Draft text: EU offers Brexit delay to May 22

No further postponement possible if UK does not take part in EU election.

European Council President Donald Tusk proposed May 22 as the new Brexit date, with no further delay possible if Britain does not take part in the European Parliament election, according to draft conclusions of today’s EU summit seen by POLITICO.

British Prime Minister Theresa May had proposed an extension to the Brexit process to June 30.

“The European Council commits to agreeing, before 29 March 2019, to an extension until 22 May 2019, provided the Withdrawal Agreement is approved by the House of Commons next week,” the draft conclusions say.

“Given that the United Kingdom does not intend to hold elections to the European Parliament, no extension is possible beyond that date.”

The pointed reference to May closing off the possibility of U.K. participation in the EU election highlighted the dismay among EU27 leaders that the British prime minister did not at least leave open the path toward a longer extension.

But if she fails to win ratification of the Brexit deal — which looks increasingly like a long-shot given animosity between May and the House of Commons in the last 24 hours — both sides will have to rethink their positions.

In the draft conclusions, the Council once again declares that the EU will not renegotiate the divorce terms included in the Withdrawal Agreement that they agreed with May back in November. “The European Council reiterates that there can be no opening of the Withdrawal Agreement that was agreed between the Union and the United Kingdom in November 2018,” the draft conclusions state.

One portion of May’s letter on Wednesday that troubled EU leaders was her declaration that intends to issue a an additional policy statement providing certain assurances to constituents in the U.K. Potentially to give the Northern Ireland assembly a role in approving regulatory changes the region would be required to adopt.

The leaders, in the draft conclusions, sought to prevent May from making any proclamation that would undermine the Withdrawal Agreement. “Any unilateral commitment, statement or other act should be compatible with the letter and the sprit of the Withdrawal Agreement,” the draft Conclusions state.

In the six-point draft document, the leaders also call for continuing to prepare for a worst-case no-deal scenario. “The European Council calls for work to be continued on preparedness and contingency at all levels for the consequences of the United Kingdom’s withdrawal, taking into account all possible outcomes,” the document states.

“The European Council will remain seized of the matter,” the draft conclusions state.


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Big winners from no-deal Brexit: Irish smugglers

British plan could make Northern Ireland back door to UK market.

Ireland was once a smuggler’s paradise. If the U.K. leaves the EU in a no-deal Brexit, experts say, it will likely become one once again.

The British government’s no-deal contingency plan released early Wednesday morning would create enticing opportunities for smugglers, by slapping steep tariffs on agricultural products like beef and cheddar cheese while not applying checks at the border between Ireland and Northern Ireland.

“I assume this is more of a theoretical plan than a practical one,” said David Henig, director of the European Centre For International Political Economy, a think tank. “I cannot see this being in anyway sustainable beyond a short period. There are reasons we check things at borders.”

The move was intended to provide businesses and consumers with clarity and prevent a return to the period prior to the 1998 Good Friday Agreement, when the British army patrolled the borderlands between Northern Ireland and the Republic of Ireland, blockaded country roads and struggled to stop smugglers.

The U.K. said the plan would be temporary in nature, but offered little clarity about how it would be able to carry out checks on goods coming over to Britain from Ireland.

“We can see Northern Ireland really being the back door into the main Great Britain market” — Ivor Ferguson, president of the Ulster Farmers’ Union

The goods affected range from farm products to motor vehicles.

“You’re essentially saying ‘we’re not going to check anything on the border between Ireland and the rest of the U.K.,'” said Henig.

Someone could buy a car in Ireland, drive it across the border into Northern Ireland before shipping it over to Scotland, bypassing the U.K.’s 10.6 percent tariff on vehicles. “If you are not going to put something in place and check goods crossing the sea border, then it opens up all sorts of differentials,” Henig said.

The U.K. plan would put a tariff on beef amounting to 53 percent of the EU most-favored nation rate, while tariffs on poultry products would be set at 60 percent of the EU most-favored nation rate. Butter and cheddar cheese would have tariffs of 32 percent and 13 percent of the EU most-favored-nation rate respectively.

A farmer at work on Gola Island, Ireland | Charles McQuillan/Getty Images

EU farmers, particularly those from Ireland, would find it much harder to compete in the U.K. market under these terms. Up to 65 percent of Ireland’s cheddar cheese exports go to the U.K., along with large shipments of butter and infant formula. In total, 30 percent of Ireland’s dairy production is sold to the U.K, according to Bord Bia, the Irish Food Board. Ireland’s food exports to the U.K. made up 35 percent of the total in 2017.

“There is nothing to stop that [smuggling] at the moment,” added Ivor Ferguson, the president of the Ulster Farmers’ Union. “We can see Northern Ireland really being the back door into the main Great Britain market.”

Farmers in both the U.K. and Ireland expressed dismay at London’s plans.

Bord Bia said London’s plan “would be detrimental to Irish farmers and Ireland’s agri-food exporters,” while the Irish Farmers’ Association said the U.K.’s tariff proposals would devastate rural areas and inflict huge damage on the country’s beef sector.

“Our most exposed sectors, particularly beef, simply will not survive the kind of tariffs being talked about. This would have a devastating effect in the rural economy,” the IFA’s president, Joe Healy, said. “We export over 50 percent of our beef to the U.K.  If this is subject to tariffs, it will be a ‘direct hit’ of almost €800 million on the sector.”

