Tag: Single Market

Brexit red tape to send UK food prices soaring even higher

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LONDON — A new system of border checks on goods arriving from Europe is expected to force rocketing U.K. food prices even higher as businesses grapple with hundreds of millions of pounds in extra fees.
British business groups last week got sight of the U.K. government’s long-awaited post-Brexit border plans, via a series of consultations. One person in attendance said the proposals will “substantially increase food costs” for consumers from January.
That could spell trouble in a country which imports nearly 30 percent of all its food from the EU, according to 2020 figures from the British Retail Consortium, and where the annual rate of food and drink inflation just hit 19.2 percent — its highest level in 45 years.

Government officials told business reps at one consultation that firms will be hit with £400 million in extra costs as a result of long-deferred new checks at the U.K. border for goods entering from the EU.
Ministers have argued that the full implementation of the new post-Brexit procedures — which will eventually include full digitization of paperwork and a “trusted trader scheme” for major importers in order to reduce border checks — will more than offset these costs in the long-run as they will also be rolled out for imports coming from non-EU countries as well.
Supply-chain disruption caused by the Ukraine war, poor weather and new trade barriers due to Brexit have all been blamed for the U.K.’s surge in food prices.
A member of a major British business group, speaking on the condition of anonymity, said that incoming post-Brexit red tape will mean “some producers on the EU side will find it is no longer possible to trade with the U.K.” and that “some small businesses will find themselves shut out.”
“It will add to the costs, and probably inflation, but I think we need to go through this so we can work with the EU to find advantageous improvements,” they said.
“We can’t keep running away from the fact we need to implement our own border checks.”
‘Not business as usual’
Britain has delayed the implementation of full post-Brexit border checks multiple times, while the EU began its own more than two years ago.
The government’s new “target operating model,” published last month, will see the phased implementation of new border and customs checks for EU imports from October.
This will include a new fee that must be paid from January for all goods that are eligible for border checks, including items like chilled meat, dairy products and vegetables.
A new fee will be applied from January for all goods that are eligible for border checks, including items like chilled meat, dairy products and vegetables | Paul Faith/AFP via Getty Images
Each batch of goods that could be subject to checks, even if they are ultimately not chosen by border staff for inspection, will be hit with a fee of between £23 to £43 at inland ports.
The first business figure quoted above said the scale of the new fees came as a surprise, after firms had been previously assured by the government that these costs would be dependent on whether goods had actually been checked.
“[Former minister] Jacob Rees-Mogg said there would be minimal costs. Initially we thought it was business as usual, but it’s not,” they said.
“There were people at this [consultation] saying that this is not a massive increase, but it will substantially increase food costs.”
William Bain, trade expert at the British Chambers of Commerce, said there is a “strong prospect” of higher inflation due to the new Brexit checks.
“EU suppliers may be less willing to trade with British based companies, because of increased costs and paperwork. The costs of imported goods would almost certainly increase,” he said.
But he added: “We knew this day was coming and that inbound controls on goods would be applied. It’s a part of having a functional border and complying with the U.K.’s international commitments.”
Reality check
The U.K. has seen trade flows with the EU disrupted since leaving the bloc’s single market and customs union.
Recent analysis by the Financial Times found that Britain’s goods exports are dropping at a faster rate than in any other G7 country.
Recent figures from the Office for National Statistics meanwhile show that U.K. trade in goods with EU countries fell at a much faster rate than from non-EU countries in January.
Conservative MP Tobias Ellwood told POLITICO that he fears his party will pay a price at the next general election, due to be held by January 2025, if the government does not seek better trading arrangements with the EU.
“There’s certainly a revision across the nation when it comes to Brexit — people are realising that what we have today isn’t what they imagined, whether you voted for Remain or for Brexit,” he said.
“The reality check is that it has become tougher economically to do business with the Continent and quite rightly there’s an expectation that we fix this.”
A government spokesperson said: “The target operating model implements important border controls which will help protect consumers and our environment and assure our trade partners about the quality of our exports.
“It implements these important controls in a way which minimises costs for businesses and prevents delays at the border.”

