March 28, 2018

CBI: EU & UK negotiators agree status-quo transition period as talks begin on the future economic relationship

Last week’s formal announcement on an EU/UK 21-month status-quo transition agreement marks a positive step forward for business. Although some sectors need much greater legal certainty, the transition deal reached last week will help to lift the fog of uncertainty for many businesses.

Business breathed a sigh of relief last week as the leaders of EU27 countries agreed the draft Brexit withdrawal agreement and approve guidelines on the future relationship. Though some sectors need much greater legal certainty, for others it will be enough to pause contingency planning and maintain investment in the UK.

While the agreement on a 21-month transition period until 31 December 2020 is a major breakthrough, this agreement will only become legally binding once the negotiations on the withdrawal agreement are finalized and then ratified by the EU and UK parliaments.

The two sides reached “complete agreement” on the divorce bill and on citizens’ rights, so that any EU citizens who come to the UK during transition will have the same rights and guarantees as those who reside in the UK before Brexit. The UK will also be able to sign and ratify new trade deals during this period, although these will only come into effect once the transition period is over.

However, the Irish border remains unresolved and the EU has insisted the withdrawal agreement must include an emergency “backstop” option to avoid a hard border. Crucially, UK Prime Minister, Theresa May, dismissed this option in her Mansion House Speech on the grounds of threatening “constitution sovereignty” of the UK. Negotiators must urgently agree an effective and realistic solution on the Irish border.

Businesses have been clear that any solution to the Irish border must safeguard vital trade. Given 37% of Northern Ireland’s exports go to the Republic of Ireland each year, the economic evidence shows that some form of customs union with the EU is necessary to ensure frictionless trade and avert a hard border between the Republic and Northern Ireland.

The agreement reached on transition shows what can be achieved when people and prosperity are placed above political ideology which is something the CBI has been calling for since last summer.

Both sides must now turn their attention to resolving the remaining points of disagreement within the withdrawal agreement as we head towards the ratification process in October. The CBI will continue to work with UK and EU negotiators to reach an ambitious new future economic relationship that maintains frictionless trade and economic prosperity across the whole of the UK.

Source: CBI

March 23, 2018

BusinessEurope: Brexit agreement on transition is positive for business

Today the European Council confirmed the political agreement reached by Brexit negotiators this week on parts of the legal text of the withdrawal agreement including a transition period that will last until December 2020.

Emma Marcegaglia, President of BusinessEurope, said: “After many months of little progress casting a shadow of uncertainty over the business community, we welcome the fact that both sides agree on having a transition period after the UK leaves the EU in March 2019. This has been a long-standing request from business, as companies need time to prepare and adapt to the post-Brexit situation. The ‘status quo-like’ solution with the UK remaining in the customs union and the single market with all appropriate rights and obligations of the EU acquis for the duration of the transition is the best option. First, it provides business and citizens the necessary time to adjust; second, it provides more certainty and predictability; and third, it should maintain a level playing field for companies.”

Although negotiations will continue on the withdrawal agreement and nothing is agreed until everything is agreed, the European Council has also adopted the guidelines in view of opening the negotiations for the future EU-UK relation. “At this stage we don’t know what the future EU-UK relation will look like and until we have an agreement in place, a ‘cliff edge’ scenario cannot be excluded. However, the adoption of the guidelines is a step in the right direction – it provides more clarity as to what companies can expect and opens the door for negotiations.”

Source: BusinessEurope

March 23, 2018

USCC: U.S.-UK Business Council statement on European Council meeting, Brexit transition

The U.S. Chamber’s U.S.-UK Business Council issued the following statement today from its chairman, Robert Rooney, in response to the European Council meeting where Brexit transition terms were agreed upon:

“The U.S.-UK Business Council welcomes the agreement regarding a transition period that was affirmed at today’s European Council meeting. This represents an important step in the right direction, and we are eager to see the process advance. Clarity regarding the terms of the transition are of paramount importance to U.S. companies who want to maintain the ability to seamlessly serve their customers in the UK and throughout the EU.”

Source: USCC

Mar 15, 2018

BDI: Brexit is casting its shadow

Foreign direct investment into the UK is down by 90 per cent. London should agree to status quo transition from March 2019. First results from BDI Task Force Brexit – duty and quota free trade as minimum requirement.

The Federation of German Industries, the BDI, has called on the UK government to seize the opportunity to make progress in the Brexit negotiations at next week’s European Council meeting. “Our companies need reliable parameters. This meeting presents a chance to work against the uncertainty felt by companies on both sides of the Channel,” said BDI Director General Joachim Lang.

“Brexit is casting its shadow,” warned Lang. Last year the United Kingdom slipped down two places and now only ranks fifth among Germany’s key trading partners. Foreign direct investment flows into the United Kingdom were down by 90 per cent over the previous year according to the United Nations Conference on Trade and Development, UNCTAD. “This is an alarm bell that London cannot ignore,” said the BDI Director General. The UK government is meanwhile forecasting GDP growth of only 1.4 per cent for this year, the weakest value in the whole EU.

The UK should agree to a status quo transition phase as of 29 March next year. “We call on the EU and the UK government to make this fundamental decision at the upcoming European Council meeting. Otherwise, some companies will have no choice but to launch their contingency plans – for a worst-case scenario that nobody wants and that will harm everyone,” underlined Lang.

Due to the faltering progress achieved in the negotiations so far, companies are having to prepare for the possibility of a hard Brexit. The BDI’s Task Force Brexit has been analyzing the problems associated with the UK’s departure from the EU over the past nine months and has presented potential solutions in the areas of trade, market access, transport, tax and financial services.

“For German companies, duty and quota free trade is the minimum requirement, ideally in the framework of a customs union,” said Lang. If the negotiations lead to a free trade agreement, the task force believes it should be based on three tenets: The agreement must rule out duties and quotas without exception, clearly regulate subsidies and provide for regulatory cooperation.

Source: BDI

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