THE key obstacle to a reasonable Brexit negotiation is Michel Barnier, the EU’s Brexit negotiator.
Barnier still insists on a role for the European Court of Justice, a non-starter for UK prime minister Theresa May. Barnier also insists on an exit bill and “principles” before trade agreements start. Principles include agreement on rights of migrant, social welfare, taxes, environmental and consumer protection standards. Good luck with that.
To top it off, the EU now demands fishing rights to UK waters in return for nothing.
Queues and Shortages
Please consider Barnier warns UK of queues and shortages if Brexit talks fail.
In a wide-ranging speech ahead of Article 50 exit talks, Michel Barnier warned Britain it must agree “principles for an orderly withdrawal” before trade talks, including its financial dues and the rights of 4m UK and EU migrants.
Brushing aside one of Mrs. May’s red lines over the future role of European judges, Mr. Barnier explicitly stated the EU’s demand that interim measures “will be within the framework of European law” and the European Court of Justice. Such a transition could not allow Britain to pick and chose access to areas of the single market.
In one of the most provocative parts of his address, Mr. Barnier tackled head-on Mrs. May’s assertion that “no deal is better than a bad deal”, setting out a bleak vision of the “serious consequences” from leaving without agreement.
“More than 4m British citizens in the EU and European citizens in the UK faced with complete uncertainty about their rights and their future; the reintroduction of binding customs controls, which will inevitably slow down trade and lead to queues of trucks at Dover; serious disruption to air traffic; an overnight suspension in the movement of nuclear materials to the UK,” he said.
Fishing Rights
Also consider EU Fishing Fleet Urges Post-Brexit Access to UK Seas.
Fishing groups from nine EU countries have demanded continued access to UK waters after Brexit and warned that UK fish supplies could otherwise lose tariff-free access to the continent.
EU countries rely heavily on access to UK seas, with some vessels catching up to 80 percent of their fish there. Some UK fishing groups and politicians have demanded that Britain remove foreign vessels after Brexit to improve catches for UK fishermen.
Alain Cadec, chair of the EU’s fisheries committee, warned that it was “out of the question” for the EU to continue to allow tariff-free access for British fish “if they do not provide our vessels access to their waters”.
His comments mirror a leaked report from the European Parliament which revealed that the EU is determined to maintain access to UK waters for its vessels and will not seek to change the division of fishing quotas, which many UK fishermen find unfair.
Ivan Lopez Van der Veen, a representative of Cepesca, the largest Spanish fishing association, said: “If you don’t want to pay 30 per cent tariffs [on UK fish coming into the EU] — which is what the World Trade Organisation sets — you will have to negotiate. That negotiation should be completely tied to access to UK waters.”
“The UK has the stronger position, but is that really how you want to leave the EU? By blackmailing us on the way out?” asked Mr. Van der Veen.
Blackmail Irony
What a hoot. Barnier clearly attempts to blackmail the UK with threats of queues and shortages but demands the UK do nothing in response.
Deep Divisions
Telegraph writer Peter Foster explains Why triggering Article 50 will expose the deep divisions inside the EU’s 27 states.
Thus far, the EU 27 have remained publicly united, rejecting a British offer to settle the question of expat rights ahead of negotiations last December and rebuffing British attempts to wind up French and German trade groups to push their politicians for a sensible deal.
But as one EU ambassador privately acknowledges, EU unity has held largely because it has been untested. It is not just the UK that has been busy fighting a phony Brexit war these last nine months over the politics of Brexit, the same is true of Europe too.
So when Mrs. May triggers Article 50 the Brexit process becomes real – for both sides.
The British will probably have to give up on the idea that sovereignty can be repatriated without trade-offs, but the European side will face tests of its own.
The Poles and Hungarians are seething about political heavy-handedness in Brussels, the Greeks are chafing about German-imposed austerity, the Italians want more help on immigration, the Germans want to avoid paying for everyone else, the rich northern states are no longer unequivocal supporters of Free Movement and the some in the core EU still cling to dreams of a united Europe that are rejected by half the continent.
If the UK side is clever, these divisions are waiting to be exploited as a deal takes shape that will affect the interests of all member states differently – if the EU 27 wishes to remain united, it will have to make compromises internally that will be to the UK’s benefit.
Too much internecine strife in the EU camp risks causing delays that will run down the two-year clock on the negotiations or cause the scope of the talks to contract to include only the narrowest aspects of the UK-EU ‘divorce’ where the 27 can reach agreement.