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( With inputs from : www.politico.eu )

April 26, 2023
Biden’s Northern Ireland ultimatum looks doomed to fail

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LONDON — Joe Biden is not someone known for his subtlety.
His gaffe-prone nature — which saw him last week confuse the New Zealand rugby team with British forces from the Irish War of Independence — leaves little in the way of nuance.
But he is also a sentimental man from a long gone era of Washington, who specializes in a type of homespun, aw-shucks affability that would be seen as naff in a younger president.

His lack of subtlety was on show in Belfast last week as he issued a thinly veiled ultimatum to the Democratic Unionist Party (DUP) — return to Northern Ireland’s power sharing arrangements or risk losing billions of dollars in U.S. business investment.
The DUP — a unionist party that does not take kindly to lectures from American presidents — is refusing to sit in Stormont, the Northern Ireland Assembly, due to its anger with the post-Brexit Northern Ireland protocol, which has created trade friction between the region and the rest of the U.K.
The DUP is also refusing to support the U.K.-EU Windsor Framework, which aims to fix the economic problems created by the protocol, despite hopes it would see the party reconvene the Northern Irish Assembly.
The president on Wednesday urged Northern Irish leaders to “unleash this incredible economic opportunity, which is just beginning.”
However, American business groups paint a far more complex and nuanced view of future foreign investment into Northern Ireland than offered up by Biden.
Biden told a Belfast crowd on Wednesday there were “scores of major American corporations wanting to come here” to invest, but that a suspended Stormont was acting as a block on that activity.
One U.S. business figure, who spoke on condition of anonymity, said Biden’s flighty rhetoric was “exaggerated” and that many businesses would be looking beyond the state of the regional assembly to make their investment decisions.
The president spoke as if Ulster would be rewarded with floods of American greenbacks if the DUP reverses its intransigence, predicting that Northern Ireland’s gross domestic product (GDP) would soon be triple its 1998 level. Its GDP is currently around double the size of when the Good Friday Agreement was struck in 1998.
Emanuel Adam, executive director of BritishAmerican Business, said this sounded like a “magic figure” unless Biden “knows something we don’t know about.”
DUP MP Ian Paisley Jr. told POLITICO that U.S. politicians for “too long” have “promised some economic El Dorado or bonanza if you only do what we say politically … but that bonanza has never arrived and people are not naive enough here to believe it ever will.”
“A presidential visit is always welcome, but the glitter on top is not an economic driver,” he said.
Joe Biden addresses a crowd of thousands on April 14, 2023 in Ballina, Ireland | Charles McQuillan/Getty Images
Facing both ways
The British government is hoping the Windsor Framework will ease economic tensions in Northern Ireland and create politically stable conditions for inward foreign direct investment.
The framework removes many checks on goods going from Great Britain to Northern Ireland and has begun to slowly create a more collaborative relationship between London and Brussels on a number of fronts — two elements which have been warmly welcomed across the Atlantic.
Prime Minister Rishi Sunak has said Northern Ireland is in a “special” position of having access to the EU’s single market, to avoid a hard border with the Republic of Ireland, and the U.K.’s internal market.
“That’s like the world’s most exciting economic zone,” Sunak said in February.
Jake Colvin, head of Washington’s National Foreign Trade Council business group, said U.S. firms wanted to see “confidence that the frictions over the protocol have indeed been resolved.”
“Businesses will look to mechanisms like the Windsor Framework to provide stability,” he said.
