Contents on this page
- USCC seeks open minds & clarity on way forward as Brexit begins
- CBI President calls triggering of Article 50 by the UK Government a ‘Pivotal moment in country’s history’
- BusinessEurope ready to play a constructive role in the search of solutions to establish a balanced new model for EU-UK relations.
- BDI President calls for Maximum Damage Limitation During Brexit
- Keidanren’s View on Brexit – Towards the right deal for sound and sustainable economic development
- IBEC feels assertive national effort needed to avoid risk of a divisive, damaging Brexit divorce
March 28, 2017
USCC seeks open minds & clarity on way forward as Brexit begins
British Prime Minister Theresa May will officially notify the European Council of Britain’s intention to withdraw from the European Union (EU). On behalf of the business community, which has a significant stake in the outcome, we hope the UK and the EU will approach the upcoming negotiations with open minds and a firm commitment to provide clarity on the way forward as quickly as possible.
As the formal negotiating clock starts, we are eager to see London and Brussels move smartly toward a mutually acceptable agreement on the structure of their relationship. The U.S. firms that have invested USD 600 billion in Britain and trillions more elsewhere in Europe would be among those harmed by the failure to reach an agreement, which could, in turn, impact the millions of workers they employ.
Over the next two years, negotiators must agree on whether to retain or modify a wide array of rules, regulations, financial commitments, information sharing arrangements, and countless other agreements forged during Britain’s 44-year membership in the EU. These talks will be incredibly complicated and at times contentious. It will be essential for both sides to demonstrate sufficient flexibility to secure a mutually acceptable outcome. Given the complexity of the issues at stake, as well as the significant economic implications, stakeholders also must be closely consulted throughout the process of reframing this economic relationship.
Strong commercial ties between the UK and EU are indispensable for companies doing business on both sides of the Channel. We urge the UK and EU to work toward an ambitious free trade agreement once the terms of the UK’s exit become clear. So far, we are encouraged by the positive statements from the British government as well as the European Commission calling for such an arrangement.
The U.S. Chamber’s U.S.-UK Business Council has outlined the business community’s priorities in these negotiations, including unfettered market access, minimally-disrupted movement of labor, financial services, data flows, tax policy, and the need for an adequate transition period.
The Council will work with UK, EU, and U.S. policymakers to ensure that the priorities of the business community are understood as the UK resets its relationship with the EU and, when the time is right, as the U.S. and the UK consider the evolution of their commercial relationship. We look forward to working toward solutions that promote economic growth and create jobs.
March 29, 2017
CBI President calls triggering of Article 50 by the UK Government a ‘Pivotal moment in country’s history’
Paul Drechsler, CBI President, said:
“We welcome the Prime Minister’s commitment to free trade and European values which should hearten those around the table and set a constructive tone at the start of the negotiations.
“Today is a pivotal moment in our history and the time to be ambitious, level-headed and confident.
“It is in the interests of businesses across Europe to work together in absolute determination to make a success of Brexit.
“Our shared aim must be to forge a mutually beneficial deal that delivers barrier-free trade and safeguards prosperity for all. The Prime Minister has recognised this.”
On securing some early wins, Mr Drechsler said:
“The first six months are crucial as the UK heads into these challenging and unprecedented negotiations. Securing some early wins is therefore vital to set us on the right path.
“Most welcome of all would be the immediate guarantee of the right to remain for EU citizens here and UK nationals in Europe, which all governments agree is desirable.
“Businesses will welcome the upfront commitment to an implementation period to rule out cliff-edges for firms on both sides of the Channel – though more detail will be needed. Meanwhile, we must work constructively to design a means to maintain some influence over regulations affecting UK businesses in our biggest market.
“And discussing new trading arrangements should go hand-in-hand with negotiating the UK’s exit from the EU.
“It will be important to deliver on the commitment to include the devolved nations and all regions of the UK in the discussions.”
On the role of business, he said:
“Business has a crucial role to play in making the economic case as the negotiations progress so we can be clear about the impact on real people, jobs and communities across the UK.
“We know there’ll be a lot of noise, which is why the CBI will continue to work closely with the Government and our partners across Europe to ensure the economic case is heard loud and clear.”
