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Britain agrees to EU request for more time to ratify Brexit trade deal

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Britain has agreed to the European Union’s request to delay ratification of their post-Brexit trade agreement until 30 April, cabinet office minister Michael Gove (pictured) said on Tuesday (23 February), writes Elizabeth Piper.

Earlier this month, the EU asked Britain if it could take extra time to ratify the agreement by extending until 30 April provisional application of the deal to ensure it was in all 24 of the bloc’s languages for parliamentary scrutiny.

In a letter to Maros Sefcovic, vice president of the European Commission, Gove wrote: “I can confirm that the United Kingdom is content to agree that the date on which provisional application shall cease to apply ... should be extended to 30 April 2021.”

He also said Britain expected there to be no more delays.

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UK and Gibraltar gear up for tough negotiations with EU

Catherine Feore

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Today (29 March), UK Foreign Secretary Dominic Raab and Gibraltar Chief Minister Fabian Picardo met in the UK-Gibraltar Joint Ministerial Council. Discussions were focused on the need to reach an agreement on a future treaty between the UK and EU in respect of Gibraltar.

Gibraltar was not covered by the EU-UK Trade and Cooperation Agreement agreed at the end of 2020, however, an “in principle” political agreement on a “proposed framework for a EU/UK agreement or treaty on Gibraltar’s future relationship with the EU” was reached between Spain and the UK on 31 December 2020.

The discussions on 31 December went to the wire, in a statement at the time the Gibraltar Chief Minister described the discussions as: “So close to the wire that I think all of us involved in the negotiation felt the wire cutting into our flesh as we finalized arrangements in the early hours of this morning.”

The Chief Minister thanked the Spanish Prime Minister for reaching an agreement that looked beyond the disputed issue of sovereignty of the rock. He also thanked both the Prime Minister and the Foreign Secretary, at the time, for understanding the need for a differentiated solution for Gibraltar’s “socio-economic and geographic reality”.

Nevertheless, the agreement involved significant compromise on issues usually associated with a sovereign state. Spain, as the neighbouring Schengen member state, will be responsible for the implementation of Schengen. This will be managed by the introduction of a FRONTEX (EU border agency) operation for the control of entry and exit points from the Schengen area at the Gibraltar entry points, for an initial four year period. It will also seek to address maximized and unrestricted mobility of goods between Gibraltar and the European Union. The agreement also touched on a wide range of other issues from the level playing field to citizens’ rights. 

The European Commission is currently developing its own mandate for the negotiation of a Treaty, which is expected in the near future. This will then need to be agreed by the European Council before negotiations begin. A key issue for Gibrlatar will be the need to maintain freedom of movement given that 40% of its workforce crosses the border from Spain each day. The overseas territory is also heavily dependent on its offshore banking.

Ahead of today’s meeting British Foreign Secretary Dominic Raab said: “As a valued member of the UK family, we stand side by side with Gibraltar as we enter into the forthcoming negotiations with the EU on Gibraltar’s future relationship.

“We are committed to delivering a treaty which safeguards the UK's sovereignty of Gibraltar and supports the prosperity of both Gibraltar and the surrounding region.”

Current relations between the EU and UK have deteriorated, in relation to the commitments it made in the Withdrawal Agreement; in particular, the UK has taken a unilateral decision outside the agreements decision procedures to suspend many of the obligations for a six-month period to October. The Commission has started a legal infringement procedure against the UK for failure to respect the agreement and for being in breach of its commitment to act in good faith.

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Brexit and the City of London: What has changed?

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Britain and the European Union agreed a new post-Brexit financial services pact on Friday that will allow them to co-operate on regulation but does little to improve the City of London’s access to the bloc, writes Huw Jones.

Britain left the European Union in January and its £130 billion ($179.17bn) financial services sector lost direct access to the bloc, which had been its biggest customer, worth about £30bn per year.

The relationship helped cement London’s position as one of the world’s biggest financial centres and as a major contributor to British tax revenues.

The following details how the City of London’s ability to access the EU market and serve clients in the bloc has changed.

WHAT CHANGED IN JANUARY FOR THE CITY?

Financial services were not part of the EU-UK trade deal that came into effect in January. Blanket access for British financial firms to the EU has ended and any future access will depend on an EU system known as equivalence.

WHAT IS THE NEW COOPERATION PACT?

The pact sets up a forum, similar to what the EU already has had for years with the United States. It will provide a space for informal and non-binding discussions between UK and EU financial regulators, but not negotiate market access.

