The EU took a tough stance in Brexit negotiations, formalizing previous warnings in negotiating guidelines that European Commission president Donald Tusk sent to 27 EU capitals.
Bloomberg notes EU Says U.K. Only Gets Trade Talks After Progress on Brexit Bill.
In draft guidelines for the talks released to the bloc’s 27 other capitals on Friday, EU President Donald Tusk said discussions over future commercial ties would not take place until “sufficient progress” was made resolving thorny topics such as borders and budgets. May was also told any transitional period to ease the exit would require the U.K. paying money and accepting EU laws.
The tough stance, which formalizes the previous warnings made by EU officials, implies a quid pro quo in which May gets a shot at securing tariff-free trade ties with the U.K.’s biggest market only if she quickly strikes a deal over the bill the bloc wants to impose.
EU Guideline Highlights
- Negotiations under Article 50 TEU will be conducted as a single package. In accordance with the principle that nothing is agreed until everything is agreed, individual items cannot be settled separately.
- The two-year timeframe set out in Article 50 TEU ends on 29 March 2019.
- The European Council expects the United Kingdom to honor its share of international commitments contracted in the context of its EU membership. In such instances, a constructive dialogue with the United Kingdom on a possible common approach towards third country partners and international organizations concerned should be engaged.
- Arrangements ensuring legal certainty and equal treatment should be found for all court procedures pending before the Court of Justice of the European Union upon the date of withdrawal that involve the United Kingdom or natural or legal persons in the United Kingdom. The Court of Justice of the European Union should remain competent to adjudicate in these procedures.
- Any free trade agreement should be balanced, ambitious and wide-ranging. It cannot, however, amount to participation in the Single Market or parts thereof, as this would undermine its integrity and proper functioning.
- After the United Kingdom leaves the Union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom.
Domino Theory
The EU fears that if one country leaves, more will follow. That stance is akin to Vietnam War “domino theory“.
The domino theory, which governed much of U.S. foreign policy beginning in the early 1950s, held that a communist victory in one nation would quickly lead to a chain reaction of communist takeovers in neighboring states. In Southeast Asia, the United States government used the domino theory to justify its support of a non-communist regime in South Vietnam against the communist government of North Vietnam, and ultimately its increasing involvement in the long-running Vietnam War (1954-75).
The EU strategy is also similar to gang membership. It’s far easier to get in than leave.
Germany Insists On No Tax Dumping
In addition to Tusk’s demands, Germany Warns U.K. Against Tax ‘Dumping’ as Brexit Era Begins.
Chancellor Angela Merkel’s government will insist that the U.K. rules out tax “dumping” as part of any trade deal struck during Brexit negotiations, according to a senior official from the German economy ministry.
The concern is that Prime Minister Theresa May could choose to resurrect the threat to turn Britain into a low-tax Singapore of the West as a way to extract trade concessions and secure a no-duties deal down the line.
Any future trade agreement between the European Union and the U.K. will only be possible if it’s accompanied by a pledge by the May government to avoid harmful competition in tax and regulation matters, German Deputy Economy Minister Matthias Machnig said in a Bloomberg Television interview.
The latest caution shows that Merkel is firm that some things are not up for discussion. Back in January, German Finance Minister Wolfgang Schaeuble told Bloomberg in Davos that a “race to the bottom” on corporate taxation would not be tolerated.
“We can only conclude a fair trade agreement with advantages for both sides if there are reasonable framework conditions in the areas of tax, regulation and the like,” Machnig said. A race to the bottom in tax and regulation matters “would make trade relations difficult,” he said.
Which Side Is In Control?
Finacial Times writer Philip Stephens proclaimed Brussels Takes Back Control of Brexit.
“All the power lies with Europe and Britain holds no cards in the coming negotiations,” says Stephens.
No UK Cards?
- The UK can and should walk away from a €60 billion exit price.
- The UK can stop EU fishing rights.
- The EU will suffer much more than the UK in a trade war, especially with the collapse of the British Pound.
- The UK can and should lower corporate taxes more.
For sure, the EU can take such a hard stance there will be no deal. The UK can do the same. How the heck does that put the EU in control?
And the more demands the EU issues, the more likely it is for the UK to say to hell with it all.
Control of a Sinking Titanic
The idea that the EU is in control of anything is like saying the captain of the Titanic was in control of the ship going down.
