15 March 2017

Financial Times: European Parliament signals tough line on Brexit

[...] A resolution being prepared by senior MEPs lays out the priorities for a parliament that wields a veto over Britain’s exit terms from the EU and the substance of any future trade relationship.

Submissions seen by the Financial Times indicate that the parliament will adopt an uncompromising line on crucial political issues including: European Court of Justice oversight over a transition deal; the “strict” requirement for Britain to abide by common tax standards; and the demand that it “fulfil all its commitments” to the EU budget.

The powerful economic and monetary affairs committee’s suggestions, agreed by a cross-party group of senior MEPs, are more detailed than what the final resolution will be on areas such as clearing of euro trades in London.

But those working on the final text say it fits with the principles the European Parliament will lay down as a starting point for talks. MEPs are expected to adopt the resolution in early April, which could be just days after Britain’s Article 50 notification. These will guide Guy Verhofstadt, parliament’s chief Brexit negotiator, in his approach to talks.

Brexit The great unknowns of Brexit Nobody can be sure how the negotiations will play out, says Gideon Rachman The economic committee submission stresses that the two sides “will need to find a relationship between UK and EU markets that works” and notes there should be a transition to “avoid disruption in financial markets”. However, the committee writes “the possibility of no agreement cannot be excluded” and calls for the EU “to prepare for such an event”.

[...]the economic committee submission emphasises a role for the ECJ in transition and the “integrity” of EU rules — a hint at the need to continue free movement between Britain and the EU. The committee states that “appropriate transitional arrangements” should be conceived to provide “legal certainty and continuity” and “avoid disruption in financial markets”. But the measures “should preserve the integrity of the union law and the role of the ECJ”.

MEPs are also set to take a tough stance on other issues. Principles set out in the economy committee’s report include a “strict condition” that Britain must continue adhering to EU tax rules — including sensitive transparency standards for trusts — as part of any Brexit deal.

Britain should also be forced to honour obligations to the EU budget and the European Investment Bank so as to “avoid disruptions”. The document backs up recent calls from MEPs for greater oversight of the City of London’s lucrative business clearing euro-denominated derivatives.

The committee says that “current legislation has to be adjusted" to ensure that clearing and supervision of euro derivatives trading comes “under the responsibility of EU institutions”.

Full article on Financial Times (subscription required)

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