said Michael Noonan, the Irish finance minister. “That difference has to be overcome.”
Mish: Do tell, why does the difference have to be “overcome”? More accurately, how can it be? Things will either happen in parallel or serially. Is there a “half-parallel” construct?
FT: Some EU officials strike a more uncompromising line. “What people are worried about is that the talks could drag on and on and on,” said Johan Van Overtveldt, Belgium’s finance minister. “Even those who don’t want to punish the UK will be very careful not to give Britain too good a deal.”
Mish: The desire to punish the UK is strong. To not punish the UK will require 27 nations to agree. Clearly, there is something more uncompromising than “half-parallel”.
FT: Michel Barnier, the EU’s chief negotiator, wants member states to bolster his hand by issuing a directive that covers only the exit bill and citizen rights. When formal talks start in late May or June, Mr. Barnier could then say talks on trade were simply beyond his mandate, according to EU officials.
Such tactics may open up the first cracks in EU-27 unity. Some member states and even some European Commission officials are less concerned by the exit bill and would not want the divorce to poison future EU-UK relations.
Mish: Cracks are a given. Heck, crevasse is likely a better word. But nothing can be done unless all 27 nations agree.
FT: Britain is banking on Mr. Barnier being overruled. David Davis, Britain’s Brexit secretary, claims there is “slight schizophrenia” on the EU side: “Most of them, nearly all of them, are sympathetic [to the UK case for parallel talks] but there will be an issue of not breaking the solidarity of 27.”
Mish: I am unsure if the UK is banking on the EU doing anything. If so, it may be unwise. The same applies to the EU banking on the UK to do something specific.
FT: Mats Persson, a former Downing Street adviser now advising on trade for EY, noted an emerging “mismatch in perceptions” that could kill the process. “Neither side is thinking the other would ever risk a no-deal scenario because of damage to trade, financial stability, and geopolitics,” he said. “In reality, there are players on both sides who are genuinely contemplating this option.”
Mish: I side with Mats Persson.
FT: Stephen Adams of the Global Counsel advisory group said the problem with Article 50 “is not that it is complicated but that it is relatively simple”.
“It provides limited guidance and leaves a lot to political interpretation. It also starts a ticking clock and that is what makes it so different,” he said. “You are working against time. And time, in this case, is everybody’s enemy, including the EU, because two years is not long to get an agreement of this kind.”
Mish: Time is another reason why Persson is likely correct.
Sensible Deal Likely?
Wolfgang Münchau says the EU should not seek to earn a quick buck, nor the UK to dodge direct costs. Münchau concludes A Sensible Brexit Deal is More Probable Than You Think.
The fight over the UK exit bill should not be as difficult. There is talk, unconfirmed, about €60bn. This is financially not in the same league as the great fights of the past. The problem about the exit bill is lack of legal basis and precedent. The treaties are silent; there is no rule book.
The problems are solvable as long as both sides adhere to a simple principle: that Brexit should be an opportunity neither for the EU to earn a quick buck, nor for the UK to dodge the direct costs to the union that will result from its decision.
While it is only fair for the UK to pay for the costs of Brexit, it would not be fair for the EU to extract a price for market access. Fortunately, there is an ample choice of numbers between zero and 60bn.
There are 18 months for the two sides to discuss the details of the Article 50 exit procedure. This will not include a trade deal, only the terms of the divorce. Separately, the EU and the UK will negotiate an interim arrangement that would remain in place until a final trade pact is negotiated and ratified. The interim agreement would take effect after Brexit takes legal force.
It would be reckless to predict that all will go smoothly. On the contrary; this will be as bitter and hard fought as any of the big battles of the past. What I do see, however, is that both sides have more to lose than to gain.
Every political process is prone to accidents. But I am really struggling to identify a single insurmountable obstacle to a deal. My advice, especially for angry Remain supporters, is to take a deep breath, accept that Brexit will happen and focus on how to reconnect with the EU after Brexit. There is much to play for.
Final Word
I certainly agree that both sides have more to lose than gain by a messy Brexit. Yet, the math remains, all 27 nations in the EU have to agree to the deal. They need to do so in 18 months or so and sign off on it within two years.
The EU could not conclude a trade deal with Canada in seven years.
The CETA free trade negotiations between Canada and the EU started in October 2008 and concluded in August 2014.
On February 15, 2017, the Guardian reported European Parliament Passes EU-Canada Free Trade Deal Amid Protests.
Somehow we are supposed to believe a messy divorce will be a faster process. That’s possible, but color me skeptical in calling such an event likely, especially if one insists most loose ends will be tied up.
