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‘The risk of #Brexit happening without a ratified deal still exists’ Phil Hogan 

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European Commissioner for Trade, Phil Hogan

Speaking at his first event in Ireland as the European Commissioner for Trade (6 December), Phil Hogan addressed what he described as the ‘seemingly endless’ question of Brexit, as well as other pressing trade issues.  

Hogan is hoping that next week’s UK general election will provide clarity and unblock paralysis. He told Irish business leaders that ‘we are not out of the woods yet’ and that the risk of a ‘no deal’ Brexit still exist. He advised the audience of Irish businesses to continue with their work on preparedness given the lack of certainty. The Commissioner appeared to unwittingly acknowledge that a new government, of any hue, will not deliver clarity on what the UK’s situation will be at the end of 2021. 

EU still in the dark about what the UK wants 

Hogan accused the British media of quoting him out of context when he said that he thought that a deal was achievable before the end of 2020. He said the truth was that there was no accurate way to predict how long it would take to negotiate a deal with the UK as there was no precedent. He said that the UK needs to focus on content, the ‘nuts and bolts’ not timing. 

Hogan said he was still in the dark about what type of Free Trade Agreement the UK ultimately want. He said that the UK must outline preferences, define its offensive and defensive interests for each stage of the negotiations, consider the necessary trade-offs and compromises. He urged UK negotiators to involve also stakeholders in defining each stage of negotiations and to have a frank discussion about pros and cons. He said that there was little point negotiating a deal without knowing whether it will gain domestic approval. 

Hogan said the new agreement will secure that there was no hard border on the island of Ireland, but did not address the checks and controls that would apply across the Irish Sea. Today, the Labour Party revealed the contacts of a report on future arrangements written by Her Majesty’s Treasury. Labour Shadow Secretary of State for Brexit Keir Starmer accused Prime Minister Boris Johnson of lying about his deal when he has made repeated claims that it would mean no customs checks between Northern Ireland and Great Britain.  

Hogan told his audience that he warmly welcomed the deal's commitment to maintaining EU state aid and VAT rules in Northern Ireland, enforceable in the European Court of Justice.  

Making a point that has been made by the EU’s Chief Negotiator Michel Barnier, he made it clear that given the EU’s geographical proximity and economic interdependence the EU would expect solid guarantees in relation to state aid, labour, environmental protection and tax arrangements. He said that the EU has made it abundantly clear that an ‘ambitious’ deal will be contingent on these guarantees.  

It is the UK’s desire to diverge from these EU level-playing-field standards that will be highly problematic. During the campaign Johnson has promised that he will introduce new state aid rules, that will allow the government to intervene more in the economy.  

Hogan lamented that many in the UK had not yet ‘woken up’ to the fact that anything other than EU membership would be greatly inferior to the status quo. 

Brexit

EU tells UK to say how long it will align with EU financial rules

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Britain must spell out how far it wants to diverge from European Union rules if it wants access to the bloc’s financial market from January, a top European Commission official said on Tuesday (27 October), writes

Britain has left the EU and access under transition arrangements ends on 31 December. Future access for the City of London hinges on UK financial rules staying aligned or “equivalent” to regulation in the bloc.

John Berrigan, head of the European Commission’s financial services unit, said Brussels has asked London for more clarification on Britain’s intentions to work out what is an “acceptable level” of divergence.

“We are almost ready,” Berrigan told the European Parliament.

“There will be divergence... but we have to get some mutual understanding of how much divergence is likely to happen, and is that going to be sufficient to allow us to maintain an equivalence arrangement.”

Brussels has granted temporary access for UK clearing houses, but chunks of stock and derivatives trading would move from London to the bloc without equivalence.

Separately, Britain and the EU are discussing a trade deal which would contain only limited references to financial services to avoid tying the bloc’s hands, Berrigan said.

“We see our regulatory co-operation in the financial services field outside the agreement,” he said.

It would consist of a “forum” similar to what the bloc has with the United States to assess potential divergence in rules ahead of time, he said.

“What we don’t want is an equivalence regime that is constantly under threat,” he said.

“We will need at the outset the direction of travel the UK want to go... so we don’t have to keep talking in emergencies about whether equivalence can be maintained or not.”

Britain has said that while it won’t weaken its high regulatory standards, it won’t be a “rule taker” or copy every EU regulation word-for-word to obtain market access.

Berrigan said market participants are generally ready for the “unavoidably fragmenting event” that full Brexit will be in January.

No trade deal would make future cooperation in financial services far more challenging, he added.

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UK will not back down on fisheries policy in EU talks: Gove

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Britain will not back down on its demands to the European Union over fisheries, minister Michael Gove said in a 26 October letter sent to a minister in the devolved Welsh government, writes William James.

Responding to concerns set out by Jeremy Miles, Wales’s Minister for European Transition, Gove wrote: “I am afraid we strongly disagree with your premise that we should ‘back down’ on fisheries.

“The UK government’s view is that in all circumstances, the UK must be an independent coastal state, no longer be bound by the Common Fisheries Policy.”

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Brexit decision entirely separate from US election outcome says PM Johnson

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Britain’s decision on whether to agree a Brexit deal with the European Union is entirely separate to the outcome of the US election next month, Prime Minister Boris Johnson said on Monday (26 October), writes William James.

“The two things are entirely separate,” Johnson said, when asked about an Observer newspaper report that he was waiting to see the US result before making a Brexit decision, and whether he was concerned about the prospect of a Joe Biden presidency.

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