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Brexit talks still stuck because EU is asking too much, UK says

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Brexit trade talks are stuck on fishing, governance rules and dispute resolution because the European Union is asking too much of Britain, a senior member of the British government said on Tuesday (1 December), write and

Just 30 days before Britain leaves the EU’s orbit following a transition period since it formally quit the bloc, the sides are trying to agree a trade deal to avoid a turbulent rupture that could snarl almost $1 trillion in annual trade.

With each side urging the other to compromise, a French official said Britain must clarify its positions and “really negotiate”, and cautioned that the EU would not accept a “substandard deal”.

Even if a trade accord is secured, it is likely to be just a narrow deal on goods, and some disruption is almost certain as border controls are erected between the world’s biggest trading block and Britain.

Talks have snagged on fishing in Britain’s rich waters, on what EU rules London will accept and on how any dispute might be resolved.

“The EU still wants to take the lion’s share of the fishing in our waters - which is just not fair given that we are leaving the EU,” Michael Gove, Chancellor of the Duchy of Lancaster and a senior ally of Prime Minister Boris Johnson, told Sky.

“The EU still want us to be tied to their way of doing things,” Gove said. “The EU are at the moment reserving the right, if there is any sort of dispute, not quite to rip everything up but to impose some really penal and tough restrictions on us, and we don’t think that’s fair.”

A trade deal would not only safeguard trade but also buttress peace in British-ruled Northern Ireland, though some disruption is almost certain at the busiest EU-UK border points.

Failure to secure a deal would snarl borders, spook financial markets and disrupt delicate supply chains that stretch across Europe and beyond -- just as the world grapples with the vast economic cost of the COVID-19 outbreak.

UK's Gove says there's a chance of a no-deal Brexit

Gove said the process was close to conclusion but avoided repeating an earlier prediction of a 66% probability of a deal. He declined to put a figure on the probability.

German Chancellor Angela Merkel, Europe’s most powerful national leader, has said some of the EU’s 27 member states are getting impatient.

“The priority is for the British to clarify their positions and really negotiate to find a deal,” a French presidency official told Reuters. “The EU also has interests to fight for, those of a fair competition for its businesses and those of its fishermen.”

“The Union has made a clear and balanced offer for a future partnership with Britain. We will not accept a substandard deal which would not respect our own interests,” the official said.

Irish Prime Minister Micheal Martin said a deal could be done this week.

“There is a landing zone for an agreement,” Martin told the Irish Times in an interview. “We are now really in the endgame if a deal is to be arrived at this week.”

Brexit

Brexit butchers EU trade for Scottish beef producers

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Brexit has dealt a blow to Andrew Duff’s business. His burgeoning sales of high end Scottish beef to Europe are on hold because his business is too small to navigate the post-Brexit customs border for now, writes .

The 32-year-old had been on the verge of expanding the family business, using his social media marketing skills to promote the rare beef that has been reared on farms across the Scottish lowlands and borders for centuries.

Instead his Macduff business is now one of thousands across Britain that lack the financial firepower to throw at the myriad health checks, customs declarations and higher logistics costs that are required to export goods into the European Union.

“With these customers it takes years to build the relationship and get them on board, and it can take seconds to lose,” said Duff, whose clients include an award-winning butcher in Germany and a Michelin-starred restaurant in Belgium.

“Luckily January is a quiet month. Come February, March, if the situation is still the same then it could be problematic,” he told Reuters.

Far from the dire warnings of clogged ports and tailbacks that preceded the departure, Brexit so far has seen factories and fishermen unable to complete paperwork and get the goods off their yard. Many still do not know which forms need completing. Different couriers give different answers.

The government has said it is helping businesses deal with the “teething problems”. It has urged exporters to make sure their paperwork is in order and said it will give 23 million pounds ($31 million) to fishermen who have lost sales due to delivery delays.

Prime Minister Boris Johnson argued that Britain would be free to trade globally once it had cast off the shackles of the EU. But his pursuit of a relationship that enables Britain to set its own rules means those firms trading with Europe face a full customs border.

Hardest-hit are the small companies that built up during Britain’s 47-year membership of the world’s biggest trading bloc to sell often low-priced product that was couriered at speed across the continent.

Almost half of 2018’s 76 billion pounds in exports to the EU from small and medium sized enterprises came from firms employing fewer than 9 people.

Where a huge meat or fish producer can fill one truck with one product and complete one set of customs paperwork, Duff sources top quality cattle from a selection of farms.