The danger to the negotiation process is if the EU actually believes the delusional nonsense from Stephens that the EU is in control.
Perhaps this tough stance is just standard negotiation hype. But never discount the stupidity of politicians, especially when 27 nations all have to agree.
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Mike “Mish” Shedlock
The EU is as much in control of Europe/Brexit as Maduro is in control of Venezuela. The more control they have to closer to total collapse it gets.
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“The more you tighten your fingers, Governor Tarkin…”
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I believe that the line spoken by Princess Leia Carrie Fischer) to General Tok (Peter Cushing) was, “The more you tighten your grip, the more Star Systems will fall through your fingers”
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True enough, the EU is all hot air (talk) and no bite. The UK can go back to being an independent nation-state without the EU’s permission. Negotiations are optional. The UK can start reasserting traditional sovereignty at any time. EU bullying just reinforces the original rightness behind voting for Brexit.
The difference between the Treaty of Versailles and Brexit is that the UK has not disarmed and the EU lacks an invasion army to get its way. If the EU had an invasion army to send across the channel to invade the UK, NATO countries like Turkey could come to the aid of the UK and polish Germany’s ass on behalf of the UK. WWIII for Europe. Also the reason Russia and Turkey are natural UK allies to contain the EU.
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Macron or Le Pen.
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Le Pen appears now to want to stay in the EU but on the condition that the EU changes to allow sovereignty to member states (which must mean own currency) – the bombastic unrepresentative Eureaucrats will be bombed, one way or another, perhaps even if she loses – and Germany might be forced into an upward currency revaluation that will ensure they cannot enforce penury on the then more competitive southern spendthrifts :-).
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LePen wants to stay in to close the gap on Macron. Macron differentiator was EU, now less of a differentiator.
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In a sense control is now with the EU as its their job to negotiate. Until issuance of Article 50 the UK had control and that is why the EU wanted it issued in 24 hours of the referendum so the UK had no chance to do any preparation at all and the EU gained control.
If no arrangements by March 29 2019 then the Fish are out of the picture as is security co-operation & taxes will fall. The Germans have said Security should not be involved but since its costing the UK we should get to say who we co-operate with post Brexit amd why help those wishing to punish the UK?
There will be an all mighty fight soon enough.
If May screws it up expect a new political party to arise, not UKIP.
It can happen quite quickly and give the 17.4M people that voted Leave a real voice.
Pop-up political parties will be a theme in future. This might be a testing ground for the theory starting in the near future. A few wealthy people and 17.4M of the electorate is enough to finish the revolution.
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I don’t see ANY deal at all as likely so best to prepare to walk, see the economy suffer and then work to re-build.
CUT TAXES NOW!! Don’t wait.
Act now to show seriousness and get some business on-shore in preparation for March 29th 2019.
The EU is scared crapless in case someone manages to leave and cope as it will show the benefits are largely illusory. NZ, AUS, CAN all survive well enough.
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Better to let your enemy deplete his ammunition first if it’s not causing much damage.
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Yes, you are right, hold fire until really needed.
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The UK should lower their corporate tax rate to zero and sign a free trade agreement with Russia.
Your move EU…
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Germans will thaw on Russia first. The President is pro-Russia, the corporates are pushing for it, political elements want it to generate demand post Brexit and the Security Services are riddled with people influenced by Russia.
Don’t think for one minute that Germany isn’t in the pocket of the Russians already at various levels.
Poland et al should be very wary.
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McCain’s head would explode.
Great Idea!!!
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Doesn’t a vacuum implode?
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“The EU strategy is also similar to gang membership. It’s far easier to get in than leave.”
…
No fan of The Eagles?
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“We haven’t had that spirit here since 1992… ”
(Year of Maastricht Tr)
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“The EU fears that if one country leaves, more will follow. That stance is akin to Vietnam War “domino theory“.” (Mish)
the EU’s fear is justified. the UK (or any other defection) will readily demonstrate the benefits of sovereignty, which easily outweigh the “benefits” of EU membership. the EU’s net contributors will further question their role as host to the club med parasite members, and the EU’s dependent members will further question their forced austerity (relative to sovereign currency control/devaluation). the EU is practically powerless to fix/reverse the dynamics that are ripping the experiment apart… the politics of change is impossible within the EU construct itself. however, change IS possible at the national level… which is exactly why devolution is inevitable.