The trade body Dairy Industry Ireland said London’s suggested tariff on cheddar would result in additional costs of €20 million per year. Currently, Irish cheddar exports to the U.K. are well north of €250 million in value.

“The proposed tariff levels are deeply unwelcome, would put Irish butter and cheddar under severe pressure in the U.K. markets … and would necessitate increases at consumer level,” Dairy Industry Ireland said.

Northern Irish sheep farmers would also stand to lose out | Charles McQuillan/Getty Images

While Irish agriculture producers might try to export to the U.K. through Northern Ireland, Dairy Industry Ireland said this is not an option as exporters would be keen to keep up their reputation by trading through legal channels

Northern Irish sheep farmers, who sell some 400,000 of their lambs in the Republic every year, would also stand to lose out. Added tariffs would crush the trade, Ferguson of the Ulster Farmers’ Union, said.

U.K. farmers meanwhile worry the selective tariffs would distort markets and leave parts of the industry vulnerable.

Sensitive agricultural goods, such as meat and dairy products, will be protected but cereals, potatoes and most fresh produce imports will face no tariff barriers and massive competition from abroad, said Tom Hind, chief strategy officer at the U.K.’s Agriculture and Horticulture Development Board.

“In simple terms, the U.K. grain and oilseed rape market would be open to all global exporters after previously seeing protection from the EU’s tariffs,” he said. He also noted that while lamb would be protected by a steep tariff under London’s plan, it would still face the EU’s common external tariff in a no-deal scenario. “This will impact trade flows and market dynamics,”‘ he said.

“It has been said that an open border in Northern Ireland will be an invitation for smuggling” — Holger Hestermeyer, reader in international dispute resolution at King’s College London

Minette Batters, the president of the U.K.’s National Farmers Union said: “While we are relieved that we are finally able to see the tariffs that will be applied on imported food in a ‘no-deal’ scenario, it is appalling that we only now have this opportunity to do so — a fortnight before they could come into effect. Farmers and food businesses have no time to prepare for the implications.”

The U.K. could also face legal challenges to its plans, said Holger Hestermeyer, a reader in international dispute resolution at King’s College London.

Hestermeyer said the plan would open up the U.K. to complaints inside the World Trade Organization because it would break the so-called most-favored nation rule, a principle that dictates that all special trade benefits outside of a trade deal must be shared with every other WTO member.

“It has been said that an open border in Northern Ireland will be an invitation for smuggling,” he said. “Quite possibly, the reality could turn out worse: Routing goods via the Northern Irish border could — depending on the details of the policy — become a legal alternative to paying tariffs that would be due anywhere else.”

Not everyone, however, sees things as being as gloomy as the Irish are suggesting.

“I’m not so sure a hard Brexit means as much pain for Irish beef farmers as they might want you to think,” said Ben O’Brien, director for the trade group Beef + Lamb New Zealand. “It takes some kind of front for an EU member state to complain about anybody else’s beef access arrangements.”


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UK to cut tariffs to zero on 87 percent of imports in no-deal Brexit

Mixture of tariff rates would be retained for some goods, including on agricultural imports and cars.

LONDON — The U.K. would temporarily cut tariffs to zero on 87 percent of imports in the event of a no-deal Brexit in order to avoid “potential price spikes” hitting consumers, ministers said Wednesday.

A mixture of tariff rates would be retained for some goods, including on agricultural imports and cars.

The emergency tariff regime would apply for up to 12 months, according to a government briefing issued Wednesday morning.

After Theresa May’s Brexit deal was rejected by the House of Commons for a second time Tuesday, MPs will vote later Wednesday on whether to leave the EU with no deal on the legal date of March 29.

Trade Policy Minister George Hollingbery said the government “must prepare for all eventualities.”

“If we leave without a deal, we will set the majority of our import tariffs to zero whilst maintaining tariffs for the most sensitive industries,” he said. “This balanced approach will help to support British jobs and avoid potential price spikes that would hit the poorest households the hardest.”

Tariffs on beef products would be set at 53 percent of the EU most-favored-nation rate, while tariffs on poultry products would be set at 60 percent of the EU most-favored-nation rate. Sheep meat would attract the existing EU most-favored-nation rate.

While finished cars would attract a tariff rate of 10.6 percent, no tariffs would apply to car parts required by manufacturers reliant on EU supply chains.

Some minimal tariff rates would also apply to ceramics, fertilizers and textiles.

A set of goods including bananas, raw cane sugar and some kinds of fish would also attract tariffs to protect preferential arrangements the U.K. holds with exporters in developing countries.

The tariff regime will not apply to goods crossing the Northern Ireland border, for which the U.K. today announced a set of temporary, unilateral measures for avoiding checks in the event of no deal.

UK to unilaterally waive all checks at Irish border in no-deal Brexit

Temporary regime would permit unmonitored flow of goods and exploitation of the new system by smugglers, officials acknowledge.

LONDON — The U.K. would unilaterally waive checks on all goods crossing the Northern Ireland border in the event of a no-deal Brexit, as part of a temporary regime in the days immediately after the U.K.’s exit, ministers said Wednesday.

