18 December 2017

The Guardian: UK cannot have a special deal for the City, says EU's Brexit negotiator

Michel Barnier said it was unavoidable that British banks and financial firms would lose the passports that allow them to trade freely in the EU, as a result of any decision to quit the single market.

“There is no place [for financial services]. There is not a single trade agreement that is open to financial services. It doesn’t exist.” He said the outcome was a consequence of “the red lines that the British have chosen themselves. In leaving the single market, they lose the financial services passport.”

The stark declaration quashes the hopes of the Brexit secretary, David Davis, for a unique trade deal that would include financial services. The Brexit secretary has called for a “Canada plus plus plus” deal with the EU, a reference to the free trade agreement struck between Ottawa and Brussels in 2016, but with the crucial addition of financial services.

In an exclusive interview with European newspapers, including the Guardian, Barnier gave examples of his own three pluses – judicial cooperation, defence and security and aviation.

The negotiator also said:

• A trade deal could be agreed within a two-year transition period, but would have to be ratified by more than 35 national and regional parliaments.
• The UK could not stop Brexit unilaterally, arguing that overturning the decision to leave would require the consent of 27 EU member states – a view at odds with one of the authors of article 50, Lord Kerr.
• The UK must follow all rules and regulations of the EU during the transition period, including new laws passed after the UK has left.
• The UK could negotiate trade agreements with the rest of the world during the transition, but they could not come into force.
• He would not confirm British estimates that the final Brexit bill – the UK’s outstanding obligations to the EU – would be no more than €45bn (£39bn).

Barnier was speaking three days after EU leaders agreed the UK had made enough progress on the Brexit divorce – citizens’ rights, the Brexit financial settlement and the Irish border – to allow talks on the future.

He said the next key moment would be an EU summit in mid-March, when EU leaders are due to sign off guidelines that will lay out red lines and hopes for the future. “I hope very much that we will have a clear position from the British government by this time.” [...]

In a move that will infuriate cabinet Eurosceptics, Barnier said the UK must accept all EU law, including new directives and regulations adopted after British ministers and MEPs are no longer part of the EU decision-making process. “The same rules for everyone – this is the spirit of the transition.”

During the transition, the UK must accept the EU’s “complete architecture”, including the role of the European court of justice, free movement of people and the common fisheries policy. “It will be essentially the economic status quo,” he said. 

Any new trade deals the UK signs will not be able to come into force during the transition. EU officials think this is a theoretical point, because other countries will not be able to complete deals with the UK without knowing what London has agreed with the EU. “We have already had contacts with third countries and they want to know what will be the nature of the relationship between the EU and the UK,” Barnier said. [...]

Full article on The Guardian

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