WHAT IS EQUIVALENCE?

This refers to an EU system that grants market access to foreign banks, insurers and other financial firms if their home rules are deemed by Brussels to be “equivalent”, or as robust as regulations in the bloc.

It is a patchy form of access that excludes financial activities like retail banking. It is a far cry from continued “passporting”, or full access, that banks lobbied for in the aftermath of the 2016 British referendum vote to leave the EU.

Access under the system of equivalence can be withdrawn at one month’s notice, making it unreliable, but Britain hopes the new regulatory forum can help persuade Brussels to make the system more predictable.

HAS EQUIVALENCE BEEN GRANTED?

Brussels has only granted equivalence so far for two activities: derivatives clearing houses in Britain since January for 18 months, and settling Irish securities transactions until June.

Brussels says it is in “no rush” to grant equivalence given that it wants to build up its own capital markets to cut reliance on the City and see how far Britain wants to diverge from rules used in the bloc.

Faced with limited or no direct access, financial firms in London have already moved 7,500 jobs and over a trillion pounds in assets to new EU hubs to avoid disruption to EU clients.

Trading euro stocks, bonds and derivatives have left London, turning Amsterdam into Europe’s biggest share trading centre. Britain and the EU have agreed that asset managers in London can continue to pick stocks for funds in the EU.

WILL EU FINANCIAL FIRMS HAVE TO LEAVE LONDON?

No. To help maintain London as a global financial centre Britain is allowing EU firms to stay for up to three years, in the hope they will apply for permanent UK authorisation. Britain is also unilaterally allowing financial firms in the EU to offer selected services like credit ratings directly to British customers.

Britain has allowed UK firms to use derivatives trading platforms in the bloc to avoid ruptures in business with EU clients.

WHAT’S ALL THIS TALK ABOUT DIVERGENCE?

Brussels says it won’t grant market access until it has a clear idea of how far Britain wants to diverge from financial rules inherited from the bloc, fearing that the City will end up with a competitive edge over the bloc’s banks.

Britain has said it won’t apply some EU rules, will tweak others like insurance capital norms, and will introduce its own version of pending European regulation for investment firms.

It is also easing listing rules, making Britain more attractive for fintechs, and due to publish proposals to make the capital market more globallly attractive. It has already started by easing curbs on “dark” or anonymous share trading, a practice EU countries distrust.

Britain insists it won’t lower standards and will stick to any rules agreed at the global level.

WILL BREXIT END LONDON’S REIGN AS EUROPE’S TOP FINANCIAL

CENTRE?

For now, no. London still has a towering lead over rivals Frankfurt, Milan and Paris when it comes to trading stocks, currencies and derivatives and playing host to asset managers.

Financial firms say shifting more capital out of London than is necessary under Brexit would cause unnecessary and costly market fragmentation.

But in the longer term, if the EU takes a tough line on equivalence and its financial centres reach a critical mass in trading key asset classes, the attractions of London as a financial hub would diminish.

($1 = £0.7256)

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Britain toughens its post-Brexit asylum system

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Britain will introduce new rules for those seeking asylum, making it more difficult for refugees entering illegally to stay in the country in what Interior Minister Priti Patel (pictured) called a firm but fair system, writes Elizabeth Piper.

Since Britain completed its exit from the European Union at the end of last year, Prime Minister Boris Johnson has been keen to set out a new independent vision for the country, unveiling new policies on defence, foreign affairs to immigration.

In what the government calls the biggest overhaul of the asylum system in decades, the “New Plan for Immigration” sets out a plan to resettle refugees at urgent risk more quickly while making it more difficult for those arriving illegally.

“Under our New Plan for Immigration, if people arrive illegally, they will no longer have the same entitlements as those who arrive legally, and it will be harder for them to stay,” Patel said in a statement.

“Profiteering from illegal migration to Britain will no longer be worth the risk, with new maximum life sentences for people smugglers ... I make no apology for these actions being firm, but as they will also save lives and target people smugglers, they are also undeniably fair.”

She also said those arriving after travelling through a safe country such as France would not have immediate entry into the system and that the government “would stop the most unscrupulous abusing the system by posing as children”.

Reducing immigration was one of the promises made by the Vote Leave campaign, for which Johnson was a figurehead, during the 2016 referendum on membership of the EU, and the government has said it would toughen up its post-Brexit asylum system.

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