In such a scenario, the U.K. would seek to immediately enter talks with the EU and the Irish government to find a long-term solution, according to a government briefing.

The temporary regime would permit the unmonitored flow of goods and exploitation of the new system by smugglers, officials acknowledged.

Tariffs which would apply to 87 percent of imports in the event of no deal would not be levied on goods crossing the Northern Ireland border. The existing VAT regime for traders would remain in place, and small traders not currently registered would be allowed to report online only periodically.

However, animal and animal products from outside the EU would need to enter Northern Ireland through a designated port. There would be new import requirements on a small number of goods, such as endangered species and hazardous chemicals, but these would not involve infrastructure or checks at the border, the government said.

After Theresa May’s Brexit deal was rejected by the House of Commons for a second time Tuesday, MPs will vote later Wednesday on whether to leave the EU with no deal on the legal date of March 29.

Northern Ireland Secretary Karen Bradley said the measures “can only be temporary and short-term.”

She added: “We will do all we can to support people and businesses across Northern Ireland in the event that we leave without a deal.”

For business, no-deal Brexit has already hit

Three weeks before Brexit day, the costs of no deal are mounting by the day.

The value of a Brexit deal is dropping by the day.

With three weeks to go until Britain’s scheduled EU departure, many U.K. businesses are already feeling the impacts of a no-deal Brexit.

Industry has spent hundreds of millions on contingency plans it will not be able to recoup even if a last-minute deal can be done, and U.K. firms are already reporting drops in sales, exports and investment. Farmers are also watching contract orders for this year’s harvest dry up.

Theresa May’s government is still seeking changes to the controversial Northern Ireland backstop mechanism — designed to avoid a hard border on the island of Ireland — that will satisfy skeptical MPs when the Brexit deal returns to the House of Commons for a second “meaningful vote” next week. But even if MPs approve the deal, the impact of months of uncertainty means that much of the economic damage of a no-deal Brexit has already come about.

“The specter of no deal is holding them back from investing in new factories, new overseas markets and new jobs.” — Rain Newton-Smith, CBI’s chief economist

According to a survey released Thursday by the Confederation of British Industry, there was widespread concern among 273 firms across the services, manufacturing, and distribution sectors about the impact the prospect of a no-deal is already having on sales and investment.

Potential tariffs on goods as a result of crashing out of the EU were “extremely” concerning for 57 percent of the firms who responded and “moderately” concerning for 19 percent.

The findings are backed up by U.K. government figures showing that domestic business investment has fallen for three consecutive quarters. The last time business investment fell for more than two quarters was in the aftermath of the 2008 economic crash.

“With Brexit stuck in stalemate, this only means growing damage today and a weaker economy tomorrow. Growth is at a near standstill and investment is evaporating; the economy is undoubtedly slowing down,” said CBI’s chief economist Rain Newton-Smith. “The specter of no deal is holding them back from investing in new factories, new overseas markets and new jobs.”

One example is in future contracts for agricultural goods. Matt Culley, the owner of a 300-hectare farm close to Andover in southern England, has spent the last four years exporting premium grade malting barley to buyers supplying the German beer industry.

The National Farmers’ Union has warned that Britain would “run out of food” if it cannot continue to easily import from the European Union | Dan Kitwood/Getty Images

Usually, all of his crop would have been bought up by now, even before all his fields have been planted. But not this year. Demand has dropped off and he is pondering how much land to leave fallow.

Over half of the U.K.’s 7 million ton barley harvest is exported to the EU. The worry for potential buyers is that if there is no deal, then the U.K. crop will be subject to tariffs.

“They are not taking or signing any new contracts for surplus I may have,” Culley said. “My question is: Do I plant all of the land or not? … Do we blindly go planting hoping it all comes right, even if the price might not be there?”

Jack Watts, chief combinable crops adviser for the National Farmers’ Union, said the uncertainty is affecting many crops beyond barley. “All this uncertainty has implications on the 2020 crop,” he said. “Typically farming would be looking to get contracts on board now.”

Phil Bicknell, market intelligence director at the Agriculture and Horticulture Development Board said beef prices have begun to dip as well due to fears that market access to the EU will be cut off in the event of no deal. Beef prices have fallen 10 pence to £3.44 per kilo, he said, compared to the same period a year ago.

WTO rules

A key issue for many sectors is uncertainty over the terms of trade that will operate after March 29. While the U.K. has sealed deals to roll over existing EU trade terms with the likes of Switzerland, Chile and a handful of other countries, it has yet to seal deals with lucrative markets like Japan — let alone sign new trade deals. The government has also postponed an announcement about the tariff schedule that would apply in a no-deal scenario until after the Commons vote on the Brexit deal next week.

“It’s difficult if you’re buying new clothes, books or electronic devices and you know the taxation is going to be higher, but not by how much” — Pauline Bastidon

“We will communicate a decision on market sensitive information to stakeholders and the public as soon as possible,” a government spokesperson said. “We will need to balance a number of considerations to avoid potential price rises for consumers and manage the impact on producers that rely heavily on supply chains as well as those who are currently protected from global competition by import tariffs.”

But that doesn’t help importers making decisions now on future purchases or exporters who don’t know what trade terms other countries will apply.