March 29, 2017
BusinessEurope ready to play a constructive role in the search of solutions to establish a balanced new model for EU-UK relations
The UK has now notified officially its decision to leave the European Union and triggered article 50.
BusinessEurope and its 40 member federations from 34 European countries have published “Preliminary reaction to the triggering of Article 50”. BusinessEurope stands ready to play a constructive role in the search of solutions to establish a sound and balanced new model for EU-UK relations. It is in the interest of both the European Union and the United Kingdom to pursue mutually beneficial relations in the future, in a level playing field environment.
The exit of the UK from the EU must be smooth. Negotiations should be led in a true spirit of partnership and mutual loyalty.
To read the publish – Preliminary reaction to the triggering of Article 50 – click here
March 29, 2017
BDI President calls for maximum damage limitation during brexit
The extent of damage limitation is largely the responsibility of the UK Government.
Dieter Kempf, President of the Federation of German Industries (BDI), is calling for “maximum damage limitation” once the UK submits notification of its intention to withdraw from the European Union: “The extent of damage limitation is largely the responsibility of the UK Government,” said the BDI President on Wednesday in Berlin. “It will be extremely difficult to prevent negative consequences, especially for companies in the United Kingdom.”
Kempf also demanded that the negotiating parties should quickly clarify how they want to put economic relations back on a stable basis in the long term. “There is clearly a danger of a long-running breakdown of trust as a result of contentious negotiations.” Minimising this risk should be a guiding principle for the forthcoming negotiations between Brussels and London.
“Regarding policy in Brussels and Berlin, there should be one common approach, namely holding together and strengthening Europe,” Kempf said. This includes the single market with its four basic freedoms of labour, capital, goods and services. Europe is the basis for prosperity and opportunities – and importantly, for peaceful coexistence on the continent. “Europe is definitely not the problem; rather, Europe helps us to solve problems.”
March 14, 2017
Policy Proposals Europe Keidanren’s View on Brexit – Towards the right deal for sound and sustainable economic development
1. Keidanren compiled and released its Preliminary View on Brexit on August 10 of last year, following the UK referendum in which the British people chose to withdraw from the EU. In this document, Keidanren sought (1) to maintain stability in the financial and exchange markets, (2) to improve the predictability of the withdrawal process as much as possible, and (3) to maintain the highest degree of market integrity between the UK and the EU. At the same time, Keidanren raised ten key points to consider during the negotiations over the withdrawal agreement and the new framework, with a view to avoiding major difficulties in the activities of Japanese companies operating in Europe. Moreover, on September 12, Keidanren released a joint statement with other G7 countries/regional economic groups (B7) which stated that they “will observe closely the relationship between the United Kingdom and the European Union following the Brexit vote in the hope that a new and balanced model will be found.”
2. Fortunately, turmoil in the financial and exchange markets lasted only a short time after the referendum, and the markets have stabilized since. Nonetheless, for Japanese companies operating in Europe, unstable foreign exchange fluctuations are one of the most crucial management issues and therefore we need to remain vigilant on market developments. Concerning the withdrawal process, UK Prime Minister Theresa May spoke at the Conservative Party Conference on October 2 last year, where she said the UK would “invoke Article 50 no later than the end of March” this year, and procedures for initiating the Brexit process are currently underway. With regard to the negotiations following the withdrawal notification, Prime Minister May stated in her address at Lancaster House on January 17 this year that the UK would reach “an agreement about our future partnership by the time the two-year Article 50 process has concluded” and that “a phased process of implementation” would take place. Since, however, the shape of the new partnership will depend on the outcome of the negotiations; it remains difficult to predict the outcome. The EU attaches the highest importance to the idea and principles of integration and intends to shape a vision for its future as the EU at 27, as this year marks the 60th anniversary of the Treaties of Rome.
