Category Archives: Brexit

The head of the UKs leading employers organisation has stepped up pressure on the government to conclude trade talks with the EU so that the country can move on from the suspended animation of the past four years.

Reflecting on her five years as director general of the CBI, Dame Carolyn Fairbairn said her biggest regret was that the issue had not been resolved earlier and warned ministers that businesses grappling with Covid-19 were unprepared for a hard Brexit.

Talks between London and Brussels have intensified in recent days as negotiators grapple with issues such as fishing and state aid.

Fairbairn, who steps down next week, said The thing thats painful is that it has taken so long to get to a resolution. I think we will get a deal. The remaining issues look soluble.

The first female CBI director general said she had barely started in the job when David Cameron announced in February 2016 that a referendum would be held in June that year.

That was the moment everything changed, Fairbairn said. I realised there was an extraordinary debate to be held, not just about the EU but about the type of economy we had created and the kind of country we had become.

Fairbairn said issues that had surfaced as a result of the financial crash of 2008-09 such as fairness and inequality became bound up with the debate about the UKs relationship with the EU.

The CBI campaigned for a yes vote in the referendum but Fairbairn says the employers organisation has always accepted the result.

At our first presidential committee meeting after the referendum the debate wasnt about trade or tariffs but about what the result said about business and its relationship with the British public, and what do we do about it.

Our position has not really changed since 24 June 2016. We completely accepted the result of the referendum and never supported a second referendum. We have campaigned for a good deal that protects jobs from day one.

It [departure from the EU] has had a momentum of its own. It has been almost a perfect storm. The economy has gone into suspended animation while we resolve this seismic issue. I hope we can have a resolution so we can move on.

Despite her optimism that a deal would be done, Fairbairn did not rule out the talks collapsing, an outcome she described as very challenging for CBI member companies.

With much of the country facing new Covid-19 restrictions, the CBI said many companies were going backwards in their Brexit preparations. She urged the government to set up a task force to speed up preparations as soon as an agreement had been reached.

A deal would still mean radical changes for business but would be hugely better than no deal, she said.

Tariff-free trade would be the difference between companies in the automotive sector staying in the UK or going. The automotive sector is 40 times larger than fishing, she added.

A deal would also make customs procedures easier, and would give the UK a base from which to build future agreements that would boost key sectors such as financial services, which Fairbairn said had been almost absent from the current negotiations. A deal is enormously better than no deal.

Despite the short-term challenges, Fairbairn said the UK would make a success of Brexit. Business will do everything possible to make the best of it. There will be areas to explore. There will be areas where it will be good to align with the EU but when it comes to AI and the industries of the future we could find new ways to shape the regulatory environment.

Brexit aside, she said business was also having to cope with a second wave of Covid-19 infections. Fairbairn said the UK had a glimpse of what recovery could look like in the summer but things now looked gloomier and there was a mountain to climb.

The CBI head said she was especially worried about young people, who had been hit hardest by the Covid-19 recession and needed better training, more job opportunities and a wider range of further and higher-education courses to give them a better chance of finding work.

She added: We are not epidemiologists, we put health first. But we need a plan for the short run to keep as much of the economy open as possible. It has to be evidence based and rely on really clear tiering.

Changes last week by the chancellor to the job support scheme to make it more generous had led some companies to rethink lay-offs, but there were sectors of the UK including live events and aviation that faced acute problems.

Fairbairn said: We are going to see significant redundancies. It is going to be tough.

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CBI chief fires parting shot over slow pace of Brexit negotiations - The Guardian

LONDON (AP) Its more than four years since Britain voted to leave the European Union, and almost a year since Prime Minister Boris Johnson won an election by vowing to get Brexit done.

Spoiler alert: It is not done. As negotiators from the two sides hunker down for their final weeks of talks on an elusive trade agreement, Britain and the EU still dont know whether they will begin 2021 with an organized partnership or a messy rivalry.

A deal is the likelier case now, but I wouldnt be banking the house on it yet, said trade expert David Henig, U.K. director at the European Centre for International Political Economy.

Heres a look at where things stand:

HASNT BRITAIN ALREADY LEFT THE EU?

The U.K. has quit the now 27-nation bloc politically, but not economically.

Britains June 2016 vote to leave was followed by protracted talks on divorce terms. When then-Prime Minister Theresa May finally struck an exit deal with the bloc, Britains Parliament repeatedly vetoed it.

May finally resigned in defeat last year. Her successor, Johnson, secured his own withdrawal agreement with the EU in October 2019, allowing for the U.K. to leave on Jan. 31.

The two sides gave themselves an 11-month transition period to strike new agreements on trade, security and a host of other areas. When that period ends on Dec. 31, Britain will leave the EUs economic embrace after decades of membership.

WHAT HAPPENS ON JANUARY 1?

With or without a deal, Britain will leave the EUs customs union and single market for goods and services, and will no longer have unfettered access to its biggest trading partner.

The two sides are hoping to agree a free trade deal with no tariffs and no quotas. Even if that happens, the British government says businesses must prepare for new paperwork such as customs declarations, and short-term disruption to cross-Channel trade. It is building vast parking lots and customs clearance depots near ports, and says a reasonable worst-case scenario could see backlogs of 7,000 trucks waiting to enter the EU.

A no-deal exit would be far more disruptive, bringing the instant imposition of tariffs on many goods at levels set by the World Trade Organization including a 10% tax on cars and more than 30% on dairy products. Whole sectors of the British economy could be ruined, prices would rise and there could be temporary shortages of some goods.

WHY HASNT THERE BEEN A DEAL YET?

Both sides say they want a deal, but their views of what that means are fundamentally at odds.