His goods - bone-in pieces from Shorthorn and Luing breeds - are sent on a truck carrying products from other suppliers, a process known as groupage.

Now a vet-approved health certificate is required for each firm’s goods, meaning potentially up to 30 per truck. One fish exporter said he needed over 400 pages of export documentation for one EU-bound lorry. One error can block delivery.

Duff’s transport company have said they are struggling as it is to help big customers, so groupage must wait.

He is also worried about prices, knowing that he cannot absorb all the costs of customs declarations, longer logistics times and the health certificates.

Logistics bosses believe Brexit could force a shake-out in trade. Truck volumes between Britain and the EU were on average down 29% in the first 20 days of the year, according to data firm Sixfold. Logistics groups say some trucks are returning empty to Europe to avoid export paperwork. Prices are rising.

One of those caught up in the bureaucracy is Sarah Braithwaite, who worked 16-hour days to build a horse feed firm that until 1 January was selling into 20 European countries.

This month her stock has failed to get to Europe or been rejected by customers over unexpected customs bills and taxes. Her Forage Plus has halted European orders - making up to 30% of her sales - and is refunding £40,000 to customers.

Braithwaite says her business is too small to build a presence in Europe to overcome the new barriers. “The trade that we’ve got now wouldn’t support the cost of setting all that up,” she said.

Both she and Duff are hopeful that exports can resume once the new system has bedded in but nerves are frayed. In desperation Braithwaite called the UK government for help.

The message she got back: ring the French embassy.

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‘It is not a friendly signal from the UK immediately after leaving the European Union’ Borrell

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The EU’s High Representative on Foreign Affairs, Josep Borrell, was asked about the decision of the UK to refuse full diplomatic status to the EU Ambassador to the UK Joao Vale de Almeida and his team in London. Borrell said that it was not a friendly signal from the UK immediately after leaving the European Union.

Borrell pointed out that the EU’s 143 delegations around the world had all - without exception - granted the delegations a status equivalent to that under the Vienna Convention. He said that the EU would not accept that the UK would be the only country in the world that will not give the EU delegation the recognition equivalent to that of a diplomatic mission. 

“Granting reciprocal treatment based on the Vienna Convention on Diplomatic Relations is standard practice between equal partners and we are confident that we can clear this issue with our friends in London in a satisfactory manner,” said Peter Stano, the commission’s spokesman for foreign affairs.

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Commission proposes to amend the EU's 2021 budget to accommodate the Brexit Adjustment Reserve

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Following the proposal for a Brexit Adjustment Reserve the Commission put forward on 25 December, the Commission has today proposed a €4.24 billion increase (equal to €4bn in 2018 prices) of the EU's 2021 budget. This will ensure sufficient resources are available this year to support EU countries in addressing the immediate effects of Brexit. The total amount for the Brexit Adjustment Reserve is €5bn in 2018 prices, or €5.37bn in current prices for the MFF 2021-27. This would bring the budget to €168.5bn in commitments and €170.3bn in payments.

Commenting on the decision, Commissioner Hahn said: “The EU budget has always been and continues to be a tool to deliver on EU's political commitments. The Brexit Adjustment Reserve is yet another example of European solidarity. The Commission will now work with the European Parliament and the Council to ensure that money becomes available to businesses and companies, regions and local communities as soon as possible.”

Cohesion and Reforms Commissioner Elisa Ferreira (pictured) added: “Our motto in Cohesion policy is to leave no one behind. The Brexit Adjustment Reserve will come in support to those most impacted by Brexit. European unity was key throughout the negotiations and European solidarity will be crucial to deal with the outcome.”

The Brexit Adjustment Reserve will be rapidly available and flexible, and will cover expenditure to counter adverse consequences of Brexit in all member states over a period of 30 months. The vast majority will be allocated through pre-financing already in 2021, calculated on the basis of the expected impact of the end of the transition period on each member state's economy, taking into account the relative degree of economic integration with the UK. This includes trade in goods and services, and the negative implications on the EU fisheries sector.

An initial breakdown per member state is available online here. The remaining €1 billion in 2018 prices will be paid in 2024, after the member states have notified the Commission about the actual expenditures incurred. This will allow to respond to unforeseen events, and ensure that the support from the Brexit Adjustment Reserve is concentrated on the members states and sectors most affected by the withdrawal. For more information on the Brexit Adjustment Reserve, see here and here.

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