Mike “Mish” Shedlock
All 27 nations have to agree, so Greece holds out for the UK to pay off all its debts, Germany demands the UK take 500,000 ‘refugees” per year…
If the EU makes it messy….
The UK should strike free trade deals with Russia and America and cut their corporate tax rate to zero…
Game on.
The danger is that they will arrive at an agreement that leaves so many loose ends flapping in the wind as to be meaningless. I find that more likely than that the UK will slam the door and walk away without any deal.
There are hardcore Leavers quite prepared to walk as soon as possible.
Thinking is we survived 14-18, 39-45, this is not as bad of either of those 2 scenarios.
Interestingly 6 years keeps coming up in talks, same as 39-45, and some hardcore look at this as a war scenario.
Declared war on me and my family openly. Promised us destruction and misery, and set about it. I’m not what you could call hardcore, very part of local society in different European countries. We had 6 years and more of attrition and living on the edge trying to resolve ‘ nothing ‘ , just defending. Someone picks up the theme and decides to let loose on us. So I drop off details of the the encounters and recordings in court, knowing that the court is only a gamble and that the power is through alt bureaucracy and brown shirts. I tell the court what I think, including of their own impotence, and I let them know that someone among them has declared war on me and my family. Not one off, met this particular attitude here and there, different countries, only after more recent ‘integration’. No good.
Then we leave… that is now.
Either or.
Don’t trust them, only deal with those who have the top say, but as the region is leaderless now you won’t meet or even know who that is , just be subject to a competition in chaos where out of control bureaucracy competes for trophy.
V. Bad. I’ve witnessed how fast real war can occur first hand, work as if not but don’t be surprised.
Not worth trying to forge something out of imo, but don’t let that stop anyone.
The teutonic Germanii according to Caeser
“They do not pay much attention to agriculture, and a large portion of their food consists in milk, cheese, and flesh; nor has any one a fixed quantity of land or his own individual limits; but the magistrates and the leading men each year apportion to the tribes and families, who have united together, as much land as, and in the place in which, they think proper, and the year after compel them to remove elsewhere. For this enactment they advance many reasons-lest seduced by long-continued custom, they may exchange their ardor in the waging of war for agriculture; lest they may be anxious to acquire extensive estates, and the more powerful drive the weaker from their possessions; lest they construct their houses with too great a desire to avoid cold and heat; lest the desire of wealth spring up, from which cause divisions and discords arise; and that they may keep the common people in a contented state of mind, when each sees his own means placed on an equality with [those of] the most powerful. ”
Tacitus ” A family likeness pervades the whole.”
Maybe people change over time.
Point being, when you mix that discipline and the corresponding attitudes used to enforce, into say Mediterranean culture… wtf do you end up with? Technical oppression vs. some kind of traditionalism/deep plumbed identity? Multikulti modernity by religious acceptance and guidance? Politically correct dictatorship?
?
It is not even a “divorce” as there are more than 2 parties (namely, UK and the 27 nations). Although, EU is so far under sharia law already that Brussels can be thought to have multiple “wives” and each of them have diminshed rights of existence. Maybe rather call it a dissolution?
more than 27 as is has to go through regional assemblies too.
Look what happened to Canada and who scuppered that.
UK holds all the cards. If the EU wants to try extortion,Britain can simply cut off all negotiations and negotiate individual trade deals. If Germany doesn’t trade with Britain, Germany will fall into an instant depression….
+100
I was going to suggest England send Paddington Bear (a stuffed children’s toy) to negotiate with Brussels. Have it wear a “No, England does not agree to those terms” shirt. Negotiating with a stuffed animal is frustrating and goes nowhere, and that is the point.
After 18 months or so, the incentive for all EU member states to put their own interest above Brussels will be overwhelming. England needs just 1 out of 27 to break rank for the stuffed bear to prevail.
Germany, the export based economy, would rather go into economic depression rather than ignore Brussels? Netherlands would destroy Royal Dutch Shell to spite itself? French farmers would permanently lose market share to Latin America just to protect government jobs in Brussels? Greece is going to give up the British military base on Cyprus to protect Brussels interest?
England has nothing to lose asking for separate trade deals, Brussels already doesn’t like them. Kind of like OPEC, the 27 members of the EU have strong incentives to put their national interests above Brussels. The first EU country to do a side deal with England is going to get a much better deal than the holdouts.
Fabulous idea, Paddington with his “Please look after this bear” luggage tag. Some wag ought to do it anyway! A stuffed toy might engender some sympathy. These people take themselves far too seriously, the political institution is a joke.
EU is a complete stuff up, but the UK is barely better.
There will be no deal. It is as logical for Britain to demand a return of 40 years of contributions (half a trillion Euros?) to a failed politicial construct as it is for the EU to seek damages of 60 billion.