The bloc accuses Britain of wanting to have its cake and eat it retaining access to the EUs lucrative markets without agreeing to follow its rules. So it is demanding strict legal guarantees on the governance of any trade deal.

Britain says the bloc is making unreasonable demands and is failing to treat it as an independent, sovereign state.

Talks have also been soured by a lack of trust. Many in the EU are wary of Johnson after years of hearing him make disparaging and exaggerated claims about the bloc. Trust plunged even lower when Johnson announced plans last month to pass a law that breaches part of the legally binding withdrawal agreement that he made with the bloc just a year ago.

Frustration boiled over last week when Johnson declared that talks were over unless there was a fundamental change of stance from the EU. There wasnt, but conciliatory words from EU chief negotiator Michel Barnier about the need for compromise on both sides coaxed Britain back to the negotiating table.

The two teams say they will meet daily, including weekends, and see mid-November as the deadline for a deal if it is to be ratified and in place by years end.

WILL THERE BE AN AGREEMENT?

For all the tiffs and tantrums, the two sides have managed to reach agreement in many areas, but there are big gaps in two main areas.

One is the economically small but symbolically huge topic of fishing. EU nations such as France, Spain and the Netherlands want to retain their fishing boats access to British waters, while the U.K. is determined to assert its authority as an independent coastal state.

The other is about ensuring fair competition and settling disputes whats known as level playing field provisions. The EU fears Britain will slash social and environmental standards and pump state money into U.K. industries, becoming a low-regulation economic rival on the blocs doorstep.

The U.K. insists it wont lower standards. But U.K. negotiator David Frost said this month that Britain would not accept level playing field provisions that lock us in to the way the EU do things.

WHAT HAPPENS IF THERE IS NO DEAL?

Britains prime minister refers to a no-deal exit as leaving on Australian terms since Australia has no comprehensive trade deal with the EU and insists Britain will prosper mightily even if that happens.

But most economists say leaving like that would deal a severe blow to an economy already reeling under the coronavirus pandemic.

Adam Marshall, director-general of the British Chambers of Commerce, said British businesses facing the triple threat of a resurgent coronavirus, tightening restrictions and a disorderly end to the transition period desperately need the clarity that a deal would provide.

As well as the economic impact, a no-deal exit would endanger everything from U.K. police forces access to EU crime databases to U.K.-EU cooperation in science.

What really makes a difference is the underlying cooperation, Henig said. Deal and you have a basis for clearing up problems. No deal and you have a very hard landing, no way to manage the process afterwards, continued uncertainty and thats a much bigger hit.

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AP Explains: Why are UK and EU still arguing over Brexit? - Associated Press

Reaching an agreement in trade deals is, in the best of times, a long process. There are inevitably differences in objectives and negotiation strategies between sides. Most trade agreements with the EU take years to negotiate, not least because there are 27 member states involved in the process. And when it comes to the negotiations between the EU and the UK over Brexit, an element of rational versus emotional approaches is at play too.

Negotiations are resuming after a period of stalemate. Different strategies have been attempted to break the deadlock, including the threat of a no-deal exit. The UK is toying with the idea of abandoning already agreed issues and the EU has threatened legal action if it does. These moves are damaging trust between the parties, even if they are merely negotiaton strategies.

Ideally, the UK wants single-market access and special agreements for financial services and security and the Northern Ireland border. It wants no free movement of people, which is a big ask given the amount of access it expects. The EU wants some governance system for future conflict resolution through the European Court of Justice, while the UK wants that conflicts involving the UK should be dealt with through its own judicial system. The UK also wants control of its fishing waters, while the EU wants some access for European fishermen.

It is in the interest of both parties to strike a deal. Strong bargaining positions are used by experienced negotiators to achieve an expected outcome an agreement. But the UK, at times, talks as if no-deal is an intended outcome. It is not. It would be the the result of a failed negotiation.

State aid has been a sticking point, with the EU wanting an agreement that the UK will not use state subsidies to undercut the EU while trading with its partners. The UK is reluctant to agree to that.

However, during the pandemic, most governments have been subsidising their companies, so there is reason to think that the EU might be flexible on this issue. In that case, the UK will have to show flexibility on other issues, such as fisheries. Negotiations, after all, mean give and take and compromise. Proposing to go back on the Northern Ireland border deal might be a negotiation tactic, but it has not played well and the EU seems to be losing trust.

The main issue is that both parties seem to have different priorities. While the EU is more concerned about the economics and trade implications, the UK is primarily concerned about sovereignty and independence. However, the UK has more to lose from a no-deal Brexit and there is considerable opposition to it from the British public and businesses.

The European Union is the UKs biggest trading partner, both in terms of value and volume. Its much bigger than the US and all Commonwealth countries put together. It is therefore hard to see how new post-Brexit deals can entirely replace what would be lost in the event of a no deal.

Moreover, other countries have their own priorities about what they want to achieve through trading with the UK. The US, for example, wants access to food and pharmaceutical markets for American firms. UK citizens, meanwhile, are not enthusiastic about chlorine-washed chicken, hormone-filled beef, genetically modified food products and highly inflated branded medicines. Nor would there be shortages of these products domestically in the event of a no-deal Brexit anyway.

In the UK, some sectors will be hit hard, however, including energy, financial services and manufacturing that requires components from the EU.

The US has already started dictating terms for post-Brexit trade. Both political parties in the US have also shown their disapproval of the UKs proposal to go back on the Northern Ireland border deal. The consequence of no deal will definitely lead to three to five years of very tough times for the UK and its citizens until they get some deals in place, including with the EU.

