Martin Mayer is TUC delegate to the EU Economic and Social Committee
Almost parodying Theresa May’s fatuous famous statement “Brexit means Brexit”, the EU’s chief Brexit negotiator Michel Barnier commenced his lengthy address to EESC Plenary on July 6 with the words “Brexit means uncertainty – for citizens, jobs and business.”
His lengthy address to Europe’s civil society body was clinical in its analysis and impressive in its clarity. Every British citizen – and certainly every UK MP – needs to take very careful note of what he had to say.
The UK will become a third country in March 2019
This course has been set upon by the UK not the EU. The UK Government has set the “red lines” for the negotiations:
• No more free movement of citizens
• Full UK autonomy over its laws
• UK to have its own trade agreements with the rest of the world
• No role for European Court of Justice (ECJ) over UK affairs
The EU’s response is equally clear:
• The free movement of citizens, capital etc is “indivisible”
• There can be no “sector by sector” participation (e.g. with reference to financial services). You cannot be “half in, half out”
• The EU will have full sovereignty over its own affairs – all third countries must respect that
All the above points have been made clear by decisions of the EU Parliament and Council of Minister.
“I am not sure the UK understands this”, said M.Barnier.
UK is leaving the Single Market and the Customs Union
At the commencement of talks just after the recent UK General Election, M.Barnier asked UK’s Chief Brexit Negotiator David Davies three questions:
“Can you confirm UK wishes to leave the European Union?” David Davies replied “Yes.”
“Can you confirm UK wishes to leave the Single Market?” David Davies replied “Yes.”
“Can you confirm UK wishes to leave the Customs Union?” David Davies replied “Yes.”
Addressing the EESC, M.Barnier made it clear that if a country leaves the Single Market, frictionless trade is not possible. Nor is it possible to retain the benefits of the Single Market if a country is not a member.
“The consequences are the choice of the UK not the EU” he said.
Frictionless trade only exists because of the Single Market and Common External Tariff, and the absence of custom controls. “Only by adhering to the rules of the Single Market and the Customs Union can you have frictionless trade. By leaving both, the UK excludes itself,” he said.
He then gave a number of examples of what is required of third countries:
• VAT declarations
• Animal border checks
• Health and Safety verification on exports to EU
He then gave the specific example of UK’s Airbus factory in Broughton which depends on frictionless trade e.g. free movement of personnel (engineers etc), automatic certification, frictionless routing of parts etc. This cannot be the same outside the Single Market.
There are other options of course e.g. Norway which is in the Single Market but outside the Customs Union or Turkey which is in the Customs Union but not in the Single Market. But that is not the choice of the UK.
From end of March 2019, UK will not have the benefits it currently enjoys from the EU Single Market. “Trade can never be as fluid for a country that leaves the EU” he said. UK and EU businesses need to prepare for the consequences of BREXIT.
“My job is to limit the cost of BREXIT to the remaining 27 EU member states” he said. “Some sectors will be damaged – we need to prepare citizens, businesses, unions for the consequences”.
“No Deal” is NOT better than a bad deal
M.Barnier was very clear that “No Deal” cannot be a preferable option. “No Deal” means trade relations will be based on World Trade Organisation (WTO) tariffs which vary between 10% tariffs on cars to 19% on alcoholic drinks, from 12% on lamb and fish and tariffs of 30% and more on certain other goods.
“No Deal” means very cumbersome procedures upsetting “just in time” delivery of goods and components. It will mean goods kept in storage for 3 or four days not hours as at present and new warehouses built at ports and airports.
M.Barnier said he had recently visited Zeebrugge in Belgium which deals with 17M tonnes of freight trade annually with the UK. “No Deal” would mean a total breakdown of this trading activity.
There is no reasonable justification for a “No Deal”. There is no reason to worsen the consequences for Brexit. That’s why we want a deal. A balanced deal is better than “No Deal”
Build trust – approach the Brexit talks in a calm structured manner
M.Barnier said there was no aggression or arrogance on his part. We have to approach the talks in stages, taking each stage one by one. We need to create trust
There are 3 subjects that must be dealt with first to provide the conditions for an ordered departure
1. The rights of EU citizens in the UK
2. The cost of exit – funding of current EU programmes already agreed
3. Special border issues e.g. Ireland
If these areas can be agreed by the Autumn, then the second stage in the talks can proceed, namely the defining of the new partnership covering issues such as trade, security and defence – and any transitional measures.
But we only have 20 months left till March 2019. The real transition period started from the delivery of the Article 50 letter in March 2019. (He was very circumspect about the possibility of a transitional period beyond that).
Post- Brexit Free Trade Agreement
A Free Trade Agreement is possible but M.Barnier spelt out the conditions that must apply. “Any trade agreement must guarantee fair competition and a level playing field”. The EU’s “rules of the game” make it possible for our social market to be competitive. We don’t yet know what the UK wants.
The EU has 30 Free Trade Agreements covering 60 third countries. The most recent FTAs include South Korea, Canada and just now Japan. These all required lengthy and difficult negotiations and required a high degree of convergence of that country’s regulations to meet EU standards. In many ways this is opposite to the position we find ourselves with the UK which as a current member of the EU is totally convergent with EU regulations at present.
But now there will be divergence. What is that divergence? Will it develop into social dumping? Tax dumping? Competition divergence? Regulatory competition? We cannot be undermined by divergence on social rights, taxation, state aid etc. “If we are to ratify a Free Trade Agreement with UK, it will require the agreement of the EU Parliament and the 27 member states”.
