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News & Insights on Europe

News and Views on Europe – 2 Mar 2018

posted by eucentresg


Labour sets out post-Brexit vision while EU seeks to keep Northern Ireland in single market
At the beginning of this week, Jeremy Corbyn, leader of the opposition Labour party in the UK, set out his vision of post-Brexit arrangement. Of particular note is that he backed the UK being in a permanent, “bespoke” customs union with the EU. If it stays in the customs union, Britain could avoid tariff barriers for its exports to the bloc as well as the risk of a return to a so-called hard border between Northern Ireland and the Republic of Ireland, a prospect that alarms many in Dublin and Belfast (see below). Politico argues that Corbyn’s stance over Brexit significantly changes the complexion of the UK’s internal Brexit politics by establishing a position for proponents of a softer Brexit and those still in favour of “no Brexit” to rally behind.

However, maintaining a customs union relationship with the EU would infringe on the UK’s trade policy autonomy, possibly curbing the latter’s ability to strike free trade agreements with countries across the globe such as China and India – the cornerstone of the government’s “Global Britain” vision. For many Tory MPs, not being able to strike trade deals outside the EU defeats the whole point of Brexit. Indeed, denouncing Labour selling “snake oil” Brexit, the UK’s Brexit secretary David Davis wrote in The Telegraph that the soft Brexit “would prevent us from signing economy-boosting, job-creating free-trade deals with other countries around the world. This is one of the central prizes of Brexit”. Likewise, international trade secretary Liam Fox echoed Davis’ point by saying that a customs union amounts to “a complete sellout” of UK’s national interest. On top of these concerns over trade policy independence, Fox added that a customs union would also leave the UK forced to accept “EU trade rules without any say in how they were made” and would limit the UK’s international development agenda by blocking efforts to help “the world’s poorest nations trade their way out of poverty”.

While an across-the-board customs union maybe out of the question for many in the ruling Tory, there are calls in the Theresa May’s cabinet for sector-specific customs arrangement with the EU. Leader of the House of Commons Andrea Leadsom said Tuesday (27 Feb) that closer alignment to the EU is needed for certain sectors “where there is a very tight supply chain where you might want to keep the same rules and regulations in order for that supply chain to work well.” Ms May herself had earlier labelled this approach as “managed divergence” in future EU relationship. (Even Corbyn envisioned a “new, strong” single market relationship with opt-outs to allow the government to subsidise some industries and nationalise others.)

However, in the eyes of the EU leaders, this increasingly shared position in the UK of the possibility of striking a bespoke deal is not realistic, or “pure illusion” as President of the European Council Donald Tusk put it. “It looks like the cake philosophy is still alive,” he said, referring to the British fondness for having the cake and eating it too. “From the very start there has been a key principle, there can be no cherry-picking and no single market à la carte,” Tusk added.

In another major development, the EU in the Brexit draft withdrawal text announced on Wednesday (28 Feb) that Northern Ireland should be part of EU customs territory. Specifically, the text states: “The territory of Northern Ireland, excluding the territorial waters of the United Kingdom (the “territory of Northern Ireland”), shall be considered to be part of the customs territory of the Union [EU].” This position of keeping Northern Ireland in a common regulatory area, which according to the EU chief negotiator Michel Barnier should not be a surprise, provoked angry reactions from London. Speaking at Prime Minister Questions, Ms May said that the EU proposal threatens the constitutional integrity of the country and that “no UK prime minister could ever agree” to this. More dramatically, former Brexit minister David Jones said the EU’s proposal “amounts to an annexure of Northern Ireland” because “a substantial part of British territory is effectively governed by a foreign administration [the EU]”. (Jones’ comments come in the wake of a leaked letter from Foreign Secretary Boris Johnson to Ms May, in which Johnson appeared to accept the return of a hard border between the Republic of Ireland and Northern Ireland.)