We need to distinguish between bargaining power and negotiation strategy. The UK is already outside the EU, and therefore does not have a strong bargaining position. The COVID-19 crisis has further reduced the bargaining power of the UK, while EU member states received support for their economies and are collaborating with each other on tackling the pandemic from PPE to vaccine development.

The UK has chosen to use a tough negotiating strategy in spite of its position. In our ongoing research with experienced negotiators in international trade negotiation experiments, which has yet to be published, we are seeing that British negotiators often start very high with their demands but are unable to adapt their offers and concessions at the proper time to reach an agreement.

Tough negotiators quickly consider concessions, whereas British negotiators get stuck on a high level and are too conflict averse to adapt their demands to reach an agreement. That often leads to a deadlock or breakdown of negotiations.

Too much is at stake here not to prepare properly for negotiations with realism. A no-deal outcome would be detrimental for businesses, the economy and society because the UK is strongly dependent on trade with the EU. With the COVID-19 situation, this will have huge implications for British society and the economy. This would be the worst-case scenario .

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Why the UK should stop talking tough on a no-deal Brexit - The Conversation UK

By Robert Lyons27/10/2020

The UK and the EU are entering into a key phase of negotiations in terms of their future trading relationship and, as things stand, it is quite possible that no agreement will be reached on a free trade agreement (FTA), which would mean a hard Brexit with trade between the UK and the EU being conducted on WTO terms.

One of the outcomes of a hard Brexit will be that many goods imported from or exported to the EU will be subject to tariffs for the first time since the establishment of the single market and customs union.

Affected businesses will need to calculate the cost of these tariffs and other non-tariff barrier costs, assess whether these cost can be passed on to the end consumer or the next in line in the supply chain, determine whether the business is still viable with these new additional costs and, if so, whether it has adequate working capital facilities to meet these new costs.

It will also be important to determine whether any products or parts will be subject to Tariff Rate Quotas (TRQs). TRQs allow a lower rate tariff on imports of a given product up to a specific quantity and requires a higher rate on imports exceeding that quantity. These TRQs are frequently seen in FTAs but are also relevant under the WTO rules.

When entering an FTA, the parties to that FTA agree to provide preferential trading terms to goods and services traded between those two countries/trading blocs. Rules of origin have evolved to attribute a country of origin to a product to determine its nationality.

For example, the EU does not currently have a full FTA with the USA but if the UK were to enter into a FTA with both the EU and the USA, the EU would want to ensure that the US does not circumvent EU tariffs on US goods by shipping goods to the UK tariff free for forwarding onto the EU. Rules of origin provisions are also relevant for TRQ purposes.

Pre-Brexit, the relevant nationality for UK goods was the EU. Post-Brexit, the nationality will be the UK. For many sectors this will not be an issue but, for some, this will be highly problematic.

Certain goods such as cars and aircraft are made up of many parts and components. Take a car manufactured in the UK the engine may be built in the UK but the engine blocks come from France and the transmission system from Germany and various other parts from Spain, Italy, France, Germany and the UK.

The same also is true in aviation the UK aviation sector is largely made up of the manufacture and exporting of components such as wings, landing systems, engines and avionic systems.

Pre-Brexit, if the relevant car or aircraft was predominately built within the EU with a largely EU supply chain, then certifying the EU nationality was relatively straightforward. Post-Brexit, absent an agreement with the EU, it will become more complicated for both the EU and the UK. Take the case of a car where 55% of its value comes from its pan-EU (non-UK) production with 30% of its value coming from the UK. If the EU has an FTA which provides preferential treatment to cars with 65% EU content, pre-Brexit, this would not be an issue but post-Brexit it would be for both the UK and EU entities involved.

There are ways of addressing these issues at governmental level by way of agreeing full or bilateral and diagonal cumulation provisions, but these would effectively require agreement of an FTA with EU.

Absent such arrangements being agreed, it may be necessary for supply chains to be revisited. In the above scenario, it may well be that EU manufacturers would seek to source the UK components from elsewhere within the EU to preserve EU nationality with a detrimental impact upon those UK manufacturers in the supply chain.

Conversely, where products are largely UK in origin, there could be opportunities for UK manufacturers where there is a need to increase the UK contribution to the product to ensure UK nationality.

Ascertaining the origin of UK goods will be an additional new cost for many UK companies. Anecdotally, many businesses have indicated that they would prefer to take the tariff rate hit than incur the cost, time and administrative inconvenience of proving the origin of their particular goods.

Clearly, this decision would have to be made on a goods by goods basis depending on the tariff rate for the relevant good and the complexity of the relevant supply chain but this determination will need to be built into the strategic planning of those businesses that could be affected by these provisions.

This is a guest post by Robert Lyons, a specialist business and corporate lawyer at Excello Law

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What a no-deal Brexit and trading on WTO terms really means - theloadstar.com

In 1981, tarnished by a legacy of nuclear embarrassments, the leaky Cumbrian atomic power plant Windscale was rebranded as Sellafield and the problems of public perception simply melted away, like hot uranium seeping into a water table. Likewise, we are no longer about to embrace a similarly contaminated no-deal Brexit. We are instead welcoming a nice, new Australia-style deal. But Australia doesnt have a deal with the EU (even though it wants one). We are embracing a no-deal Brexit in all but name. It is, as the secretary of state Alok Sharma admitted to an unusually uncooperative Nick Ferrari on Monday, just a question of semantics. Ah yes. The Conservatives old enemies! Words! And their actual meanings!