Marjorie Chorlins, senior vice president for Europe at the U.S. Chamber of Commerce, said the Windsor Framework was “very important” for U.S. businesses and that “certainty about the relationship between the U.K. and the EU is critical.”
She said a reconvened Stormont would mean more legislative stability on issues like skills and healthcare, but added that there were a whole range of other broader U.K. wide economic factors that will play a major part in investment decisions.
This is particularly salient in a week where official figures showed the U.K.’s GDP flatlining and predictions that Britain will be the worst economic performer in the G20 this year.
“We want to see a return to robust growth and prosperity for the U.K. broadly and are eager to work with government at all levels,” Chorlins said.
“Political and economic instability in the U.K. has been a challenge for businesses of all sizes.”
Prime Minister Rishi Sunak has said Northern Ireland is in a “special” position of having access to the EU’s single market | Pool photo by Paul Faith/Getty Images
Her words underline just how much global reputational damage last year’s carousel of prime ministers caused for the U.K., with Bank of England Governor Andrew Bailey recently warning of a “hangover effect” from Liz Truss’ premiership and the broader Westminster psychodrama of 2022.
America’s Northern Ireland envoy Joe Kennedy, grandson of Robert Kennedy, accompanied the president last week and has been charged with drumming up U.S. corporate interest in Northern Ireland.
Kennedy said Northern Ireland is already “the number-one foreign investment location for proximity and market access.”
Northern Ireland has been home to £1.5 billion of American investment in the past decade and had the second-most FDI projects per capita out of all U.K. regions in 2021.
Claire Hanna, Westminster MP for the nationalist SDLP, believes reconvening Stormont would “signal a seriousness that there isn’t going to be anymore mucking around.”
“It’s also about the signal that the restoration of Stormont sends — that these are the accepted trading arrangements,” she said.
Hanna says the DUP’s willingness to “demonize the two biggest trading blocs in the world — the U.S. and EU” — was damaging to the country’s future economic prospects.
‘The money goes south’
At a more practical level, Biden’s ultimatum appears to carry zero weight with DUP representatives.
DUP leader Jeffrey Donaldson made it clear last week that he was unmoved by Biden’s economic proclamations and gave no guarantee his party would sit in the regional assembly in the foreseeable future.
“President Biden is offering the hope of further American investment, which we always welcome,” Donaldson told POLITICO.
“But fundamental to the success of our economy is our ability to trade within our biggest market, which is of course the United Kingdom.”
A DUP official said U.S. governments had been promising extra American billions in exchange “for selling out to Sinn Féin and Dublin” since the 1990s and “when America talks about corporate investment, we get the crumbs and that investment really all ends up in the Republic [of Ireland].”
“President Biden is offering the hope of further American investment, which we always welcome,” Donaldson said | Behal/Irish Government via Getty Images
“The Americans talk big, but the money goes south,” the DUP official said.
This underscores the stark reality that challenges Northern Ireland any time it pitches for U.S. investment — the competing proposition offered by its southern neighbor with its internationally low 12.5 percent rate on corporate profits.
Emanuel Adam with BritishAmerican Business said there was a noticeable feeling in Washington that firms want to do business in Dublin.
“When [Irish Prime Minister] Leo Varadkar and his team were here recently, I could tell how confident the Irish are these days,” he said. “There are not as many questions for them as there are around the U.K.”
Biden’s economic ultimatum looks toothless from the DUP’s perspective and its resonance may be as short-lived as his trip to Belfast itself.
This story has been updated to correct an historical reference.