The future of Europe is much more important than Brexit
We will face up to Brexit. It is the choice of the UK not us. But we are looking to the future of the European Union as our top priority. We will be transparent – all position papers are available on our website. We will also support the work of the European Economic and Social Committee which has an important role to play as the representative of civic society.
M.Barnier then responded to questions from EESC members
1. The Irish border
M.Barnier responded to several impassioned questions from EESC members on both sides of the Irish border. Some of the points raised were:
• The importance of maintaining the current open border between North and South
• Ireland and UK joined the EU at the same time in 1973. Their economies are intrinsically linked
• Agricultural products flow across the border in both directions in large quantities. A hard border would damage this trade.
• UK is only 60% self-sufficient in food and depends on imports from Ireland
• Ireland is a special case. After BREXIT it will be the only EU member state with no land border with the rest of the EU. It’s route to the EU will be via UK
• Ireland stands to lose more from BREXIT than UK itself
M.Barnier said he had personally been involved in the Good Friday Agreement which had only succeeded due to the good offices of Brussels. We do not want to undermine the Good Friday Agreement and we have to find a solution.
“But we must respect the integrity of the internal market. Any agreement must be signed off by UK and Ireland and the other 26. We must respect Ireland as a special case but UK must respect the Single Market,” said M.Barnier.
2. Citizens and Workers rights
EESC Workers Group President Gabriele Bischoff referred to 4m citizens (3m EU citizens in the UK and 1m UK citizens in Europe) whose rights “should not be used as a bargaining chip”. UK’s offer is far from generous she said.
The ECJ is of key importance in guaranteeing not only citizens rights but workers rights after BREXIT. UK workers rights must be protected so that we can have a level playing field. They must not be allowed to undermine EU standards. We cannot have the UK undercutting the EU with low pay, lower social standards, and tax haven status.
Judy McKnight, Leader of UK Workers Group members outlined the TUC’s 5 priorities:
1) Jobs and workers rights are our top priority. Workers must not pay the price of BREXIT
2) EU citizens rights in UK and UK citizens rights in EU. We are not happy with Theresa May’s offer
3) TUC wants access to EU Single Market for goods and services
4) We must combat racism and xenophobia made worse by BREXIT. For that we need a positive agenda e.g. an active industrial strategy
5) Northern Ireland. We don’t want a hard border
Judy also asked if transitional arrangements could be in place after March 2019 to allow for adjustment. She invited M.Barnier to meet with Frances O’Grady TUC General Secretary and said whatever the outcome BREXIT will never stop solidarity between UK and EUY trade unions.
Other Workers Group EESC members raised the following points:
• EU Charter of Fundamental Rights is at the core of protection for citizens and workers, and is a legally binding and integrated part of the EU. Yet David Davies has refused to allow it to be included
• I million Polish workers are in the UK. Discrimination and racism has increased. The EU Charter of Fundamental Rights, guaranteed by ECJ, is essential to protect EU workers in UK
• It’s not just residency rights. It covers access to housing, welfare, family reunions, children’s rights, access to health care etc.
M.Barnier said guaranteeing the rights of workers and citizens is complex. We mustn’t forget the rights of students, pensioners and complex issues like divorce, succession rights, mixed couples etc. The EU position paper has been agreed by member states and requires the protection of rights of all EU citizens in UK up to BREXIT; lifetime tights including for family members; and an EU framework of law. The rights of UK citizens in EU must be reciprocal.
3. Consumer rights
How can we ensure UK and EU citizens continue to enjoy consumer protection and safe food? How will BREXIT affect the use of debit cards, mobile phones, health cards, purchases made on the internet etc?
M.Barnier acknowledged that consumer rights are important e.g. food quality. It’s true that use of mobile phones across Europe without incurring exorbitant charges is a major benefit for EU citizens.
However, he concentrated his answer to financial services which he said would lose their passporting rights. The priority concern is to ensure EU’s financial stability, which we have painstakingly put back together after the 2008 financial crash.
4. Protecting the integrity of the EU post-BREXIT
Several EESC Employers Group members raised issues about risks to EU businesses post BREXIT.
• The EU is a not a restaurant a-la-carte! UK cannot pick and choose which benefits it wants or other member states may wish to do the same.
• Businesses have a lot to lose. There is 20B UK investment in EU and even more the other way round.
• Cyprus is one economy that is very dependent on UK trade. We need to deter other member states leaving but we must be respectful to the UK
• What if as is claimed UK relaxes the rules on State Aid? Access to the EU Single Market must follow the same rules. EU must stop non-tariff barriers to trade
M.Barnier said businesses must start preparing now for BREXIT and manage the consequences. Much will depend on the outcome of the negotiations. But we will protect the integrity of the EU!
M.Barnier spoke of his regret at UK leaving the EU. As a young man growing up in France his first political act was to vote in the French referendum on whether UK should be allowed to join the EU. He voted yes. Now his job was to unpick over 40 years of legislation that binds UK to Europe.
He is ready to talk to businesses, trade unions and civil society organisations in UK and across the EU. He wants to hear their concerns and answer their questions. In reply to Judy McKnight he did take up the offer to meet UK trade unions and said he would be meeting the UK Opposition Party next week.
Finally M.Barnier spoke about far right populists who are trying to whip up sentiment against the EU. “We all face demagogues blaming the EU for everything. We need to remind people of everything you gain by being inside the EU – and lose if you’re outside”.