On Monday evening, I opened my Anglo-Asian tandoori lamb vindaloo delivery and found a request to contribute to one of Dominics Cummings blue-sky, out-of-the-box think-boxes inside it, written on my poppadum in mango chutney. Cummings omniscient net-lords knew my every move. As usual, Cumming was looking for hot-ass cyber-freaks and batshit Ballardian head-jobs who could furnish him with shamanic sci-fi solutions. Apparently I was such a person because I had both written a comic book about a ghost and sung in 10th-century Anglo-Saxon on a dance record. Cumming needed a way to avoid identifying the incoming no-deal Brexit, which no one had wanted or expected, as the no-deal Brexit it clearly was. Sharmas public admission that the Australia-style deal rebrand was linguistic smoke and mirrors had proved potentially problematic and threatened to unravel a number of other flimsy, fictional Conservative constructs, the implausible public persona of Boris Johnson having been deemed the most vulnerable to a moments scrutiny.

Normally I wouldnt sell my skills to a Tory brainstorming session, but I am principally a live comedian and I havent worked since March. Under lockdown, my principles, like my trousers, inexplicably became elasticated and I was to be offered the usual 25,000-a-day consultancy fee, as long as I worked through a company run by an old schoolfriend of any current cabinet member. I was picked up and taken to the agreed secret location a boarded-up, underground, art deco gentlemans convenience on Shepherds Bush Green where I joined four other futurist-warlocks round a socially distanced, circular marble table. One had blue-lensed granny specs and a green parrot on her shoulder; another was dressed as a kind of disco Rudolf Hess; a third wore tracksuit bottoms, espadrilles and a plain brown Primark T-shirt, but his bangle was festooned with runes. All were inscrutable, carried satchels and had produced incendiary content for opaquely funded libertarian blogs. They regarded Laurence Fox as a Trojan horse, Michael Gove as a stink bomb and Boris Johnson as an unpleasant but useful clump of sausage meat that could be animated to mouth whatever words were necessary, within its limited capacity.

In the centre of the table, Cummings head appeared inside an illuminated glass crystal ball full of pink gas. Initially, I assumed it was a three-dimensional holographic projection, like Laurence Oliviers head in Dave Clarks Time musical, Cumming broadcasting his image from elsewhere. He had previous form in being in two places at once, such as Islington and Barnard Castle, for example. But every now and again, Cummings face would groan and the head would shift uneasily and I realised the eyesight-anxious political fixer was actually crouching uncomfortably beneath the table with his skull through a hole, gas pumping into the simple goldfish bowl that encased it so it looked mysterious, like a shit Wizard of Oz. If any of my fellow situationist-idea-terraformers realised his ruse, they didnt let on, fearful of dismissal.

Sharmas careless breakfast lips have exposed the semantic hollowness of the Australia-style deal language virus, immunising some sections of the electorate against its charm, Cummings head began, his voice condensed behind the glass, like someone speaking into a plastic cup to do an impression of Melvyn Bragg. We must use our sock puppets in the internet, the press and the BBC to obscure it, flood the info-sphere with synonymous ideas, fabricating post-Brexit deals with nonexistent places and creating plausible backstories to stiff any grots that would verify them. Be about it! And with that Cumming popped down beneath the table again to conceal himself. By Wednesday lunchtime, the airwaves were abuzz with our distractions, expendable loyalist MPs swamping Sharmas indiscretion with expedient lies.

On 5 Live, Banbury MP Victoria Prentis said she was looking forward to an Eternia style deal with the planet Eternia, He-Man having already promised timber from the Skytree ; on Talk Radio, Torbays Kevin Foster spoke enthusiastically of our Equestria style deal and of the untapped financial value of the manure of his magic Little Ponies , especially the thick dung of Pinkie Pie ; and on Sky News, West Suffolks Matt Handcock nervously commended a Gor style deal to Adam Boulton, while explaining it wasnt his place to criticise the fantasy kingdoms human rights violations, most notably the compulsory sexual captivity of all women, when it offered such valuable access to the slave markets of the Insectoids .

By midnight, I had helped publicise fictional deals with the nonexistent realms of Atlantis, Plutonia, Pellucidar , Lemuria , Skartaris , Etheria , Lyonesse and Wakanda , whose coveted metal, Vibranium , did not exist either. And by the time Cumming spat me out into the Shepherds Bush night, I was so disoriented I almost believed it all myself. I drank a few cans of strong cider alone on the darkening green. All-but-empty night buses circled me, masked passengers staring out. Everything will be OK, I thought, we have a Fantasy Island-style trade deal. The Plane! The Plane!

Stewart Lee contributes 10th-century Anglo-Saxon poetry to a track on the new album by Asian Dub Foundation, Access Denied, out now

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Since were talking fantasy Brexit deals - The Guardian

Larry Elliott (Boris Johnsons split from Brussels echoes Henry VIIIs break with Rome, 18 October) seems too willing to accept that the UKs economic performance has been constrained by EU membership and that models showing the economic cost of Brexit should be treated with scepticism because behaviour can change. Behaviour can change, but not always for the best. Rather than observing that, post-Brexit, the government can nurture industrial regeneration, it would be wise to understand why the UK has spent less on state and regional aids than comparable EU members, and why they have achieved more impressive productivity growth.

As to his outmoded view that a fall in sterlings value will relieve some Brexit pain, all we can say for certain is that it will make the country poorer. Since the financial crash, sterling has lost some 25% of its value, yet the current account continued to decline until the Covid recession reduced import demand.