“It’s difficult if you’re buying new clothes, books or electronic devices and you know the taxation is going to be higher, but not by how much,” said Pauline Bastidon, from the U.K.-based Freight Transport Association. “It could go as high as 35 or 40 percent in certain cases. [Exporters] can’t do anything about it, but what they could have is clarity to calculate the total cost.”

Shipping times to Asia are around six weeks, so companies shifting British cars, gourmet snacks or electronics by sea have not been sure for weeks now of the trading regime their goods will encounter when they reach their destination.

In the coming days, products bound for the Middle East and India will also fall within that sphere as the exit date nears. “The horizon of nations is extending the closer we get to Brexit date,” said Bastidon.

Should the deadline arrive without an extension or without a withdrawal agreement, any cars being exported to the U.K. would be hit by standard tariffs that are set by the World Trade Organization | David Hecker/Getty Images

Bentley, for example, sends 60 percent of its cars to markets beyond the EU, with shipments primarily departing in vessels from Southampton. Aston Martin and Jaguar Land Rover follow similar export routes. If the U.K. is operating under World Trade Organization rules by the time these shipments arrive, their products will be subject to a 10 percent tariff.

‘Pointless costs’

Car manufacturers are also having to deal with the costs of stockpiling parts to hedge against supply problems in a no-deal scenario. That comes on top of a 9.1 percent drop in production in the U.K. — a five-year low for the sector. Honda, Nissan, Ford and Jaguar have all announced that they will scale back production in the U.K. or are diverting investment elsewhere.

“The clear and present danger remains the threat of a no-deal Brexit, which is monopolizing time and resources, undermining competitiveness,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, last week. “Every day a no-deal Brexit remains a possibility is another day automotive companies pay the price in additional and potentially pointless costs.”

The impact on U.K. research is already happening too. Pam Kearns, a pediatric oncologist and director of Cancer Research UK’s clinical trials unit at the University of Birmingham, said British researchers are losing out.

General Secretary of Unite the Union Len McCluskey joins Honda employees as they stage a protest over the planned closure of their Swindon plant | Dan Kitwood via Getty Images

“Although the U.K. is eligible for European Horizon 2020 funding, some EU partners have politely said it would be better if they did not have a U.K. partner because of the uncertainty — so the U.K. is losing out on funding at the moment because people are anxious because of the uncertainties,” she said.

“They worry that having a U.K. partner will disadvantage them,” she added. “We’re all working to get ready [for a possible no-deal Brexit] instead of working on these trials, we’re just treading water.”

For Culley, the grain farmer, he still hopes to recoup some future revenue if an 11th-hour deal can be done. “I have not sown all my seeds yet,” he said.

For many business though, that won’t be an option.

Emmanuel Macron’s renaissance vs. reality

POLITICO’s team breaks down the French president’s plans — and rates their chances of success.

No one could accuse Emmanuel Macron of being short of ideas. But how many of them will become reality?

The French president laid out his vision for the EU in an op-ed published in multiple European newspapers Monday evening, calling for a “European renaissance” and proposing a raft of new policies and institutions to implement them. He also called for a conference to rethink the EU political project, saying even changes to the bloc’s governing treaties should not be taboo.

But talk is cheap. As countless national leaders before Macron have found, getting the EU to change course is the hard part.

Here’s a run-down of Macron’s key proposals, together with analysis by POLITICO’s specialist reporters — and our take on how much chance of success they have.

TRADE

What Macron wants: A lot is left to interpretation from Macron’s op-ed but trade is arguably the area where his proposals represent the most radical shift from status quo. They are broadly in line with a recent Franco-German push to rethink the EU approach to competition and trade policy. Macron calls for a “European preference” in public procurement and says the EU should “reshape our trade policy, penalizing or banning businesses that compromise our strategic interests and fundamental values.” He also calls for “penalizing businesses” that compromise “environmental standards” in trade.

Macron delivers a speech during the closing session of the Intelligence College in Europe | Ludovic Marin/AFP via Getty Images

What the EU thinks: We’ve heard that before. The “European preference” line sounds a lot like the “Buy European Act” that Macron called for in his election program. But even French officials have admitted that type of protectionist measure is a non-starter in Brussels.

A more realistic approach — that France has already championed — would be “reciprocity” in public procurement. That’s the notion that EU governments should not buy goods and services from countries that are not open to European companies. The idea is gaining traction, including in Germany’s latest industrial strategy. There’s an old Commission proposal to that effect, which could be renegotiated between EU countries after the EU elections.

As for taking into account the EU’s “fundamental values” in trade, Macron has a little credibility problem: When it was suggested to him that France’s strategic arms industry should not be exporting to Saudi Arabia, Macron called an export ban “pure demagoguery.”

Reality check: POLITICO’s trade team puts the chances of implementing a policy of soft reciprocity (where non-EU companies are penalized unless their countries open up to EU bids) at 4 out of 5. But that “fundamental values” thing looks a lot like hot air.