“All the power lies with Europe and Britain holds no cards in the coming negotiations,” (Stephens)
this is straight-up propaganda… absolute nonsense. the UK holds ALL the cards here. the EU has practically zero leverage, and the element of time is working against the EU, too.
the EU remains lodged b/t a rock & a hard place, while the UK is literally “free” to pursue any & every opportunity in their national interest.
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“while the UK is literally “free” to pursue any & every opportunity in their national interest.”
…
Soros (and every other Globalists’) head would explode
Great Idea!!!
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There are some big forces lined up against the UK not least our own 5th Columnists throughout the establishment.
It would take too long to explain but the EU is a very pernicious organisation that deliberately weakens a countrys ability to self determine. It does it over a long period of time by infiltrating the system through the laws, regulations. Slowly a country is neutered and becomes no more than a vassal local authority.
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The EU will resort to non-tariff trade barriers.
Anyone with time – worth reading the downloadable PDF here:
“It’s Quite Ok To Walk Away”
http://www.civitas.org.uk/publications/its-quite-ok-to-walk-away/
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Put money on mad dogs and Englishmen over the English
Channel. Teutons have nothing on the Saxons.
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“Negotiations under Article 50 TEU will be conducted as a single package. In accordance with the principle that nothing is agreed until everything is agreed, individual items cannot be settled separately.”
They have lost it.
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That in a nutshell is the whole problem with the EU. For this single reason the EU will never ever ever ever become competitive. EVER!!!!!!!
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“The European Council expects the United Kingdom to honor its share of international commitments contracted in the context of its EU membership. In such instances, a constructive dialogue with the United Kingdom on a possible common approach towards third country partners and international organizations concerned should be engaged.”
So they are saying UK is bound by the deals EU has agreed to internationally while UK was member?
Completely unreal – the UK can renogotiate its accords with outside countries at will, with the pre-existing EU framework as only a starting point.
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“Arrangements ensuring legal certainty and equal treatment should be found for all court procedures pending before the Court of Justice of the European Union upon the date of withdrawal that involve the United Kingdom or natural or legal persons in the United Kingdom. The Court of Justice of the European Union should remain competent to adjudicate in these procedures.”
ECJ to have last say on all legal process started before 2019 involving the UK. That is madness as UK sovereignty will be subject to EU until the last case is resolved ( decades if not ‘forever’).
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“After the United Kingdom leaves the Union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom.”
An EU attempt to separate Gibraltar from UK by taking position that any deal reached for after exit will not apply to Gibraltar “unless Spain and UK agree” – i.e. means accepting Spain has veto of application of deal (which UK would be ‘enjoying’) to Gibraltar. It is like Brussels saying they want to be able to pick off Gibraltar
http://www.telegraph.co.uk/news/2017/03/31/outrage-spain-given-effective-veto-future-gibraltar-eu-plans/
Complete no-go.
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Gibraltar – Is that something like Crimea and Guantanamo or like Sth Vietnam and Sth Korea or is it just another Sudenlande.
http://www.wehrmacht-awards.com/service_awards/occupation_medals.htm
Europe is getting shaky if the idiots persist.
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Thanks, I appreciate details like that. It is hard to tell how much of what is happening regards Gibraltar is just political opportunism, and if that of itself might oblige a hostile stance, but I do know that there are enough Spanish who believe Gibraltar to be Spanish, to always have been, and with politicians around to match ( e.g. Margallo). This is where people might look up surprised…on the ground events shape differently when diplomacy and respect change, when all is condensed down to ‘can do’. I don’t think Spain would invade Gibraltar, but they might do everything else short of provoking a direct British military retaliation. You have to know what the mindset and sentiment is to understand, and it is almost impossible to describe properly. EU has also backed Spain / shunned Gibraltar in various ways, but normally has played to role of arbitrage, taking influence at the same time though.
Spain and Germany have an unusual relationship and influence over each other,
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If NATO survives there’s NO WAY they would want Spain running Gib.
The Spanish are a disaster including interfering with US Navy.
The soft under belly of Europe would be wide open. To the east Med Russia/Turkey via various influences, to the West WIDE OPEN.
The Spanish want Gib because it has been successful, because it’s not Spanish!!
If they get their hands on it all Gib financial influence will be actively attracted back to the UK and what will be left will be another part of Spain and a large defence vulnerability to southern Europe.