Surely its time to realise that the UKs less-than-impressive economic performance is home-grown. Blaming EU membership only increases the difficulties of mitigating the economic cost of Brexit. Sean Rickard Newton Blossomville, Bedfordshire

Larry Elliotts comparison of Brexit and Henry VIIIs break with Rome is strange. It took 200 years for the industrial revolution to develop in England after the divorce from Rome thats a long time to wait. Also, despite the break with Catholic Europe, England was careful to maintain trade links with the Netherlands, northern Germany and Scandinavia. All those states, plus Scotland, eventually became Protestant, so England was part of a much larger break. Reform of the EU and recognition of its positive benefits is a much better long-term strategy for the UK and could have gathered a lot of support from other countries. Clive Spragg Calgary, Canada

You cite Neil Wilson, a market analyst, saying the UK would through gritted teeth accept no deal because politically Johnson is taking so much flak over the pandemic that he has no room to let the country down over Brexit (UK economy not ready for no-deal Brexit, say business leaders, 16 October). This view shows how the agenda has been reshaped over the past four years. The 48% of June 2016 are now ignored. There was never a majority for no deal. Even in December 2019, of the 43.6% who voted Tory to get Brexit done, a fair proportion would have wanted a sensible relationship with the EU. But thats majoritarian democracy for you. Christopher Hill Duxford, Cambridgeshire

Boris Johnsons announcement that the UK would trade with the EU on Australian terms makes one wonder why he chose Australia to illustrate his idea of a best-case no deal (What did Boris Johnson mean by an Australia-style system of trade? 16 October). It is puzzling because the economic structure of Australia is very different from that of the UK. And it is concerning if his statement indicates his preference for the future direction of the UK economy, dominated by extractive industries and exporting minerals, coal and raw materials.

The difference is reflected in Australian trade with the UK. While the UK was the fourth largest export destination for Australian products, Australia sold 10 times more to China in 2019. Imports from Australia were barely 1% of total imports into the UK, and Australia accounted for less than 1.5% of total exports from the UK. SP Chakravarty Bangor, Gwynedd

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Brexit is not like Henry VIIIs split with Europe - The Guardian

Rosa Barcelo co-chairs the firms global Data Privacy & Cybersecurity Practice. She counsels clients on data protection and privacy, including compliance with the GDPR and the ePrivacy Directive. Her expertise includes advising organizations on structuring international data transfers, BCRs, completing Data Protection Impact Assessments, drafting data processor agreements and carrying out lead authority assessments. Rosas practice has particular focus on cutting-edge ICT issues, including AI, machine learning, autonomous vehicles, programmatic advertising and online tracking technologies.

Rosa has nearly 20 years of experience in European data protection and privacy, including expertise in compliance, enforcement and policy. Her experience covers diverse sectors and is drawn from working in private practice, as well as in public service with the European Data Protection Supervisor (EDPS) and the European Commission.

Prior to joining the firm, Rosa was Deputy Head of Unit of the Cybersecurity and Digital Privacy Unit of DG CONNECT in the European Commission, where she led legislative deliberations over the proposed e-Privacy Regulation.

During her tenure with the European Commission, Rosa held other privacy and data protection-related roles, including in the Data Protection Unit, where she was responsible for international data transfer issues (BCRs, adequacy decisions and EU-US Safe Harbor).

Rosas work with the office of the EDPS focused on a wide range of ICT-related issues. In these roles, Rosa worked closely with national supervisory authorities participating in the former Article 29 Working Party (now the European Data Protection Board).

Rosa has also worked in academia and as a private lawyer in the Brussels offices of various international law firms, where she advised on EU privacy and data protection issues, as well electronic commerce and technology laws.

Rosa is a frequent lecturer on data protection, privacy and cybersecurity. In addition, she is a correspondent for theJournal of Computer Law Review Internationaland is currently serving on the European board of the International Association of Privacy Professionals.

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Why Data May Prove One of The Hardest Parts of Brexit [Podcast] - The National Law Review

Oct 24th 2020

THE FORTUNES of financial centres may swing less wildly than the markets they host, but swing they do. In the 2000s London threatened to knock New York off its perch as the worlds top financial centre. Michael Bloomberg, then mayor of the Big Apple, commissioned McKinsey to study how his city could repulse the attack in 2007. Today things look different. Brexit has robbed the City of London, the capitals financial district, of much of its swagger. World-conquering ambition has given way to anxious defensiveness.

When the post-Brexit transition period ends and Britain leaves the single market on December 31st, financial links with the EU will become, in the words of its new financial-services chief, Mairead McGuinness, less fluid. That is putting it mildly. British-registered financial firms will lose the passporting rights that have long allowed them to sell funds, debt, advice or insurance to clients across the EU unimpeded, as if they were domestic. Thousands of jobs and well over 1trn ($1.3trn) of assets have already been shifted to continental Europe as City firms confront this new friction.

Brexiteers argue that a City cut free from the EUs red tape can be a more outward-looking entrepot, with strengthened links to the rest of the world. For now, though, the headlines are all about what London is set to lose. Covid-19 has only added to the anxiety in the City. Its a ghost town, just like it is between Christmas and new year but without the drunks, laments a banker.

This jolt comes after two decades during which London became the increasingly muscular heart of the EUs financial body. Banks are natural consolidators, and many sought to do as much of their European business as possible from London. An analyst recalls an American banker saying, of his European operations, If its not bolted to the floor we move it to London.

As a result, London became the overwhelmingly dominant EU hub in international finance (see chart 1), and Britain a big net exporter of financial services, with a 44bn surplus in 2017. The sectors share of GDP has grown, despite slipping back a bit after the financial crisis of 2007-09 (see chart 2). This activity is a big generator of tax revenue: financial-services firms pay around 75bn a year, or more than 10% of all tax receipts.