3. Against this background, Prime Minister May, in the above-mentioned address, repeatedly stressed her determination to obtain the right results for the UK, by suggesting that no deal is better than a bad deal. The point is, as it is so understood, that the negotiations are to be made to avoid no deal. Going forward, the procedures to settle the WTO’s schedules of concessions for the UK must be completed as soon as possible. These negotiations should be conducted for a new UK-EU partnership, aimed at ensuring sound and sustainable economic development, not for unilateral interest of any one party. To this end, it is essential to maintain market integrity between the UK and the EU and to improve the predictability of the withdrawal process to the highest level possible, ensuring that the business activities of companies operating in Europe, including Japanese firms, are not hindered. The items below are matters of the utmost importance in achieving such goals.
4. It should be noted that the Japan-EU EPA/FTA, whose negotiations are in the final stage, is expected to bind the UK and the EU together. With a view to preventing an upsurge in anti-globalism and protectionism in various parts of the world, this trade agreement should be realized as promptly as possible.
Addressed both to the UK and the EU
1. Realizing a “customs agreement” that is as close as possible to the present customs union: keeping UK-EU trade tariff-free and securing simplified customs procedures and highly convenient rules of origin (lowering the added value ratio, allowing choices between the added value ratio and change in tariff classification as rules of origin, and adopting accumulative rules of origin extended to FTA partner countries)
Prime Minister May stated that the UK could not fully stay in the customs union and hence would seek the greatest possible access to the EU single market through a new comprehensive, bold and ambitious FTA. She also said that the UK would aim to become an associate member of the customs union in some way, or remain a signatory to some elements of it, or enter into a new “customs agreement” to conduct tariff-free trade or frictionless trade with the EU. In the event that the UK leaves the customs union and concludes an FTA with the EU, it would be necessary to maintain tariff-free trade while clearing customs procedures and fulfilling the rules of origin. From this standpoint, customs procedures must be as simple as possible; the rules of origin must be highly convenient based on the above-mentioned measures; and the accumulative rules of origin should be extended to both present and future partner countries concluding FTAs with the EU
2. Securing regulatory coherence between the UK and the EU across a wide range of areas
If the UK exits the EU and implements new regulations and standards that are different from those currently applied in the EU, companies will be compelled to take double or additional measures in response to the new situation. In the case where the UK and the EU must compete to attract investments, companies may suffer unexpected disadvantages from such competition. Therefore, the same regulations and standards as those currently valid in the EU should be maintained, or regulations or standards with the same effect should be ensured in the UK. If the unification of such regulations and standards proves difficult, they should at least be subject to mutual recognition. The following items have been pointed out by companies as being particularly important:
- Continued application of international standards (UN/ECE) in automobiles
- In the case where the single passport system is no longer be applied to the UK (even then, continued application of the system for firms already possessing a single passport is desirable), allowing them to establish branches and to offer cross-services by securing equivalence in financial services regulations.
- (Even in the case where the European Medicines Agency moves out of the UK), continued participation of the UK in the European medicines regulatory network
- Continued application of environmental regulations such as the REACH rules on chemical substances
- Continued participation of the UK in the Single Euro Payments Area
- Securing unified protection of intellectual properties
3. Continued freedom of movement in services, capital and cross-border reorganization between group companies in the UK and the EU
Freedom of movement in services (shared services such as in accounting and personnel) between group companies in the UK and the EU should be continued, withholding taxes on the movement of capital (distributed profits, interest and royalty payments) should continue to be exempted; and non-taxation measures should be maintained on cross- border reorganization between group companies in the UK and the EU.
4. Securing the rights currently enjoyed by EU nationals residing in the UK, and UK nationals in the EU (this issue should be realized swiftly by excluding it from the negotiations)
Prime Minister May stated that such rights (people who live continuously and lawfully in an EU member country for at least five years automatically gain the permanent right of residence, etc.) should be secured for EU nationals who live in the UK (about 2.8 million people, of which a substantial majority of 0.9 million are from Poland) and UK nationals living in the EU region (about 1 million people, of which the highest number, or 0.3 million, live in Spain) as promptly as possible, and that this request had been conveyed to the leaders of other EU member states. At the same time, she pointed out that not all EU leaders had agreed to this proposal. As the White Paper on the United Kingdom’s exit from and new partnership with the EU states that the UK Government would prefer to resolve this issue ahead of the formal negotiations on leaving the EU, this item should be excluded from the negotiations and be realized swiftly.