As for cutting off Gib, it has happened before. Make it a tax haven for wealthy Europeans and screw the EU. WE can support Gib via air and sea as long as necessary, lay off the Spanish workers to keep Gib people employed = Spain/EU suffers.
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There is a movement in Spain that rejects Nato, and Spain’s cooperation with Nato has been resentful at times. That is to say Nato influence on Spanish policy is not as strong as would seem.
Access to the Med/Atlantic would be more open re. Russia, but I think currently the flow of expansion is outwards from EU. Gibraltar is a signals base now, but being British it adds a something like a police post to the surrounding reality – like it or not, there is positive and negative to that. No way that UK will cede it. Gibraltarians voted overwhelmingly to stay in EU ( in great part to moderate Spain), but vote near unanimously to reject any adhesion to Spain.
Many Spanish have a hateful side, Gibraltar makes a good outlet for that, and local political triumph:
– “Spanish officials celebrated the EU’s decision to give Madrid the power to shape Gibraltar’s future, claiming it as their ‘colony’. The DailyMail.
The Spanish are very stupid in this respect, they will cut off their own noses for an ideal. The south of Spain is completely reliant on tourism, mostly British, Gibraltar is part of that. Now if it is a question of some clever people in EU wanting to punish UK, extend their influence over Spain by weakening it, making space for own presence, making Spain promises along the way, I might understand it, but it is still stupid of Spain to take that route and close doors. There are a lot of Spanish who understand this, but less more recently as the mentality and attitudes have become more discontent, spoilt, dis-appreciative of foreign inundation ( which they also invite and profit from), and it is easier to blame outsiders pushing up prices than their own corrupt politicians, poor management, the Euro, etc.
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US – UK free trade!
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Just when you thought the EU couldn’t make themselves look more lame and less relevant.
…and the fact the FT listed that opinion piece as “content” instead of admitting it is just one loser’s opinion, says a lot about how low the quality of editing has dropped.
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When I travelled in Europe in the past I always bought the FT everyday as a benchmark to gain an idea of what was going on. Every day.
No longer so. It lost its mantle a good while back.
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So the EU is saying more or less you cannot leave until we agree on everything togetherther. What is the impetus for that, one wants them to stay and one wants to leave. This is very high profile and will set a precedent for how other countries leave the EU. I am very curious how it all turns out.
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If not completed by 29th March 2019 UK is out and all Treaties dead. EU can then go screw itself.
A) The EU won’t discuss anything until the exit bill is finalised.
B) Germany says also no Trade talks until the 2 years are up. No exit + trade talks in parallel.
C) EU also says no Trade unless various controls remain in the EU anyway -stuff the UK voted to get out from under. Therefore – I see NO DEAL as the outcome.
The ball is in the EU court now. If the UK is OK to Walk With No deal then all rights of the EU finish in 2 years, their fishing fleets need to go elsewhere, no security co-operation, defence folded back to NATO obligations only. ALL PAYMENTS TO EU CEASE IMMEDIATELY.
I suspect al BS until just around Christmas 2018 when panic sets in, especially once the EU understands the UK is planning for NO DEAL.
The 2 year limit was set by the EU. Their problem now.
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Britain imports half its food, but the US will sent Britain food. We have lots of arable land. The European energy pipelines are a bit of a complication.
Other than importing natural resources, trade doesn’t really benefit Joe average. Bankers print CPI inflation regardless of how much trade there is, so prices never get better at the store due to trade.
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The EU can make all the noise it wants but the only thing it can really do is shoot itself in the foot. President Trump has dramatically changed the balance of power in Britain’s trade negotiations with the EU. Any hope the Euro-zone is about to suddenly turn the corner is more based on false hope and a wish than a reflection of events on the ground.
The fact is their banks are neither “fixed” or the system healthy. Greek debt it again an issue. Italy is deeply in debt, unemployment is high in many countries especially among the youth population, and refugees continue to flood in adding more stress to an overburdened social system. The article below delves into these problems.
http://brucewilds.blogspot.com/2017/02/euro-zone-woes-continue-enshrouded-by.html
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This much I’m sure of…the people who voted FOR “Brexit” are a bunch of racist Xenophobes who blame others for all of their shortcomings. Trying-to-be “Trump voters”, you could call them.
Socialism NOW!!!
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