COMPETITION

What Macron wants: “We need to reform our competition policy,” Macron wrote.  Although the specific measures he hinted at are more in the trade domain, his call carries echoes a Franco-German proposal from last month. That came in the wake of the European Commission’s block of the rail merger between France’s Alstom and Germany’s Siemens that stirred up ill feelings in Paris and Berlin. Both countries insisted on the need to reform current EU rules to allow European companies to become “global champions.” That requires a rethink of how the Commission assesses mergers, mainly to take greater account of competition at the global level. Another important pillar of the strategy would allow for more state aid.

What the EU thinks: Currently, the EU does not allow its member countries to grant companies specific advantages. But several exemptions allow bypassing that rule, including a recent framework for joint research and innovation projects “of European interest.” France and Germany said this was a “useful” but “very complex” tool and have called for the conditions to be revised.

Responding more broadly to the Franco-German calls, EU Commissioner for Competition Margrethe Vestager has defended her existing toolbox, including the projects of European interest and state aid rules to tackle tax avoidance. But in a climate of increasing protectionism across the world, the proposals of France and Germany have some wind in their sails.

Chances of success: 3 out of 5. The reform of competition rules will be discussed in the run-up to, and after, the European Parliament election in May. The Franco-German alliance take is likely to have a strong impact on the final outcome.

TECH

What Macron wants: Quite a lot. The French president called for “European supervision” of major digital platforms including “prompt penalties for unfair competition, transparent algorithms,” as well as more funding for innovation (see budget section below). He also wants a “European Agency for the Protection of Democracies” to help countries protect themselves “against cyber-attacks and manipulation,” as well as European rules “banishing incitement to hatred and violence from the internet.”

What the EU thinks: We’ve already got much of that in place. Arguably, there’s already “European supervision of major digital platforms” thanks to Vestager and her competition department at the Commission and the EU Observatory on the Online Platform Economy, although for now there is no specific focus on algorithm transparency (guidelines on that front will be up to the next Commission). On cybersecurity and election defense, the EU has an action plan to push platforms to be more secure.

The Commission also works with national election officials to deal with cybersecurity threats, and is conducting stress tests on electoral systems. On hate speech and defending democracies, there are EU voluntary codes of conduct but the bloc has been reluctant to move toward regulation.

Chances of success: 4 out of 5 on the supervision of platforms. The Commission is already quite assertive when it comes to antitrust targeting Big Tech, and is expected to put forward new guidelines for dealing with algorithm bias and artificial intelligence. On hate speech, 1 out of 5. Given how much opposition there is to a law regulating terrorist content online, it’s hard to imagine a consensus for a law on hate speech.

BUDGET

What Macron wants: The French president called for financing “innovation by giving the new European Innovation Council a budget on a par with the United States in order to spearhead new technological breakthroughs such as artificial intelligence.” Macron thinks big on EU agencies: As well as a European Agency for the Protection of Democracies, he wants a “European Climate Bank to finance the ecological transition,” a “European food safety force” and a “European Council for Internal Security.” But his big plans include no mention of how they would be financed.

What the EU thinks: The European Commission has proposed an increased in research spending for the bloc’s next long-term budget, which is set to run from 2021 until 2027. Its budget proposal also includes spending on climate and the environment, as well as proposed programs for funding border management.

Macron talks with European leaders during a summit in Brussels | Emmanuel Dunand/AFP via Getty Images

Chances of success: 1 out of 5. A boost to EU spending in order to finance any of Macron’s big ideas will depend in large part on the willingness the EU’s so-called net contributors — wealthy countries like Germany, France and the Netherlands — to put more money into the EU’s coffers. At the moment, a group of frugal countries that includes the Netherlands, Denmark, and Sweden are resisting calls for an increase in national contributions to the EU budget post Brexit. Without new EU funding, many of Macron’s ideas face an uncertain future: The EU’s budget requires unanimous agreement of all member governments.

FOOD AND AGRICULTURE

What Macron wants: Macron says he wants pesticide use halved by 2025. He has also suggested establishing a “European food safety force” whose job it would be to improve controls on food, counter the threat of powerful lobby organizations and bolster the independence of scientific assessment studies regulating hazardous substances.

What the EU thinks: Halving pesticide use by 2025 is already French government policy — but French farmers are hopping mad because they say there are few alternative solutions. There are currently no European laws being proposed that would seek such an aim. Brussels is, however, in the final stages of reforming the so-called General Food Law, whereby the European Food Safety Authority (EFSA) should gain additional powers to conduct its own safety tests on products such as pesticides. EFSA last year was also provided with more than €60 million per year to do the same job that Macron’s food safety force would likely do.

Macron milks a cow in Laroquevieille, near Aurillac in 2016 | Thierry Zoccolan/AFP via Getty Images

Chances of success: 1 out of 5 for pesticides, 4 out of 5 for the food safety watchdog (because it pretty much already exists). Reducing pesticide use by 50 percent inside six years is a long shot — even for France, never mind all of Europe. France already asks Europe for hundreds of so-called derogations that allow farmers to continue using banned substances. And uptake among farmers to transition away from using glyphosate, the world’s most used herbicide, has been slow.

ENVIRONMENT

What Macron wants: The French president wants the EU to aim for zero carbon emissions by 2050. He also proposes a European climate bank to finance the transition. Macron’s other ideas for “spearheading the environmental cause” include “penalizing businesses” that compromise environmental standards.