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( With inputs from : www.politico.eu )

April 11, 2023
Brexit: UK and EU strike deal on Northern Ireland protocol

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LONDON — The U.K. and the EU finally reached a deal after months of talks over contentious post-Brexit trade rules for Northern Ireland.
Already, both sides are pitching it as a major reset in frayed relations — but U.K. Prime Minister Rishi Sunak still has to sell it to skeptics in his own party and beyond.
The so-called “Windsor Framework” comes after a final day of talks between Sunak and European Commission President Ursula von der Leyen in Windsor.

In key developments Monday:
— Sunak and von der Leyen talked up the deal as a “new chapter” in EU-U.K. ties at a Windsor press conference.
— The U.K. PM urged his MPs to get behind him in a Commons statement, as key Brexiteers gave supportive early comments.
— Northern Ireland’s Democratic Unionist Party (DUP) vowed to study the text closely before deciding whether or not to back it.
— And Brexiteers in the U.K. hit out at No. 10 Downing Street over a meeting between King Charles III and von der Leyen on the same day a deal was struck.
‘New chapter’
Details of the new agreement are now being pored over by lawmakers on both sides of the English Channel, but the plan is aimed at easing customs red-tape, equalizing some tax rules across the United Kingdom, and giving Northern Ireland’s lawmakers more of a say over the future of the arrangement.
“The United Kingdom and European Union may have had our differences in the past, but we are allies, trading partners and friends, something that we’ve seen clearly in the past year as we joined with others to support Ukraine,” Sunak said at the joint press conference. “This is the beginning of a new chapter in our relationship.”
That line was echoed by von der Leyen, who said the plan would allow the two sides “to begin a new chapter,” and offer up “long-lasting solutions that both of us are confident will work for all people and businesses in Northern Ireland.”
Sunak — under pressure to hold a House of Commons vote on the agreement — told MPs Monday evening that the arrangement would end “burdensome customs bureaucracy” and “routine checks” on goods moving from Great Britain to Northern Ireland, and claimed he had “delivered what the people of Northern Ireland asked for … We have removed the border in the Irish Sea.”
He now faces the sizable task of convicing Brexiteer lawmakers on his own Conservative benches, many of whom will be closely watching the verdict of Northern Ireland’s fiercely anti-protocol DUP, to get on board.
“Our judgment and our principled position in opposing the protocol in Parliament and at Stormont has been vindicated,” said DUP leader Jeffrey Donaldson Monday night. “Undoubtedly it is now recognized that the protocol does not work. When others said there would be no renegotiation and no change, our determination has proved what can be achieved.”
Stormont brake
The protocol has been a long-running source of tension between the U.K. and the EU, and the two sides have been locked in months of talks to try to ease the way it works.
Under the arrangement, the EU requires checks on trade from Great Britain to Northern Ireland in order to preserve the integrity of its single market and avoid such checks taking place at the sensitive land border between Northern Ireland and the Republic of Ireland.
The DUP has been boycotting the region’s power-sharing government while it pushes for major changes to a set-up it sees as driving a wedge between Northern Ireland and the rest of the U.K.
Speaking at the press conference, Sunak and von der Leyen talked up a host of changes to the protocol that they hope will be enough to restore power-sharing in Northern Ireland.
Under the revised plan, goods moving from Great Britain but destined only for Northern Ireland will travel through a new “green lane” with fewer checks, while a separate, more stringent, “red lane” for goods at risk of moving on to the Republic of Ireland — and thereby entering the EU’s single market — will now operate.
Sunak said food retailers would “no longer need hundreds of certificates for every lorry” entering Northern Ireland, while food made to U.K. standards will be able to be freely sent to and sold in Northern Ireland. He also vowed that the new pact would scrap customs paperwork for people sending parcels to family or friends or shopping online.
UK PM Rishi Sunak and EU Commission president Ursula von der Leyen hope that the host of changes to the Brexit protocol announced today will be enough to restore power-sharing in Northern Ireland | Dan Kitwood/Pool/AFP via Getty Images
The two sides have also amended the text of the protocol, Sunak said, to allow U.K. VAT and excise changes to apply in Northern Ireland — while a “landmark” settlement on medicines will mean drugs approved for use by the U.K. medicines regulator will be “automatically available in every pharmacy and hospital in Northern Ireland.”
And London and Brussels are now jointly pitching a new “Stormont brake,” claiming this will allow the devolved assembly in Northern Ireland — currently on ice amid a DUP boycott over the protocl — to prevent changes to EU goods rules “that would have significant and lasting effects on everyday lives” from applying in the region.
“This gives the institutions of the Good Friday Agreement in Northern Ireland a powerful new safeguard based on cross-community consent,” Sunak promised.
DUP’s next move
As he departed for London, DUP leader Jeffrey Donaldson said he and senior party colleagues would “take time to look at the deal” – a process likely to run at least through the weekend and to involve specially-commissioned analysis by constitutional lawyers. Early word from some Conservative Brexiteers was positive, with David Davis — who quit Theresa May’s government over her own EU deal-making — hailed it as a “a formidable negotiating success.”
Before flying out of Belfast, Donaldson briefed his party’s 25 members of the Northern Ireland Assembly about the expected key points. The DUP lawmakers met at Stormont, the seat of the power-sharing legislature that the DUP has blocked since May.
Donaldson said the DUP’s legal counsel would produce a detailed analysis for consideration by the party’s executive officers.
“It is vital that Northern Ireland’s place within the U.K. and its internal market is restored. We will have lawyers assess the legal text to ensure that this [is] in fact the case,” Donaldson told the Belfast News Letter, the main unionist newspaper in Northern Ireland.
Later, Donaldson told the BBC he was “neither positive nor negative” when assessing whether the DUP should accept the compromise package on offer.
“We need to take time to look at the deal, what’s available, and how does that match our seven tests,” he said, referring to the DUP’s July 2021 list of demands for “replacing” the protocol.
Other DUP officials said the party’s senior leadership would convene at party headquarters in Belfast, possibly on Saturday, to review the party’s legal verdict on the deal – and whether concessions won by the U.K. government were sufficient to end the DUP’s obstruction of power-sharing at Stormont.
Donaldson will seek maximum support at that meeting before committing to any policy pivot on the protocol. Other senior officials, including former deputy leader Lord Dodds, have explicitly rejected the idea of reviving Stormont if the revised protocol agreement retains any oversight role for the CJEU. Both Donaldson and the DUP’s “seven tests” have stopped short of drawing this red line.
Ever since narrowly losing May’s assembly elections to the Irish republicans of Sinn Féin, the DUP has refused not only to form a new cross-community government – the assembly’s central function under terms of Northern Ireland’s 1998 peace accord – but also has blocked the election of a neutral speaker for the assembly, preventing it from sitting.
This developing story is being updated. Annabelle Dickson and Noah Keate contributed reporting.

