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May’s Brexit Plan Gets Pushback From EU

Posted by hkarner - 22. Juli 2018

Date: 21-07-2018
Source: The Wall Street Journal

The EU’s chief negotiator casts doubt on key elements, raising the risk of a chaotic separation

The European Union’s chief Brexit negotiator Michel Barnier said some major aspects of U.K. Prime Minister Theresa May’s plan weren’t practical.

BRUSSELS—The European Union’s chief Brexit negotiator raised serious doubts about U.K. Prime Minister Theresa May’s plan for Britain’s future trade relationship with the bloc, saying parts of it would risk undermining the EU’s single market in goods and services.

In the first official reaction from the EU to the plan, Michel Barnier said Friday that it contained some positive suggestions but that key elements violated negotiating guidelines laid out by EU leaders.

The cool response underlines the risks that Britain could crash out of the bloc without a Brexit deal on March 29, 2019. With that departure date, EU officials warn that there are roughly three months left to solve remaining disagreements about the terms of Britain’s exit and to sketch the shape of future economic and security ties. The deal must be agreed by the U.K. parliament and the European Parliament.

Mr. Barnier’s comments offer little political respite for Mrs. May, who is facing growing challenges to her authority from pro-European and pro-Brexit wings of her Conservative government.

Divisions within her own party slowed the development of the detailed exit plan, which was announced more than two years after the June 2016 referendum vote to leave the bloc. The proposal was finally agreed at a key cabinet meeting this month at her official residence of Chequers, and led to the resignations of her foreign secretary Boris Johnson and chief Brexit negotiator David Davis.

On Friday, after the latest week of talks between the two sides, Mrs. May called for the EU to show more flexibility. In a speech in Northern Ireland, she doubled down on her opposition to EU proposals to impose what would effectively be a customs border in the Irish Sea between mainland Britain and Northern Ireland, also part of the U.K.

“It is now for the EU to respond,” she said. “Not simply to fall back on to previous positions which have already been proven unworkable. But to evolve their position in kind.”

At the heart of the U.K.’s proposal is an offer to accept EU rules on goods and agriculture in order to continue to enjoy frictionless trade for these categories. Britain would be free to develop its own rules for services, but financial and other companies would lose automatic access to EU markets.

Speaking after meeting ministers from the EU’s other 27 countries, Mr. Barnier said there are several elements in Britain’s proposal which would help build common ground. Those included British pledges to adopt a level playing field on environmental and state-aid rules.

“Then there are some points which raise some questions,” he said.

Mr. Barnier questioned the practicality of major aspects of Britain’s proposal. Under Mrs. May’s plan, Britain would impose different tariffs on goods depending on whether those goods would remain in the U.K. or be transported to the EU. That may increase the costs of doing business and make it easier to perpetrate fraud, Mr. Barnier said.

Mr. Barnier said his core concern was that Britain’s plan—by focusing on the trade of goods—would undercut the bloc’s single market of goods and services, access to which is tied to obligations like accepting the oversight of EU courts and allowing in workers from other EU states.

“Why would the European Union take such risks of weakening the single market, which is its principle asset,” he said.

Mr. Barnier met Thursday evening with Britain’s new Brexit minister, Dominic Raab, and the two agreed to continue negotiations throughout the summer in a bid to reach a deal by November.

That deal needs to include agreement on Britain’s exit terms from the bloc and a declaration on the shape of the future relationship. The key sticking point on the withdrawal agreement remains how to avoid the return of a hard border between Northern Ireland and the Republic of Ireland, which will remain in the EU.

Failure to resolve that issue has led to rising warnings of a “no-deal” Brexit. Both the EU and the U.K. have stepped up their preparations in recent days for such an outcome.

“If we fail with the orderly withdrawal of the U.K., it also means the perspective of an ambitious future relationship is in danger,” Poland’s EU affairs minister Konrad Szymanksi said in an interview on Friday. “This is a lose-lose-lose domino effect.”

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