What the EU thinks: Macron’s push for carbon neutrality is in line with the European Commission’s long-term climate vision; although the EU executive advocates for of a climate-neutral EU by 2050 — which covers all greenhouse gases, and not just carbon dioxide. But he’s one of few heads of state in the ambition camp. Recent discussions among ministers showed a clash between countries arguing for swift and deep cuts in carbon emissions and those worrying about economic competitiveness and jobs.

Macron holds a sign with the slogan “Make our planet great again” ahead of the One Planet Summit in 2017 | Philippe Wojazer/AFP via Getty Images

As for a EU climate bank, it’s unclear what Macron has in mind and how this would be financed or be different from the EU’s lending arm, the European Investment Bank, which is already the largest provider of climate finance worldwide. The idea of penalizing environmentally unfriendly trade partners sounds impracticable. Today France — along with Spain and Luxembourg — proposed to make future trade agreements conditional on respect of the Paris climate agreement. But there is no widespread support for increasing trade barriers based on environmental standards.

Chances of success: 2 out of 5. The difficulty in reaching a common vision on the bloc’s long-term climate ambition is obvious from recent Council discussions. Penalizing companies that violate environmental standards looks like a heavy lift.

MIGRATION AND SECURITY

What Macron wants: A “common border force and a European asylum office” and a European Council for Internal Security. Also on the wish list: “a treaty on defence and security should define our fundamental obligations in association with Nato and our European allies,” Macron wrote, including “increased defence spending.” And he wants a “European Security Council with the United Kingdom on board to prepare our collective decisions.”

What the EU thinks: Much of this is music to the Commission’s ears but some member countries are not so keen. The Commission has been pushing for a common border force, a stronger EU asylum office, and harmonization of EU asylum rules. But some governments are vehemently opposed to the idea of giving up power on fundamental issues such as who can enter their countries. Getting the likes of Hungarian Prime Minister Viktor Orbán to hand over border control to Brussels looks like a very long shot.

On a defense and security treaty, the key question is whether use of the EU budget would be extended to cover military operations. The EU’s current treaties expressly forbid that.

Macron speaks to Ahmed Adam from Sudan during his visit to a migrant centre in Croisilles, northern France | Michel Spingler/AFP via Getty Images

As for Macron’s proposal for the U.K. to have a seat on a European Security Council, it expands on plans outlined in the Political Declaration on the future relationship between Britain and the EU published alongside the Brexit Withdrawal Agreement last November. This document talks of “flexible consultation” between the U.K. and EU on foreign policy and defense.

Chances of success: 2 out of 5. Migration is a hot topic but one where finding European consensus has proved a headache. On defense, there is a political will to do more but many are also anxious to avoid any clash with their role in NATO.

As for defense cooperation with the U.K., Britain has shown a willingness to remain engaged — but would likely prefer to operate through NATO than a European Security Council.

EURO

What Macron wantsThe French president, a former banker and finance minister, has made eurozone reform one of his priorities. But he keeps his comments on the common currency to a minimum in his op-ed. “How would we resist the crises of financial capitalism without the euro, which is a force for the entire EU?” he declares.

Macron appears to have decided this is not the place to push for more, particularly as tetchy talks continue on a future eurozone budget. This article is about pushing the bloc beyond pocketbook issues. “Europe is not just an economic market,” Macron says.

Macron welcomes German Chancellor Angela Merkel in Paris | Ludovic Marin/AFP via Getty Images

What the EU thinks: EU officials and governments will be grateful Macron hasn’t added to eurozone reform fatigue. They have enough on their plates with ongoing talks over issues such as that budget, completing a banking union and the like.

Chances of success: With reaction focusing on his headline topics of security, migration, digital industry and other policies, Macron has at least succeeded in avoiding a new entanglement over the euro.


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Cabinet ministers took May ‘hostage’ over Brexit delay, says former minister

George Eustice said that taking no deal off the table would ‘dramatically undermine your credibility as a country.’

The British government was “taken hostage” by Cabinet ministers who forced Theresa May into offering MPs a mechanism to delay Brexit, said former minister George Eustice.

Eustice, who resigned Thursday from his post as junior agriculture minister, told Sky News’ Ridge on Sunday that May was strong-armed into allowing MPs a vote on delaying Brexit which would damage her negotiating hand with Brussels.

“The government was taken hostage, and some Cabinet members in government colluded in that hostage-taking,” he said.

“Some members of the Cabinet were clear that Parliament had to have a vote that would, as they put it, take no-deal off the table. As soon as you take no-deal off the table, you dramatically undermine your credibility as a country, you undermine [Attorney General] Geoffrey Cox who is trying to get some final changes to this,” he said.

Asked who he meant, Eustice cited three ministers who wrote a joint article — apparently referring to an op-ed in the Daily Mail last weekend by Amber Rudd, David Gauke and Greg Clark.

Eustice warns that rejecting the option of a no-deal Brexit would box the U.K. in and severely weaken its negotiating position.

While noting he will vote for Prime Minister Theresa May’s deal, Eustice maintained that “we mustn’t be fearful of leaving without an agreement, if we can’t get an agreement in place.”

The former junior minister and Brexiteer made the argument that even in a no-deal scenario, EU governments would be willing to put temporary arrangements in place to avoid major disruptions.