5. Securing the free flow of data between the UK and the EU, and realizing the free flow of data among Japan, the UK and the EU
It is essential for businesses that the free flow of data between the post-Brexit UK and the EU be maintained without any disruption even after Brexit. By also ensuring the free flow of data between both Japan and the EU, and Japan and the UK, the free flow of data among the three parties should be realized.
6. Establishing a sufficient and seamless transition period in the case where simultaneous conclusion of the withdrawal agreement and new framework agreement (the UK-EU FTA) will not be realized
In the transition from their existing relationship to a new partnership with the EU, Prime Minister May said that it would be in no one’s interests for business to be on a cliff- edge. To this end she wishes to reach an agreement on their future partnership by the time when the two-year period set out in Article 50 will end. She also suggested that a phased process of implementation would be in the mutual interest of the UK and the EU, as it would give businesses sufficient time to plan and prepare for new arrangements. While such a “smooth and well-ordered withdrawal” is desirable, its achievement would not be without considerable difficulties. In the case where simultaneous conclusion of the withdrawal agreement and new framework agreement cannot be realized, a sufficient and seamless transition period must be established from the withdrawal date up until the date when the new framework takes effect to ensure that companies’ business activities under the current framework are not be forced to undergo substantial changes.
7. Securing smooth and prompt incorporation procedures (including the acquisition of licenses)
Upon review of the business strategies to the EU following Brexit, it will be important for companies to be able to smoothly and quickly complete incorporation procedures, including the acquisition of necessary licenses, for setting up new corporations in the UK or the EU. In light of this, the UK and the EU member states should make all the necessary preparations. Otherwise, the effect of establishing a sufficient transition period may be largely reduced.
Addressed to the UK
1. Securing an appropriate balance between immigration control and access to labor force (including workers without high skills)
Prime Minister May declared her intention to get control of the number of people coming to Britain from the EU, while also acknowledging the need to accept high skilled immigration. In reality, there are some industries which depend on workers who are not necessarily highly skilled. Therefore, a new immigration system should secure an appropriate balance between immigration control and access to labor force, including workers without high skills.
2. Securing preferential access to third countries outside the EU, with which the UK presently enjoys free trade as an EU member state, at a level equivalent to the current agreement
The maintenance of a free trade relationship between the UK and the countries/regions where Japanese firms have manufacturing sites, etc. (such as Turkey, South Africa and Mexico, among others) with which the EU has concluded FTAs, etc., is indispensable for Japanese companies. Necessary measures should be taken immediately after Brexit with a view to securing preferential access to such countries/regions.
March 29, 2017
IBEC feels assertive national effort needed to avoid risk of a divisive, damaging Brexit divorce
In response to the triggering of Article 50 by the UK, Ibec said an assertive national effort is needed to avoid the very real risk of a divisive, damaging Brexit divorce, and the UK crashing out of the EU without a new trade deal or transitional arrangements. The group said it is advising all member companies to examine how Brexit might impact their business and is providing contingency planning support.
Ibec CEO Danny McCoy said: “The combative and hardline UK position has significantly increased the chances of a divisive and damaging split. Irish efforts and influence must be marshalled to ensure this doesn’t happen. A far-reaching free trade agreement with minimal trade barriers is desirable, but fair competition must underpin this new EU-UK relationship. Comprehensive transitional arrangements will be needed to avoid a Brexit tariff ‘cliff edge’.
“The Irish economy is uniquely exposed. Tailored solutions will be needed to address specific problems. The free travel area between the UK and Ireland must be preserved and the future development of the all-island economy must be prioritised. A comprehensive state aid package is needed to guard against potential economic disruption and dislocation. State agencies will need extra resources so they can better support companies diversifying into new markets.”
“The UK threat to slash business taxes and regulation is an indication of the post-Brexit economic reality. Every government decision needs to be ‘Brexit-proofed’. We need to aggressively confront the UK competitiveness challenge and, at the same time, position Ireland to take full advantage of the inward investment opportunities that will arise”.