British negotiators must be realistic. They must not, as Mr. Cameron did with Germany, overplay their hands – but the notion that the coming negotiation will be plain sailing for the European side is a simply wrong.
Will Cooler Heads Prevail?
Wolfgang Münchau believes A Sensible Brexit Deal is More Probable Than You Think.
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. This is a larger issue than the observation that the UK has relatively more to lose than the EU. That is trivially true, but not critical.
More to Lose
Münchau is correct that both sides have more to lose, but is way off base in proposing the UK would lose more if negotiations broke down.
- The EU exports more to the UK than it imports from the UK.
- The British Pound collapsed making import tariffs far less of an issue for the UK than the EU.
- Fishing rights are a major bargaining point for the UK.
- The €60 billion Brexit bill is a major bargaining chip for the UK. It can walk away and pay zero if it wants.
The EU has one and one bargaining chip only: Access to the alleged “single market”.
The EU also has two enormous problems:
- Michel Barnier insists on certain things that Theresa May cannot possibly give up.
- The EU has a very strong, and arguably irrational, desire to punish the UK.
It would make economic sense for a deal to be worked out. But will it? In a reasonable timeframe?
Color me skeptical in calling a deal likely given all the things that Barnier threw into the pot.
Here is the debate: Divorce Proceedings Begin March 29: Brexit Debate, Mish vs Financial Times
I would prefer to be wrong on this one.
Mike “Mish” Shedlock
Martin Armstrong may be a bit of a nut case, but he is absolutely correct in his belief that we are currently seeing faith in “government” completely evaporate, before our very eyes.
His observation that “These people could not properly manage a gumball machine” is unfortunately, spot on.
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I believe so
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Agree with Bam_man
(always have trouble logging in, so I gave up trying to click “like”)
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Good point. Alas, they still had the dumb-ass populus on their side, but ever since they flooded their neighborhoods with third world immigrants, they lost them, too.
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RE: “manage a gumball machine”
My goodness man, they’d have to create an 8,000 person bureaucracy to study the gumball machine first. Sort of like Bill Gates re-inventing the wheel with his Pathways Foundation.
Then, they’d finally want several tens of thousands employees – if not more – to establish something like the GMPA – Gumball Machine Protection Agency……
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….. you would not get to the machine for the crowd, and when they did move away there would mysteriously be no gum left in it.
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But, but they invented the cloud before it was known to IT.
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Put me down as one who lost faith and interest in the mumblings of the EU a long time ago. Pretty absurd that they are threatening England, but maybe its the booze talking. They should drink Russian vodka so they can keep their head on straight during talks… oh wait.
O/T … Mish, we have all heard your comments about self driving cars. I wondered if you saw the article in the New England Journal of Medicine about how AI devices will soon augment if not replace most radiologists and some pathologists. The NEJoM is a bit technical, but decent summary here:
http://www.techrepublic.com/article/why-ai-is-about-to-make-some-of-the-highest-paid-doctors-obsolete/
Some websites ( ahem WebMD?) try to convince people they have every disease ever imagined, but what if a local hospital system and/or the local drugstore chain were to put an AI agent on a terminal or smart phone — and replaced a significant number of trips to urgent care facilities? They won’t replace every visit, but wouldn’t surprise me if they could handle 40-50% of visits
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Don’t forget the number one goal for Britain:
Yes Minister — Why Britain Joined the European Union:
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And…A shrubbery.!
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Let’s understand
“Brushing aside one of Mrs. May’s red lines over the future role of European judges, Mr. Barnier explicitly stated the EU’s demand that interim measures “will be within the framework of European law” and the European Court of Justice. Such a transition could not allow Britain to pick and chose access to areas of the single market.”
There is no interim, there is only a timespan between triggering Article 50 and recognizing there is no interim. What there is then is a border with different laws and independent legal jurisdictions on each side.
The measures he is referring to are most likely a continuation of existing citizen rights other side of their border…the ones EU rejected making an initial progress on … but even their continuation would be a bilateral treaty UK/EU with no ECJ jurisdiction over UK activity or law. His statement however does encompass that reality as it can be read to mean that the deals EU makes will be according to what European law allows it to and with ECJ as arbiter over the legality of those with regard to EU law. He is however stating , if you read between the lines, that the old order of bilateral national relations is gone, and that the market, as with previous national relations, is now just ‘the single market without individual national priority or jurisdiction’ ‘ governed by EU. That is the arrogance in his statement.