A no-deal is “a bit of a misnomer,” he said. “No-deal probably in effect means an informal transition period for nine months. And we already know from all of our dealings with the European Union that pretty much across the piece they are looking for informal arrangements where there’ll be very little change for a period of nine months, and that gives you a window in which talks could continue.”

Don’t tie May’s hands 

Eustice warned that rejecting the option of a no-deal Brexit would box the U.K. in and severely weaken its negotiating position.

“The fundamental question is this: if parliament takes no-deal off the table and signals to the European Union that we’re too scared as a country to walk out the door, and then demands that the prime minister go cap in hand to Brussels, at the eleventh hour, with just maybe ten days go to, to beg for an extension, what happens next?” he asked.

“The EU will dictate the terms of that extension. They will come back, they may say it has to be two years, they may say there has to be a very large financial cost to that extension. And what will parliament do at that point, when it maybe at this stage has three or four days until Brexit day, and it’s faced with some impossible demands from the European Union?” he asked.

“So I don’t think those in parliament who sought to frustrate this process and sought to create an option to delay Brexit have fully thought through what they’re actually doing.”

Prime Minister May has “faced a European Union that’s seen weakness,” he said, adding that the EU “has not been in any mood to negotiate in good faith” and has “played games.”

Addressing growing fears in the British farming sector about the impact of a no-deal Brexit, the former minister said that the government would introduce tariffs on agricultural goods coming into the U.K. that would keep prices stable, but also protect key farming sectors.

“We have already agreed that we’ll have tariff-rate suspensions on goods that we don’t produce, things like citrus, so that we can keep prices stable. But we’ll also put in place tariffs to protect some of those sensitive sectors, including beef, including sheep, and possibly also some of the diary sectors as well,” he said, confirming a POLITICO Pro story about the planned tariffs published last week.

But Eustice added that other factors would also affect prices. “The biggest impact on food prices will be exchange rates,” he said.


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Trump’s UK ambassador hits out at US farming ‘smears’

The EU has a ‘Museum of Agriculture’ approach to farming that blocks innovation, said Woody Johnson.

The U.K. should ignore “smears” about U.S. farming methods and move away from the EU’s “Museum of Agriculture” approach, said Woody Johnson, Washington’s ambassador to the U.K.

Writing in the Daily Telegraph, Johnson urges U.K. citizens to embrace a bilateral trade deal that includes a loosening of the EU’s agriculture standards.

During negotiations over the now-abandonned TTIP trade deal between the EU and U.S., the prospect of imports of genetically modified tomatoes and “chlorinated chicken” from the U.S. led to protests in the U.K. ButPresident Donald Trump’s administration is hoping for a second chance to open the U.K. market to these products after the country’s EU divorce.

Johnson said that U.K. consumers had been presented with a false choice. “Either stick to EU directives, or find yourselves flooded with American food of the lowest quality. Inflammatory and misleading terms like ‘chlorinated chicken’ and ‘hormone beef’ are deployed to cast American farming in the worst possible light,” he wrote.

“It is time the myths are called out for what they really are: a smear campaign from people with their own protectionist agenda.”

Different approaches in the U.K. and EU are “not a question of quality but philosophy,” Johnson argued. The U.S. embraces innovation to bring “safe, affordable food” to the world, while the EU emphasizes tradition — a “Museum of Agriculture approach.”

Johnson rebutted some specific concerns: Chlorine washing chicken is a “public safety no-brainer” to eliminate germs, he wrote, pointing out the EU producers do the same to decontaminate fruit and vegetables. And he argued that using growth hormones meant beef could be produced at “lower cost to both the environment and the consumer.”

He urged Britons to join the U.S. to “shape the agricultural revolution of the future.”

UK farming and fisheries minister quits over Brexit delay

George Eustice says he would still back Theresa May’s Withdrawal Agreement.

LONDON — U.K. Farming and Fisheries Minister George Eustice resigned over Theresa May’s decision this week to clear a path for Brexit to be delayed.

In his resignation letter, Eustice said that if parliament votes for a delay, it could lead to the EU “dictating the terms of any extension requested and the final humiliation of our country.”

However, he said he would still back Theresa May’s Withdrawal Agreement when it returns for a vote in the House of Commons by March 12.

Eustice, who backed Leave at the 2016 referendum, said that the U.K. should be prepared to leave without a deal and negotiate with the EU afterward.

“We must be ready to face down the European Union here and now,” he said. “The absence of an agreement poses risks and costs for them too. We already know that in the event of ‘no deal’ the EU will seek an informal transition period for nine months in many areas and settlement talks could continue within this window.”

On Tuesday, Theresa May said that, if her deal is rejected for a second time, the House of Commons would have a vote on whether to leave with no deal on March 29. If it rejects that option, it would have a vote on whether to extend the Article 50 negotiating period for a short period of time, delaying Brexit.


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UK food supply under threat from no-deal Brexit

Farmers and food suppliers say they need more guidance about what to do in case of no agreement.

Britain’s farmers and food suppliers are begging the government for Brexit answers.

With just five weeks to go until Britain leaves the EU, businesses across the food supply chain say they remain in the dark about how they should operate in the event of no deal.