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( With inputs from : www.politico.eu )

February 21, 2023
Briefing wars escalate as nervous EU and Britain enter Brexit endgame

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LONDON — Whisper it softly, but the Brexit endgame has arrived.
Eighteen months after Brussels and London reopened talks on the contentious Northern Ireland protocol — and more than three years after Britain actually left the EU — panicked officials on both sides of the English Channel are frantically trying to manage expectations as reports of a technical-level deal between the two sides emerge.
“They’re still in calls with the EU, but it’s literally just lawyers tidying up bits of text,” one senior British government official said Wednesday, in reference to the U.K. negotiating team. “We’re done.”

Multiple reports suggest U.K. Prime Minister Rishi Sunak now has a draft technical deal on his desk to consider, despite a wave of both official and unofficial denials from politicians and diplomats on all sides.
“I suspect it is more the technical shape of a deal than a deal per se,” said a second person close to the talks on the U.K. side, “which might be giving them wriggle room to deny it.”
Denials of an outright agreement were still coming thick and fast Wednesday night after the Times reported that London and Brussels had indeed reached a deal on the key customs and governance disputes that have dogged talks over the protocol. Crucially — and most contentiously — its front page story suggested the EU has given ground on the role its top court will play in resolving future disputes.
That followed earlier reporting late last week by Bloomberg News that technical-level solutions on customs, state aid and checks were indeed within touching distance.
Talks on smoothing the operation of the Northern Ireland protocol have been ongoing since the summer of 2021, with negotiators long targeting a deal this month, ahead of an expected visit to Ireland by U.S. President Joe Biden in April.
The protocol arrangement, agreed as part of the Brexit divorce deal, sees Northern Ireland continue to follow the EU’s customs union and single market rules, in an effort to avoid a politically-sensitive hard border with the neighboring Republic of Ireland, which remains an EU member state.
Yet Northern Ireland’s unionist politicians have long objected to the protocol, with the Democratic Unionist Party boycotting power-sharing and arguing that checks on goods moving from Great Britain to Northern Ireland effectively separate the region from the rest of the U.K. They’re backed by critics in Sunak’s governing Conservative Party who resent the Court of Justice of the European Union’s place in protocol governance.
Selling a deal to those domestic audiences represents an almighty political challenge for a prime minister already battling to keep his fractured party together.
The official line
Officially, both sides are sticking to the script and insisting that talks continue.
European Commission President Ursula von der Leyen told reporters Wednesday: “I’m very sorry, but I cannot give partial elements — because you never know in the very end how the package looks like.”
In Downing Street, Sunak’s official spokesperson tried to steer journalists away from what he called “speculative” reporting.
“No deal has been agreed, there is still lots of work to do on all areas, with significant gaps remaining between the U.K. and EU positions,” the spokesperson said. “Talks are ongoing on potential solutions including on goods.”
But the senior U.K. official quoted before said the message from No. 10 that negotiations are ongoing only applied at a political level.
They added: “It’s now up to politicians to decide ‘yay’ or ‘nay.’ Rishi could have further technical talks with Ursula von der Leyen and [EU Brexit point-man] Maroš Šefčovič and stuff like that, but officials are done. It’s plain as day.”
According to the second person close to the talks, Sunak has been receiving regular updates on the evolving technical shape of the deal.
“As far as I know, he hasn’t given it the green light yet,” they said. “But it is all being quite ‘secret squirrel’ in the [U.K.] Cabinet Office. So I don’t think many people will be fully in the loop.”
In Brussels and in London, EU diplomats were busy rubbishing reports of an imminent resolution, while acknowledging that information on the state of play is being kept tight. European ambassadors were briefed on Wednesday morning that a breakthrough is yet to be reached, and that the CJEU issue remains particularly tricky.
Even inside the U.K., claim and counter-claim were flying. Another British official close to the talks said it was “just wrong [that a deal] is close,” with “fundamental” issues outstanding “including making sure there isn’t a border.” They would not, the person added, “expect anything in the short term.”
One EU diplomat summed up the mood: “If somebody tells you they know what’s happening, they’re lying.”
In truth, a final agreement on Brexit has never looked so close.