It might seem odd, then, that since the Brexit vote in 2016 governments have not considered the City a priority. But its support for Remain did not endear it to the Brexiteers who now run Britainand who know that there are more votes in protecting fishermen than moneymen. Financial services are not part of the trade deal being negotiated with Brussels. Ministers took the view that the City is big and smart enough to look after itself, says Miles Celic, chief executive of TheCityUK, an advocacy group.

As a result, any deal on financial services is likely to be very thin, a sort of No Deal Plus, says William Wright of New Financial, a think-tank. That is what most financial firms and their regulators have long assumed would be the outcome. Much work has gone into minimising disruption, from the 16m insurance policies that Brits have with EU-based providers to the 76trn-worth of over-the-counter derivatives contracts between British and EU counterparties. This should ensure there is no drama on January 1st even if there is no deal, says a British regulator. It will be more a broken-arm than broken-neck cliff edge. Some market disruption, perhaps, but not a financial-stability event.

Britain was quick to grant EU financial firms access on existing terms for three years, after which they can seek longer-term authorisation. This was not reciprocated. With passporting gone, the best that British firms can hope for in the EU is equivalencea poor substitute. This would allow British firms to serve EU clients only if Brussels deemed British regulations to be closely aligned with its own. Moreover, the access is limited and revocable at 30 days notice.

Worse, the EU seems minded to offer relatively unfettered access only in areas where not doing so could affect its own financial stability, such as critical market infrastructure. It has thus agreed to extend current arrangements for clearing euro-denominated derivatives, an activity dominated by London-based clearing houses. But even here the extension is only for 18 months, after which it will be reviewed. The EU is determined to build its own clearing capacity to reduce excessive reliance on British financial plumbingthough, as Sir Douglas Flint, chairman of Standard Life Aberdeen, a British fund manager, points out, how the 27 countries would share the risks of backstopping it remains to be seen. Tellingly, the London Clearing Houses (LCHs) share of euro-swaps clearing has remained above 90% since the Brexit referendum, despite efforts by Eurex, a Frankfurt rival, to nab market share.

For many other activities, the level of access starting on January 1st remains unresolved. That is not least because the EU is using equivalence as a bargaining chip in the trade talks. European regulators are yet to decide, for instance, whether EU investors will be able to trade EU-listed stocks on British exchanges. The London Stock Exchange (LSE) says it will offer trading of EU-listed shares on the Dutch trading platform it owns if necessary.

In several key areas, equivalence has been all but ruled out. One is investment-banking sales and tradingbad news for the Wall Street giants that have long used London as a beachhead from which to serve wholesale clients across Europe. Another is retail banking. Some EU countries have already told British banks they wont be able to serve customers there, forcing the closure of accounts.

Fund managers have another worry, related to delegation, the outsourcing model at the heart of the 18trn European fund industry. Thousands of funds are domiciled in places like Luxembourg or Dublin for tax or regulatory reasons, but are permitted to be managed from London, New York or Hong Kong. The EUs markets authority recently cast doubt on this arrangement, suggesting it may be reviewed. This has caused consternation in Britainwhose fund managers oversee 8.5trn of assets, 2.1trn of which sit in EU-domiciled fundsand elsewhere. Asset management is just as critical [as banks] to the Citys long-term future, says Bernie Mensah, president of International at Bank of America. If you can prise much of that industry away from London then you really start to tip the balance of power.

Brussels has always been clear what Brexit would mean if Britain left the single market: if you want to serve EU clients, as a rule it should be done from within the bloc. Its motives are complex. Playing tough is partly to do with deterring others from leaving the EU. It is also about regaining economic sovereignty. Some EU regulators worry about the implications for financial stability of having to rely on a third country for critical functions. Others see Brexit as a chance to renew the push for capital-markets union, a long-stalled project to deepen and integrate the EUs fragmented markets, thereby lowering the cost of capital. And there is raw opportunism. It does seem to me that some in the EU are seeking to weaponise the equivalence decisions for the UK as a third country in order to shift trading volumes in particular into the EU27, says Kay Swinburne, vice-chair of financial services at KPMGs British arm, and a former MEP.

EU regulators have made it clear that they want to see substance in EU subsidiaries. Banks are under pressure to move not just back-office staff but salespeople, traders and risk managers too. Keeping the key staff in London, with a brass-plate operation across the water, is out, says a British regulator. In response, banks have been moving employees in substantial numbers, albeit not the tens of thousands that City Cassandras predicted would migrate. According to EYs Brexit Tracker, which monitors announcements by large banks and other financial firms, as of October 1st at least 7,500 jobs had left the City for the EU since the referendum. On top of this, firms have added, or plan to, over 2,800 new roles in EU subsidiaries.

These lost jobs add up to around 4% of the total in the Cityhardly a devastating blow. But the actual number moving is higher; EY tracks only the 222 largest firms. And there is more to come. Some firms have been waiting to see the outcome of the trade talks before moving more staff. We will see skeletal teams in the EU being fleshed out over coming months, says John Liver of EY. With covid-19 complicating relocation, EU regulators have indicated that banks can finish transferring staff next year, as long as their intentions are clear. Hubertus Vth of Frankfurt Main Finance, the citys financial cheerleader, says that in 2019 some 1,500 finance jobs moved from London to Germanys financial capital. He expects another 2,000 to transfer as the pandemic fades.

Mr Wright estimates that around 90% of the big Wall Street banks European staff were based in London before Brexit, and expects the number to have fallen to 80% by the time the dust settles. Morgan Stanley is reportedly looking for a new London HQ with at least 600,000 square feet, down from its current 800,000. How much of the reduction is down to covid-induced downsizing and the rise of home working, as opposed to Brexit, is unclear.