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“The EU has a very strong, and arguably irrational, desire to punish the UK.”
Mish, the EU desire to punish the UK is perfectly rational and out of self preservation. Any punishment acts as a deterrent to future exits. Personally I think the EU experiment is doomed and was a mistake from the start, but if you see from the perspective of those who are heavily invested in it, punishment deterrence is rational. Whether it turns out to be effective is an entirely other order.
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Britain has created the world’s largest Empire, and has successfully devolved this Empire into a loosely-affiliated collection free trading nations. Can Europe learn to do the same – on a very much smaller scale?
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No, they can’t.
It’s a whole different mind-set over there.
It cannot be compared and that is why, even given a major economic set back & future possible geo-political issues, the UK should walk.
John Major called it “a historic mistake”. May be, may be not.
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In the meantime the ECJ recognises Western Sahara and humiliates Spain and Morroco, causing a spat between them as Spain is obliged to follow ECJ recognition , over fishing rights off the Morrocan/Saharawi coast. Not that I object to recognizing Western Sahara, but it is kind of an inverse example of how EU subjects member states and rules over bilateral relations
http://www.elconfidencial.com/mundo/2017-03-19/espana-sentencia-ue-sahara-no-pertenece-a-marruecos_1351185/
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Slightly o/t Cataluña has passed a new unpublished (to avoid Spanish legal action) constitution through its parliament as well as ruling the right to declare independence without any bureaucratic or parliamentary delays ( i.e. instantly). No link – it is in most Spanish press over the last weeks, and made known by Cataluña itself.
Just now they have tendered for the supply of all the election material necessary to hold the referendum.
http://ccaa.elpais.com/ccaa/2017/03/23/catalunya/1490269577_485283.html
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I loved your ñ in Cataluña. So rare these days…
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¡ Not in Spain though 🙂 !
In Spain punctuation and accents are not removed by anyone .
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Barbarians in Suits with a Treaty of Versailles scorched-earth mentality. The EU is essentially threatening War against the UK if they don’t get their way, or at least as much war as can be fought without an army. It’s getting pretty obvious. Fanatical forces out there wish to rollback Brexit and Trump, and refuse to take “No” for an answer or accept anything less than total capitulation. Same mentality that bombed Serbia into submission, or as Hillary said about Libya: “We Came, We Saw, He Died.” Same mentality as the Neo-con forces canceling Hamas victory in Palestinian elections, launching Iraq War II and itching for Nuclear War Against Russia.
UK needs to counter demand: Fishing rights only after Normandy is returned to its rightful inheritors/owners, the UK. Otherwise, UK fish for UK fishing fleets. So what if EU consumers are made poorer paying tariffs for UK fish? Lots of other world markets can be developed for UK fish. Next EU will demand a share of North Sea natural gas from the same UK waters. EU needs to remember that they did not conquer the UK. The UK resisted Hitler better than most other EU countries, and has nothing to fear. UK, Turkey and Russia are natural allies against EU tyranny. EU is an embarrassment to itself.
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You are right about the UK and Russia being natural allies but the pissing and whingeing from Washington’s barking mad Neocons will prevent that.
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I thought it was the other way around, and England was a province of Normandy since 1066?…
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And doesn’t the English Channel half-way belong to UK? It will be hard to navigate around that, and the UK has the navy to protect it. Let’s see who can play hard ball longer.
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Complacency allows the Eurocrats rope but a recession will hang them all – maybe when Brussels salaries are in mortal danger an agreement with the UK will get some traction – Greece too. Their are plenty of suppliers waiting to fill gaps if France and Germany get tough.
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The UK needs to get shut of these lunatics immediately. It has nothing to lose, and everything to gain from negotiating individual trade deals. If the EU shuts off trade, it will spiral into chaos within months…
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Invoke Article 50 now, PM May. At the end of 2 years the great British public, and rest of the the world for that matter, will be so disgusted at the bleating and screeching of EU bureaucrats, you can simply walk away from the entire sticky mess.
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The politicians are insane. Here in the UK when the economy turns down hard and folks start to look around who to blame, they will looking at the immigrants. These politicians are mental, they should be warning the 1 million eastern Europeans to return home because moderate British citizens will turn nasty when they start losing their jobs, homes and pensions.
