This EU Won't Work

Financially Speaking

M. Barnier: “There is no place [for financial services]. … There is not a single trade agreement that is open to financial services. It doesn’t exist.”

May: “The EU has included financial services, to varying degrees, in quite a number of the trade agreements that they have already established with other countries.”

The UK may be looking for a better deal than the EU-Canada free trade agreement (CETA) but the latter certainly does include financial (and other) services. The EU’s own summary (see Tradoc_152982, Section 7) states this unambiguously. Perhaps the problem for the EU (apart from wanting to kick the UK where it hurts most) is that CETA also includes a ‘Most Favoured Nation’ clause, which means that the Canadians must not be left with a worse deal than the UK if the latter negotiates better terms.

It is interesting to read what M. Barnier said in 2014 when he was the EU’s Commissioner for Internal Market and Services and involved in negotiating the EU-USA free trade (TTIP), later abandoned. Here is his speech in Washington, see especially the section headed: ‘WHY WE NEED TO INCLUDE FINANCIAL SERVICES REGULATION IN TTIP ‘. The hypocrisy is truly mind-boggling.

Border Line or Red Line?

We recently commented on the Irish border ‘problem’ where, as usual, the EU seems to be awarding itself credit for others’ work. It had nothing to do with the Belfast (‘Good Friday’) Agreement but is intent on threatening the peace if that will help it to get its way. And for what? It is perfectly possible with modern technology to register and track shipments from major suppliers and hauliers without physical checks at a border post (see Divide or Rule?, particularly the link to the European Parliament’s own document, Smart Border, which includes descriptions of how the Norway-Sweden, USA-Canada and Australia-New Zealand borders work).

Since 1922 smaller traders have been largely untroubled by the border, whether guarded or not. After the Irish Government increased taxes on diesel, coal and peat, guess where Free State citizens near the border source their fuel? Customs and borders do not prevent trade, smuggling is culturally accepted in the area and probably costs the Irish exchequer nearly a billion euros a year, and loses its industry even more. As the Irish MP Declan Breathnach has explained (https://www.politico.eu/article/brexit-means-good-news-for-irish-smugglers/):

“Cross-border arbitrage runs from legitimate bargain hunting to black-market trade. Older residents of border towns fondly reminisce about smuggling butter or tea to get around food restrictions in place before the 1970s. The later exploitation of EU farming payments by moving animals over the border is even celebrated in song. And although they are illegal in the Republic of Ireland, fireworks smuggled down from Northern Ireland light up the skies of Dublin every Halloween.”

The EU is choosing to make a big issue out of this in order to pressure the UK, meanwhile risking the peace and passing the blame onto Brexit supporters. That stinks.

That’s Childish

A friend (a baby boomer like us) recently said that he and his wife were undecided about how to vote in the Brexit Referendum, so they asked their children and then voted for remaining in the EU. Explaining, he said, “It’s their future, not ours.” We’ve heard this many times from others.

Good heavens, we’re not dead yet! And isn’t leaving supposed to be a cliff edge with immediate, disastrous effects that will hit our futures too? OK, it may not have happened after the Referendum itself but apparently it’s going to kill us when we actually go – in April next year, or after the Implementation/Transition period ends in December 2020, or a bit later, or a lot later, or who knows if or when? Certainly our children don’t have a better idea than we do, though they may think they do because, after all, they’re young and confident they’re right even though they have never known their country outside of the grasp of Brussels. (Deep breath.)

No, this is ‘virtue signalling’, an apparently unselfish gesture from someone who already felt that Brexit was harmful and would have voted to stay anyway.

The Italian Job

The Italian election last weekend divided the vote mainly between the Eurosceptic left and right, with the middle squeezed out: Five Star at 32% and the combined right at 37% but with the Northern League, the more extreme wing, well ahead of Berlusconi’s Forza Italia. The constitution requires 40% to form a government but electoral changes since the last vote make it harder for the President (or Brussels) to simply appoint a compliant administration as before (Mario Monti, who wasn’t even an elected politician, or Matteo Renzi). A grand coalition looks difficult even though both sides want to undermine the Euro rather than leave it, an important shared ambition. That would be a nightmare outcome for the EU.

Many in Renzi’s centre-left party think they (the PD) should join with Five Star, the biggest vote winners, and perhaps moderate their policies a little. But Renzi intends to stay in charge for now to prevent this alliance, saying his party would “never act as a front for government made up of anti-systemic forces” and denouncing both extremes for “their anti-Europeanism, their anti-politics and the verbal hatred they have directed” at PD members.

We don’t yet know what the election means for Britain, perhaps we’ll have allies in charge of Italy. On the far left the leader, Luigi Di Maio, has said: “We shouldn’t try to punish the British people for choosing Brexit.” The other potential Prime Minister, Matteo Salvini, said “You made a free choice with Brexit and I very much hope that it will be possible to maintain completely open trade with the EU without any penalties.” and “There will be no blind trust in what Germany wants. Punishment or anything of the kind would be sheer stupidity. We export more to the UK than we import back and we certainly don’t want to hurt our own client.”

That’s Ripe

The EU has responded to May’s latest speech with a six-page guideline document for its Brexit negotiators. Presenting the latest draft Donald Tusk said he wants continued cooperation on security, defence and university research, continued access to British fishing waters and to avoid disruption of air travel. These are some of the EU’s ripe cherries then, whereas ours are too sour to pick, let alone taste.

So it’s red cherries versus red lines. If only Mrs May would rub out her red line on staying in the (a?) Customs Union things would be much easier. If not perhaps the EU would rather see Jeremy Corbyn in charge. However, he won’t be happy about this from the Guidelines:

“The aim should be to prevent unfair competitive advantage that the UK could enjoy through undercutting of current levels of protection with respect to competition and state aid, tax, social, environment and regulatory measures and practices.”

State aid is central to Corbyn’s policies.