As for assets, banks have announced the shifting of 1.2trn-worth, equivalent to 14% of British-based banks total assets, in preparation for Brexit; more may have been moved unannounced. Nicolas Vron of Bruegel, a think-tank, reckons that more than 20% of British banking assets could eventually go.

Barclays is transferring 150bnover 10% of its domestic balance-sheetto Ireland, making it the largest bank there. JPMorgan Chase is moving 200bn ($237bn), over 7% of its global assets, to Germany. When asked by Bloomberg if 20-25% of the wholesale revenue JPM generates in Britain could end up elsewhere, the banks head of Europe, Viswas Raghavan, replied, You are in that zip code. Lost business means lost tax revenue: Stephen Jones of UK Finance, a lobby group, told a House of Lords committee in February that of the 37bn-38bn that banks contribute directly and indirectly to the Exchequer, 3bn-5bn is at risk.

Estimating the final toll is guesswork. New Financial reckons that a quarter of the Citys business is EU-linked and half of that may have to relocate. A similar lack of clarity hangs over the Citys 55bn-65bn in revenue from other parts of the world. No one knows what proportion of that is routed through London only because of its soon-to-disappear frictionless access to the EU.

Despite Brexit, London retains several advantages over EU financial centres, from its language and legal system (which governs many financial contracts) to the rich corporate ecosystem of lawyers, accountants, consultants and public-relations experts entwined with the City. London is alsono small matterthe worldliest of the continents world cities.

This makes it attractive not just to big banks, but also to hundreds of smaller firms that see advantages Paris and Frankfurt struggle to reproduce, says Daniel Pinto, the Anglo-French founder of Stanhope Capital, a boutique investment firm. Paris, he says, is still seen as wanting to penalise, not promote, the financial sector, despite its strenuous efforts to woo business from London. Meanwhile, foreign institutional investors, from American endowments to Middle Eastern sovereign-wealth funds, have an almost cultural attachment to London and will still want to invest through it if they can. Moreover, London is streets ahead of European rivals in several fast-growing sectors, such as green finance and fintechs. For firms in these domains, If you want to see 20 investors who are genuinely invested in your area, London is still the place, and we dont see that changing, says Mike Reid of Frog Capital, a VC firm that invests in fintechs.

Regulation might also be an advantage in the future. Some worry that standards may be allowed to slip to boost Britains competitiveness. The Bank of England rejects this (one of its mantras is divergence doesnt necessarily mean dilution). It stresses a change in style rather than substance: making rules smarter by letting regulators, rather than lawmakers more detached from the industry, craft more of them. Improving on the EUs one-size-fits-all-27 financial rule book is not the most fiendish of challenges. The aim is to rewrite it so it is more open to innovation while no less attentive to financial stability, says a British official, citing clunky European rules for small banks and the constraints of the Solvency 2 insurance directive as areas to work on. Ms Swinburne expects Britain to seek to align regulation more closely with America and Asia.

The EU, meanwhile, suffers from a lack of cohesion. The huge variation in its member states tax and insolvency laws is a formidable barrier to creating a unified capital market, for instance. The bloc is also riven with division over what type of financial sovereignty it wants. Its a delicate balancing act. The more it wraps its arms around EU borders and says activity has to take place within them, the less competitive and less connected to global flows its financial services will be, and costs will rise, says Andrew Pilgrim of EY. Even America, the financial hegemon, has never sought to gain full control of its financial flows and currency.

Also hamstringing the EU is a lack of co-ordination in taking on London. Its financial centres compete with each other. When Paris hustles to lure asset managers, for instance, it looks to poach from Luxembourg and Dublin as well as London. Theres no one place where they [the EU] are amassing their efforts, says Eva Kingston, a financial headhunter. As a result, expertise is diffuse: Frankfurt is strong in banking; Amsterdam in trading platforms; Luxembourg and Dublin in fund administration; Paris comes closest to being an all-rounder but is far from world-class. In a recent global ranking of financial centres it came 18th, just ahead of Washington, DC.

There are also questions over banks longer-term commitment to a Britainless EU. They are being forced to relocate business against their will. Allocating more capital to the euro zone right now feels odd, what with negative interest rates and an undynamic economy, says a senior City figure. It does not help that the EU27s share of global banking, insurance and capital-markets activity has been falling since before the global financial crisis: from 20% in 2006 to 13%, while Americas share has remained stable at around 40% and Asias has jumped from 18% to 28%. Anyone for a market thats relatively small in global terms, shrinking and inefficient? asks another banker, acerbically.

Some bankers may find ways around the diktat that they serve EU clients from within the bloc. The LCH has suggested that, faced with forced fragmentation, some firms might try to reroute trades via different entities. A central banker says: Never underestimate the financial sectors ability to do the business it wants, where it wants, despite regulators putting lines on maps. Arbitrage is in its DNA.

Even if London stays well ahead of European wannabes, however, it faces intense competition from elsewhere. It remains locked in a battle with New York for top spot. Asian markets are growing fast and becoming more self-sufficient in raising capital. China has hosted more of the IPO boom of 2020 than London, partly thanks to its fast-growing, Nasdaq-style market for tech stocks. The big risk for London is not the EU but that in the not too distant future Asia doesnt need it, says Mr Wright.

The full impact of Brexit wont be clear for years. Large parts of the future relationship between the City and the EU will be thrashed out only at the end of temporary extensions, such as that for clearing, says Simon Gleeson of Clifford Chance, a law firm. In the meantime, technology, along with covid-19 and home-working, is making the question of location-based regulation, long fundamental in finance, increasingly vexed. All of which, says Jan Putnis of Slaughter and May, another law firm, makes Brexit look almost quaint.