The EU is not a negotiating body that can ever agree on ay fixed position simply because all its component 27 countries are in a constant state of political flux, with the important nations acting unilaterally on major issues, like migration of non-EU people.
The logical path for a trade afreement is to copy CETA and base an agreement on one side of the same import tariffs within that and those that exisit with the US and Australia.
A full list of all EU import tariff barriers for every country is linked below. To assume that each country in a fractured EU-27 can ratify the clunky negotiations of a single EU appointee is ludicrous.
Here are a few useful links for US companies exporting to the EU
https://www.export.gov/article?id=European-union-Import-Tariffs
http://exporthelp.europa.eu/thdapp/taric/TaricServlet?languageId=EN
This link to the EU worked yesterday and now doesn’t. (Just to give you some idea of how non-tariff barriers work in the EU.
https://circabc.europa.eu/faces/jsp/extension/wai/navigation/container.jsp?FormPrincipal:_idcl=FormPrincipal:_id1&FormPrincipal_SUBMIT=1&id=f97f5baa-fbc3-4946-9077-42ad54f967cd&javax.faces.ViewState=mKOnFNtAgNwDymqfmAgEc4pzjGA9Q9Dc4C4QN8cpiMTtIvfF8aRznuDFfVbE2mNprbQ8jsRu1pDbo25JHeUUckxzzLFbtj41zn0MGQObD7Mg34DEYhd%2FBkJQ7jh2ZP35fzxRT1aajA8RM%2FiAUEzHmVv7FQ0%3D
I am glad I don’t live in the UK
I’m also glad you don’t. A win-win.
I also am glad that you are glad, because it is very nice to be glad.
Let us all be glad, let gladness shine from the faces as one .
I am very glad to say this and welcome you all to share with my gladness.
I write poem of gladness because I am so glad:
When bombs are falling all around
And they miss me I am glad
When afterwards I hear the sound
Of angels I am glad
When they lock me up for hearing things
I’m glad it made them glad
And when they set me free again
I’m glad glad glad glad glad.
I think to finish that last line some better but is no other words to say how glad I feel when I escape from there.
I gladder than anyone so there.
There will be no deal, unemployment will spike up on both sides, global trade will fall further.
Those at the top of the UK have stated clearly no deal is better than a bad deal and funds raised from tariffs (UK big importer from EU) will be used to help mitigate against the impact of no deal.
Off-shoring of some UK business is being factored in but so is the fact that something like > 10% of EU population is in the UK and they are heavy consumers so some business will on-shore inside UK-EU tariff wall and have chance to export/import with UK base to the ROW at lower cost than in the EU and at lower corporation tax.
It’s a mess and both sides can lose. The UK has a massive market on its doorstep that will be harder to access and replacing UK demand by the EU won’t be easy either.
The UK has been a very good customer to the EU, EU has been a good customer to the UK.
Barnier is considered vain. One classic encounter was him looking through a window as a colleague passed. Turned out he wasn’t looking out but at his own reflection and tidying his hair. This story did the rounds and other came forward with similar experiences.
He was considered a potential scourge of the City of London. Given job losses are being planned for and adaption beginning for life outside EU that perception may no longer be the case as its too late. A period of some hardship is expected. Less trade at higher cost to all concerned in all areas. Time to adapt.
One high ranking banker reckons London financial employment will recover in around 3 years after Brexit. I have heard some EU operations will consider a move to increase exposure to London so not all jobs will go one way. London can look out into the world without EU interference and some in the EU like that idea. Say no more than that. Expecting London to take a beating and not fight back? Who knows.
If the UK has any sense it will sell the flexibility it can offer to EU corporates.
They can move across the channel and outside the strangulation.
EU rules would apply to services offered to the EU but there are 6Bn people outside all looking to become middle class and needing future access to financial services.
I would like to see a US-UK-CAN-AUS-NZ single digital market place for services as a starter with a level playing field. Proper regulation but at low transaction cost. The EU could be invited to join at some point but under US-UK-CAN-AUS-NZ regulation that would be more Anglo-Saxon and FREER.
A funny but not insubstantial point: Many contracts on the Continent have English-law clauses. Is Brussels going to declare all those null and void?
EU says this UK says that. I’m an Englishman living in France. I’ve been an independent individual ever since I could think straight. I’m all for independence in whatever form. I don’t subscribe to any collective ideas. More and more people are thinking like me. We don’t belong to any camp. I couldn’t care less what the EU and UK do or don’t get from a ‘deal’. I live my life as best I can (very successfully) by keeping a low profile and doing whatever I want to do. Patriotism is for the weak minded that need someone to tell them what to do and to think for them. ALL politicians are self-serving parasites to be ignored as much as possible.