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( With inputs from : www.politico.eu )

January 31, 2023
Dutch PM Rutte wants EU to play it frugal in face of mega US subsidies

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Don’t inject fresh money into the European Union — just reform national policies, says Dutch Prime Minister Mark Rutte.
That’s the best way to prevent EU industry from getting wiped out by U.S. companies under Washington’s major new green subsidies scheme, Rutte told a group of journalists at the office of the Dutch embassy to the EU in Brussels on Tuesday.
“There’s so much money at this moment in the system,” Rutte said shortly after meeting with European Commission President Ursula von der Leyen and Belgian Prime Minister Alexander De Croo. He also argued for deeper reforms, stressing how some European countries spend so much on their pension systems — “all money you cannot spend on innovation and green tech.”
Rutte is often viewed as the key leader of the so-called “frugal” group of European countries, comprised of like-minded fiscally conservative nations. The group, which also includes Denmark and Sweden, has been reluctant to increase national contributions to EU coffers — at least until the coronavirus pandemic forced them to partly adjust that line.
The discussion among EU decision-makers on how to preserve the bloc’s industrial base is taking place ahead of a meeting of EU leaders next month as the U.S. moves to roll out a $369 billion industrial subsidy scheme to support green industries under the so-called Inflation Reduction Act.
The U.S. legislation has stoked fears about consequences for European industry and sparked calls to revisit rules on state aid. Another concern is that such subsidies put the EU’s single market at risk by conferring an outsized advantage to countries with larger fiscal capacity, such as Germany, which have more space to financially maneuver.
Rutte, who was recently in Washington to visit U.S. President Joe Biden, said: “There are a number of consequences to this Inflation Reduction Act (IRA) — but unintended.” The IRA “forces us to think about how we organize ourselves” to remain competitive, he added.
On the one hand, he sees U.S. attempts to meet climate targets as a positive development. On the other hand, he pointed to risks to having a level playing field, like with electric mobility. “Companies might shift investments from the EU to the U.S.,” he said, parroting a much-repeated fear.

But EU subsidies should remain unaltered, Rutte argued. Regarding calls to adapt to the IRA by changing EU aid rules, he conceded: “I can accept some changes as long as they are limited.”
Rutte was clear on his belief that no fresh EU money should be put on the table. “I mean, not grants, but even not loans,” he said. “There’s so much still around” — for example loans in the Recovery and Resilience Facility, the centerpiece of the EU’s pandemic recovery plan.
A draft of the text that leaders would seek to agree on at their upcoming European Council meeting hints at opening up new sources of EU funding. The draft, seen by POLITICO, makes calls “to take work forward building notably on the success of the SURE programme,” referring to the EU’s loans-based program to support employment floated by Rome and others.
Rutte stressed that he would not like to see this proposal in the text, which will be discussed by EU ambassadors on Wednesday.
On the question of whether he’d be in favor of a new SURE program, “My answer would be that we have serious doubts,” he said.
Barbara Moens contributed reporting.

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( With inputs from : www.politico.eu )

January 24, 2023