German coalition deal close to go forward
The hassle over the German coalition building seems to be coming to an end. On Sunday (25 Feb), Angela Merkel, the Chancellor of the Christian Democratic Union (CDU) presented her cabinet picks to the CDU’s leadership ahead of Monday’s party convention. With three men and three women in her cabinet, Merkel kept her promise of gender parity. The most surprising nomination was that of Jens Spahn for the post of health minister. He is one of her most outspoken critics and has been dubbed the “anti-Merkel”. In particular, Spahn was critical of Merkel’s “refugees welcome” policy and clashed with her in 2016 over dual citizenship. Spahn has made little secret of his ambitions to become Chancellor one day and would like to steer the party more to the right, in an effort to win back lost voters. By tapping Spahn, which is widely seen as a tactical move, Merkel also made an important concession to conservatives in the CDU who worry that she has shifted the CDU too much to the left. It is widely believed that Merkel – who traditionally surrounds herself with allies and loyalists – had no choice, since the Chancellor’s authority has been badly weakened. She has been criticised for trading away both the finance ministry (Social Democrats, SPD) and the interior ministry (Christian Social Union, CSU, the CDU’s Bavarian sister party) in order to form a grand coalition with the SPD. Merkel’s dilemma was summed up well in an article in Deutsche Welle: “The chancellor needs to show enough tact to avoid putting off older party members while displaying sufficient courage for innovation to pacify the CDU’s often disgruntled youth ranks.”

As expected the CDU delegates approved overwhelmingly the coalition deal on Monday (26 Feb) and elected Annegret Kramp-Karrenbauer as CDU general secretary. Kramp-Karrenbauer, former Saarland state premier, tipped as Merkel’s successor, is a close ally of Merkel. However, Merkel’s speech reportedly drew only a lukewarm response, a sign of her waning influence, while Kramp-Karrenbauer drew more enthusiasm. Politico wrote of the beginning of the “pre- post-Merkel era”.

The final approval of the coalition deal is now in the hands of the SPD members. The results of the SPD party vote are due next Sunday (4 March).


EU “re-imposed” sanctions on Myanmar over the plight of Rohingyas
EU foreign ministers met on Monday (26 Feb) and unanimously agreed to go ahead with sanctions against Myanmar generals over the killings of Rohingya Muslims. “The targeted restrictive measures” included asset freezes and travel bans. The ministers also agreed on an extension of the EU’s existing embargo on arms and equipment.

The EU sanctions follow the US and Canadian ones already in place. Last year, the UN high commissioner for human rights have accused Myanmar for “carrying out a textbook example of ethnic cleansing” against Rohingya Muslims, causing the displacement of more than half a million Rohingya. Since last August, most of them ended up in Bangladesh. Further to the sanctions, diplomatic chief, Federica Mogherini has also pushed to tighten up on the EU arms embargo for fear that the possession of weaponry can lead to more severe repression of citizens. Myanmar continues to deny allegations of abuses and have asked for the provision of evidence of abuses.

Before the sanction move on Monday, there was a period of “honeymoon” between the EU and Myanmar after Aung San Suu Kyi’s National League of Democracy won the elections in 2015 to form the government in 2016. However, under the present constitution, the military remain powerful as they are allocated 25% of seats in the parliament and control the key ministries in defence and internal affairs. As a sign of improved relations between the EU and Myanmar after the 2015 elections, Min Aung Hlaing, the armed forces chief, has visited several European countries and was a guest of the EU’s military committee in November 2016. The current sanction is a first step in a policy U-turn fraught with negative symbolism of the false hopes raised with the election of Aung San Suu Kyi and the extent of reforms that she would bring to the country. The EU — along with the US — lifted sanctions in Myanmar after 2011 to encourage the transition from almost half a century of military dictatorship. Now the previous policy of courting Myanmar appears to be coming to an end.

Like Myanmar, Cambodia, another Southeast Asian country, received warning from Brussels about the possible countermeasures if Phnom Penh continues to tighten its clampdown on political opposition. Potential penalties could affect the “everything but arms” preferential trade deal the kingdom’s garment manufacturing hub has with the EU. The purge on challengers to Hun Sen, the prime minister of 33 years, ahead of elections in July has been brazen — the opposition leader is in jail and his party has been disbanded by the courts. But EU ministers will have to weigh the wider impact of any move against the everything but arms deal, which could hit poor Cambodian workers, the multinationals they supply and European buyers of their products – a delicate balance must be struck.

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