The same goes for the USA. Trump or Clinton…. who gives a monkey’s whatsit.
A Sovereign Man, I totally agree.
Spot on Baron, you win the prize.
No matter where one lives their government does not give a rats ass about them. Politicians around the world want one thing , control of the people and their minds. Most people do indeed want to be lead over the cliff. We are all citizens on the planet not some form of government that only wants to secure itself at the cost of the people.
Like you I could care less because there is nothing I can do about it. I prefer to live life the fullest and prefer to think for myself.
Agree to all.
Do you know what happens when you have no valid ID made available to you when abroad?
I do.
It f****** sucks and there is 0 you can do about it unless you mix with bureaucracy and law… ‘forever’.
Consider that for a moment, the leverage that one has over you.
No one I speak to is able to comprehend this, and why, because there is no reason and no answer either, this to ‘everyday Europeans or Brits or whatever the f*** you want to label us but just give us some f****** ID to work with’. Courts, embassies, home offices, ombudsmen, yeeeeears of endless coooooooosts of all kinds for… what?
Know your weaknesses.
@***[_:_###_*[[#(()}{]—??__*%
“UK does not recognise EU exit divorce bill.”
Sounds like EU need to prove it in law, then arbitrate if found valid.
How many years to conclude that?
10, 15, 20?
UK House of Lords are pro-EU and even they have said there is no legal case.
Even if the CJEU declares the UK to owe something, what army are the EU going to send to collect it? That EU army that keeps being bandied about?
On Brexit EUCJ will not be recognised as ultimate authority, nor as superior to British law and justice.
Fact.
Yeah, I live on the Continent, and I guess I will miss my Cathedral Cheddar Cheese if push comes to shove, but for all the benefit of the EU to the UK, I only started seeing this stuff on my local stores’ shelves roughly three or four years ago. So if they keep sending it across and the price goes up 15% to 20% due to tarriffs, I guess I will go ahead and pony up the extra dough, but then again, food prices have been creeping up 5% or so each year, despite the blarney of the ECB.
Seriously, the UK needs first and foremost to drawn a bright line at E-Day and make it clear that any exit toll that might be agreed to does not include the costs of EU stupidity that are incurred after E-Day, because you can bet your bottom dollar that Brussels is going to rush a bunch of nonsense into the structure of the EU to jack up the exit toll.
Second, no deal is better than a bad deal … repeat that mantra over and over. Then start bricking up the Chunnel to make the point.
Tariffs are 2 way. UK imports much more cheese from the EU than it exports to the EU.
All in the UK is a massive EU customer for many items the EU protects carefully.
We can do without the cheese.
The high end EU cheese is probably eaten mostly by those voting Remain (nice middle class people, lovely folk) so not a big loss to the Leave types (stupid ignorant bigotted unpleasant deplorables).
Those descriptions are not mine but rather the attitude of many very nice Remain voting people of their fellow countrymen who had a different opinion at the ballot box.
In other words, the Imported-Cheese-eating Surrender Monkeys will suffer the most.
And the Zinger! award goes too..
This is a clear case of the wife walking away and filing for divorce with her lawyer. The catch is the husband refuses to sign the papers because she will not give back the dog.
F******* mut.
International Bad Language and Insults day, please excuse…you bunch of f******* pr****.
“…this will be as bitter and hard fought as any of the big battles of the past.”
Human nature never changes. When does WW3 officially begin?
..when the Americans heroically and righteously ‘Strike Back’ at Russia for a False Flag attack caused by one or a number of the alphabet agencies. – Its been pretty much the MO for.. pfh!! ages right?!
In divorce both sides usually lose. It is only later that people can find greater happiness when they build a new life unencumbered by a dysfunctional relationship.
I don’t see why Brexit should be any different. Odds are that no “deal” will be reached and that the UK will just leave with nothing better than WTO trading terms. The logistics of getting 27 nation states to agree on a deal are just insurmountable. Neither will it be possible for the UK to negotiate independent deals with EU member nations. EU rules prohibit members from negotiating their own trade deals so that option is off the table (unless more nations leave the EU).
In short, both the UK and the EU will come out worse from Brexit. However, the UK will now be free to build a new happy life outside of the EU, but it will take time (as in decades).
I dont see the UK walking away with a deal either, basically it will be two years of arguing, some agreements later on, only to fall at the final hurdle when the whole EU has to agree on it.
There will be trade deals but in wont be a result of the Briexit talks.
Keep in mind, those fools doing the negotiating are playing with the livelihoods of others, not themselves. Most are just vengeful, useless idiots “doing their best to drive a hard bargain”.