Nobody knows yet what tariffs will be applied on goods both leaving and entering the U.K. — though an announcement on that could come as early as Friday.

In Calais and Dover, no new infrastructure has been built to prepare for customs checks should controls be required. London has yet to provide exporters and importers any clarity around its proposed trading regime with countries outside the EU. And companies from supermarket chains to big food processors such as Nestlé say they have no idea what labeling requirements will be in place should no deal be reached.

“Obviously as importers of food, it’s really important that we know if there will be tariffs applied and if so what that is going to look like,” said Andrew Opie, director of food and sustainability at the British Retail Consortium, which represents supermarkets in the U.K. “There are a number of countries such as Iceland, Norway and Mexico — important for imports of food — where we are still uncertain what the trading arrangements will be on day one of a no-deal Brexit.”

A lack of trading schedule means that supermarkets such as Tesco, Asda and Sainsbury’s still have no idea where they should buy from if there is no Brexit deal.

Nearly one-third of the food eaten in the U.K. comes from the EU.

This concern is particularly acute as Britain produces very little fresh fruit and vegetables in the months of March and April. At this time of the year, 90 percent of lettuces, 80 percent of tomatoes and 70 percent of soft fruit is sourced from the EU. Environment Secretary Michael Gove told attendees at the annual National Farmers Union conference this week that an announcement on the U.K.’s tariff schedule in the event of a no-deal could come out as early as this week.

Moreover, Opie said that the level of uncertainty means there is no guarantee retailers and food processors could send products into Ireland, as meat plants exporting into the EU have still not been registered. In addition, meat labeling to assure health and safety standards has still not been designed.

Last month, the chief executives of 12 retailers, including Marks & Spencer, Waitrose and Lidl wrote to lawmakers in the House of Commons to remind them that nearly one-third of the food eaten in the U.K. comes from the EU. They said the level of uncertainty has led to a considerable amount of stockpiling. But now, “all frozen and chilled storage is already being used and there is very little general warehousing space available in the UK,” they wrote.

Uncertainty is also acute for sheep farmers. Lambs entering British abattoirs for slaughter now will arrive at their destination in the EU after Brexit, meaning farmers aren’t sure their product will even reach its final destination should labels fail to be recognized.

Farmer Pip Simpson, and his son Ted, aged 2, prepare to present his store lambs to buyers in northern England | Oli Scarff/AFP via Getty Images

“What meat stamps will be recognized in the EU?” asked Phil Stocker, chief executive of the National Sheep Association. “One or two traders I’ve spoken with have said trade is already being dampened … People here and at the end destination don’t know if they will be caught out.”

Around 40 percent of the 300,000 tons of lamb produced in Britain annually is exported, of which 96 percent enters the EU — mainly France, Belgium, Germany, Spain and Italy.

“It’s a real muddle. There is a lot of work going on … But there is still no decision made and industry has been given no guidance on what to do. There has been a total lack of understanding,” Stocker said, adding that the government has also failed to clarify how it plans to attract seasonal contractors to work in the country’s abattoirs in the event of a no-deal. A huge proportion of abattoir staff currently come from Eastern Europe.

On Thursday, U.K. Farm Minister George Eustice said the government is exploring slashing tariffs on goods coming into the U.K. as a way of sheltering consumers from price hikes in the event of a no-deal Brexit.

But the Cabinet is divided on the tariffs issue, with Environment Secretary Michael Gove pushing for higher tariffs to protect British farmers, while Chancellor Philip Hammond and International Trade Secretary Liam Fox want lower duties to protect consumers from higher prices in the shops.

If there is no deal, the EU is likely to levy full external tariffs on food coming in from the U.K., meaning an increase of at least 40 percent on sheep meat and beef — with 100 percent tariffs on specific cuts. With the threat of EU tariffs imminent, Minette Batters, president of Britain’s National Farmers’ Union, this week gave Secretary Gove a public dressing down at the NFU’s annual conference — speaking of her dismay at the “insanity” of politicians.

A no-deal Brexit would require the government to put tariffs on sheep meat, beef, poultry, milk, cheese and pig meat in order to safeguard domestic production.

“Britain was … assured that a trade deal would be the easiest deal in history, that Britain holds all the cards in the negotiations. Well, conference, in a few weeks’ time if there isn’t a deal with the EU, high export tariffs could effectively mean we have no market for four and a half million lambs,” she told delegates as Gove looked on. “With 900 hours to go, it’s unacceptable for government to leave British businesses having to take this gamble.”

Gove conceded in his speech that a no-deal Brexit would require the government to put tariffs on sheep meat, beef, poultry, milk, cheese and pig meat in order to safeguard domestic production. He also underlined that all animal products entering the EU would face health and safety checks, resulting in delays in loading ferries in Calais.

U.K. exporters will also need to comply with new customs paperwork and a new labeling scheme will be required for products of animal origin exported to the EU. “I emphatically do not want to run the risks that leaving without a deal would involve,” Gove said.

But if no deal cannot be avoided, his department’s preparedness will come under intense scrutiny, Batters said.

“It’s often said that the first responsibility of government is to defend its people and that the second responsibility is to feed its people,” she said “On March 29, you [Gove] will be the first secretary of state in over 40 years with the responsibility, the duty of ensuring Britain is fed.”