History is clear on this when the economy reaches extremes the populous will always turn on the immigrants and the UK will be no different. These immigrants will be hunted down on the streets like rabid dogs. The British public were never consulted about having their communities stuffed with these low level human beings and they will display their distain on the streets. It happened in Germany during the 1930s and it will happen here when the bond bubble bursts later this year. Times change but men’s passions do not.
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A Black Swan event, a chilling forecast of displacing 1 million East Europeans in Britain. They all cannot be taxi drivers.
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Barnier is clearly revelling in his incoherent threats right now … but eventually he’ll figure out the diverse demands he spouts are, as others have said, evidence of a deeply divided EU27 that he will be responsible for pulling together if any deal is to be agreed.
Ultimately though Barnier doesn’t care for the deal. So it will be a pretty poor document for all sides. Remember it was another Frenchman, de Gaulle, who vetoed the UK joining the EU first time around and Barnier’s attitude rings familiar.
I suspect the UK will walk away with no deal because the EU27 won’t be able to ratify it between themselves.The EU only works today because they dare not open up all prior trade/tariff agreements amongst themselves. And Brexit talks will do just that.
Game on!
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UK will hard Brexit. No deal, no transitional arrangement. Fruit and veg from the Commonwealth and UK sources. EU industrial products imports displaced by Koreans, Japanese and Chinese.
The EU will lose one of its best customers. UK will suffer but attitudes are hardening and we survived 14-18, 39-45.
This is just another war but of a different type. EU has weaponised trade. 2019-2023 will be rough, phoney situation until then.
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The idea that Mercedes Benz, Volkwagen, Porsche etc will allow the political filth to deprive them of the UK market in return for what? keeping British made cars out of Germany? is ludicrous beyond belief.
Germany’s real owners step in if their political helots go too far.
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Germany will pivot to Russia, reduce sanctions and look for demand there.
There is what anecdotally appears a push to stuff the UK with product now before the break.
Increased ads etc.
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The EU has weaponised trade.
Very dangerous given the net demand the UK offers the EU.
Alternative sources of supply are in process of set-up. Say no more. Key industries looking outside EU into Korea, Japan, China and willing to collaborate. Sharing design requirement, key specifications, documents.
I can say with some considerable confidence – 24 hrs after leaving all ECJ legislation will be on British Statute book. It will then be sorted and sifted to remove unwanted elements (ongoing already) and then there will be a single sitting of Parliament to repeal unwanted elements. Job done. No more ECJ.
Today Junker is on UK TV saying there will be no intention to punish the UK or place sanctions. BS, it’s good cop bad cop with Barnier.
It is touted here that from 29th March some border controls will be placed to limit a final rush of people entering. That will enflame the EU but is a sign of UK determination going forward.
No one knows what will play out but I do know the UK is ready to impose tariffs as necessary and key demand sectors are talking to alternative source of supply outside of Germany, France, Italy in readiness. Alternatives to Irish suppliers also.
It’s going to get very messy and unpleasant for all concerned.
No winners except Koreans and Chinese.
Planning has also been ongoing to reduce UK corporate tax rate too.
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Jean-Claude Juncker: ‘When it becomes serious, you have to lie …’ (Telegraph 12 Nov 2014).
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He’s a snake.
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If I remember the new law this month it is an EU wide law that obliges anyone leaving EU to provide ID. That would be to say people in EU are technically effectively prisoner until they are allowed to leave.
As regards UK it might be viewed as an immigration control, but there are other significances. Previously EU had not that control over ‘its’ citizens. Have studied theme of documentation quite widely, all of these laws have different ways of being presented but almost always have ulterior motives as well.
BTW, the UK diplomatic services are advising expats in EU that there will be no change in just about all matters that could concern them for the next two years, but that how anything will be after that remains unknown.
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Junker is also lucky. Merkel would see him hung out to dry but she will be replaced by Schulz. Partner with Junker. He’s just one of life’s lucky people.
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Indeed, a supposedly “bookish” chancellor is in fact the witch from the fairy tale.
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The EU is a white suicide cult.
They’ve lost their beloved Obama and Britain opted out so now they are working on a murder suicide backup plan.
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As long as I’m putting aside anything at all in savings over and above capital gains, the rest of the world is technically enjoying a “surplus” in it’s trade with me. It’s a bit far fetched to take that to mean the world would lose more by me dropping out completely, than I would.
Who gains the most from trade access, is likely best modeled in terms of network effects. When a network is split, the smallest of the two resulting networks, will generally be the one for whom the split is most consequential.
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