This article appeared in the Britain section of the print edition under the headline "Brex and the City"

See the article here:

What Brexit will do to the City of London - The Economist

PARIS (Reuters) - Many European businesses have yet to anticipate the new red tape that will be compulsory to trade with Britain after Jan. 1, the head of French customs warned, as the risk of queues of European lorries being turned down at the French port of Calais looms.

FILE PHOTO: A truck boards an Eurotunnel freight shuttle at the Eurotunnel terminal of Coquelles near Calais France, March 1, 2019. REUTERS/Pascal Rossignol

Whether London and Brussels reach a trade deal or not in the current phase of talks, in just over two months time Britain will leave the transitional arrangement that allows it to trade freely with the European Union since it officially left the bloc in February.

That means some five million trucks crossing the Channel every year will suddenly have to submit paperwork to customs officials before being allowed to go through the tunnel or take ferries between Britain and the continent. Dover-Calais is the shortest sea route.

We consider that we, at French customs, are ready, Isabelle Braun-Lemaire told Reuters in an interview.

Our infrastructure is ready but it relies on companies having taken on board the fact that with Brexit, there will be custom checks on all goods. And thats a reality we think some companies have not taken into account yet.

Some 100,000 French companies trade with Britain today, and Braun-Lemaire said she had no way to know exactly how many of them already knew what they had to do to be allowed to trade.

Since trade is free today, we dont know them. Thats tomorrows unknown, she said.

British companies will also have to confront a wall of bureaucracy that threatens chaos at the border if they want to sell into the worlds biggest trading bloc.

WE DONT KNOW EVERYTHING

Although the new customs arrangement does not depend on current negotiations on the future relationship - it is now known Britain will leave the EUs customs union - French customs officials said the political tension meant communication with their British counterpart was kept to a minimum.

We cant have technical discussions that are as frank as we could have had, she said, adding that she had little visibility about British customs preparedness. Were not naive. We dont know everything.

But ironically, the coronavirus epidemic, which has greatly reduced traffic across the Channel, may help smooth the transition, said Jean-Michel Thillier, the French customs Brexit organiser in the region around Calais.

The health crisis might help, in a way, by reducing traffic, he said. So we might have a bit of respite at the beginning of the year.

Reporting by Michel Rose; Editing by Nick Macfie

Read more from the original source:

Calais is Brexit-ready, but many businesses are not - French customs - Reuters

David Jones MP, the deputy-chairman of the eurosceptic European Research Group (ERG) has predicted any amendments peers make will be swiftly overturned when the legislation returns to the House of Commons. And Robert Oulds, director of the pro-Brexit Bruges Group, warned it was no surprise the unelected chamber is "siding with the undemocratic EU". The Bill is undergoing detailed line-by-line scrutiny in the House of Lords and is currently scheduled for four days of consideration at committee stage.

Cross-party amendments have been tabled to strike out clauses linked to the most contentious part of the Bill, which aim to give ministers the power to breach the Brexit divorce deal - known as the Withdrawal Agreement - brokered with Brussels last year.

The amendments are in the name of Lord Judge, a former lord chief justice, shadow attorney-general Lord Falconer of Thoroton and former Conservative former Lord Howard of Lympne.

Mr Kawczynski, MP for Shrewsbury and Atcham, told Express.co.uk: "This is yet another example where many of us believe if their lordships do implement what they are threatening to do, there is no doubt in my mind that the campaign to abolish the House of Lords will gain even more momentum.

"The fact that these unelected people can seek to overturn the common will of the democratically elected lower house shows the huge anachronism of our current constitutional make-up.

"If you are going to overturn the will of a democratically elected chamber then you must be elected yourself.

"I would much rather have an elected senate of 100 senators - I've said this for many years. We don't need 900 elected peers who only need to turn up for five minutes to bank their 350 daily pay.

READ MORE:Vengeful Brussels banning trade talks in 'to punish UK'

"I am horrified at the likes of Lord Howard. He was absolutely at the forefront of propagating discipline when he was party leader.

"And now he is no longer the leader of the party, he is seeking to undermine the collective will of over 99 percent of the Parliamentary party."

Mr Jones said: "The elected House of Commons has already voted to pass this essential legislation.

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"There have many occasions when domestic legislation does not reflect treaty provisions.

"Germany, among other countries, has asserted its sovereign right to deviate from international obligations.

"The Lords should respect the will of the people and the will of the Commons.

"I have no doubt that any amendments that pass will be rejected when they return to the Commons."

Mr Oulds said: "The House of Lords is sailing close to the wind if they amend the Internal Market Bill.

"It is no surprise that the unelected House is siding with the undemocratic EU.

"The Lords are putting the sovereignty and integrity of the UK at risk."

Liberal Democrat Lords leader Lord Newby and the Bishop of Leeds, the Rt Rev Nick Baines, are also among supporters of some of the cross-party proposals.

Labour has suggested peers could follow the unusual step of holding votes at committee stage next week to remove these sections of the Bill rather than waiting for report stage, the part of the process where they usually vote on matters connected to legislation.

The Government says powers to override the aspect of the Withdrawal Agreement known as the Northern Ireland protocol are necessary to protect the integrity of the UK.

However, critics argue the powers are not necessary, with Boris Johnson's predecessor as Prime Minister minister Theresa May previously stating an arbitration process to resolve issues would be available - claiming the Government's additions have "no place in this Bill".

If the Lords goes ahead and removes the controversial sections, the Government would then have to try to reintroduce them in the Commons - if they judge they are still required given the state of Brexit talks.

Read more:

Abolish the House of Lords! Unelected peers to unite with 'undemocratic EU' in Brexit plot - Daily Express