Wednesday, 10 October 2018 23:53

Speech by Michel Barnier at the closing session of Eurochambre's European Parliament of Enterprises 2018

NB Translated from the original French.

Ladies and gentlemen

It is a good chance to be able to meet here in this heart of European democracy which is the European Parliament, and I would like to thank Eurochambres and each and every one of you for taking the time to come and share your ideas on the functioning of Europe and the direction it must take.

Our European Union needs to listen to and take into account the point of view of entrepreneurs and entrepreneurs, in all their diversity.

And the topics discussed today are a good example of what can be the added value of an ambitious action at European level, for your companies as well as for European citizens.

To increase our competitiveness and meet the challenge of skills through training, mobility, integration of migrants, the fight against youth unemployment.

To find new markets, through trade and investment agreements - Cecilia Malmström told you about it - that should also benefit our SMEs and create jobs, while encouraging sustainable development.

To invest together in the technologies of the future and deepen our unique market to adapt it to new digital realities.

These are examples of positive projects, which correspond to the commitments and initiatives - I think of the Juncker Plan - undertaken by the European Commission.

It is on these topics that the 27 must focus to build a stronger Union, building on what I believe to be our greatest asset, our principal asset, which is our unique market, this ecosystem of standards, certifications, rights, regulations, supervision and jurisdiction that we built together, and for which we worked a lot together when I was the Commissioner for the Single Market. I am thinking, for example, of the simplification of public procurement or the European patent.

It is also on this positive agenda, of progress for Europe and the Europeans, that the unity we have built between the 27 Member States and the European Parliament in this negotiation with the United Kingdom must be useful.

By setting a course for the medium and long term, we will jointly tackle the challenges facing Europe, in economic, industrial, technological, geopolitical, ecological and demographic terms.

Today's challenges include Brexit, which is a concern for many entrepreneurs and businesses, as it is for many citizens and communities.

In the face of this concern, I would like to tell you clearly where we are, and what remains to be done to find an agreement on an orderly withdrawal from the United Kingdom.

*

Ladies and gentlemen,

On 29 March 2019, in less than 6 months, the UK will leave the European Union.

We have always respected the UK's sovereign decision to leave the European Union, even if we are profoundly sorry for this vote We respect its decision to leave the Single Market and the Customs Union.

We are doing our best to reach a deal on the UK's orderly withdrawal.

Since the beginning of this negotiation, we have made good progress.

In fact, you can see in this copy of the draft Treaty, a lot of the Withdrawal Agreement - 80% -85% - has been agreed with the UK.

However, some difficult issues have been left until the end.

We must agree with the withdrawal Agreement and on geographical indications that are currently protected in the EU Member States.

Above all, we need to agree on how to avoid a hard border between Ireland and Northern Ireland for political, human, and economic reasons.

Ladies and gentlemen,

The UK wants to leave the Single Market and the Customs Union.

This means that there must be checks of goods between the EU and the UK

  •        customs and VAT checks;
  •        and compliance checks with our standards to protect our consumers, our economic traders and your businesses.

We have agreed with the UK that these checks can not be performed on the border between Northern Ireland and Ireland.

A crucial question is, therefore, where they will take place.

The EU is committed to the territorial integrity and constitutional order of the UK, just like the UK has committed to respecting the integrity of our Single Market, including Ireland, obviously.

Therefore, the EU offers to carry out these checks in the least intrusive way possible.

For customs and VAT checks, we propose using the existing customs procedures to avoid doing checks at a physical border point. To be more specific:

o Companies in the UK would fill in their customs declarations online and in advance when shipping to Northern Ireland.

The only visible systematic checks between Northern Ireland and the rest of the UK would involve scanning the bar codes of the lorries or containers, which could be done on ferries or in transit ports.

These arrangements already exist in the United States, in particular those with islands, for example between mainland Spain and the Canary Islands.

For regulatory checks, on industrial goods for instance, these can be carried out by market surveillance authorities.

Again, this would not be a problem in Northern Ireland.

This leaves the health and phytosanitary checks for animals and products of animal origin. EU rules are clear: these checks must happen at the border because of food safety and animal health reasons. And obviously, in the future of the island of Ireland will remain a single epidemiologic area.

o Such checks already exist in the ports of Larne and Belfast.

They would, however, have 100% or more than 10% of live animals and animal-derived products, which would be a significant change in terms of scale.

Ladies and gentlemen,

Both the EU and the UK exclude a physical border on the island of Ireland. Therefore what will happen in Northern Ireland will also be arriving in the Single Market.

There will be administrative procedures that will not exist today for the purposes of the UK. Our challenge is to make sure that they are as easy as possible and not too burdensome, in particular for smaller businesses.

I understand why such procedures are politically sensitive, but let me make three remarks.

First, Brexit was not our choice. It is the choice of the UK. Our proposal tries to help the UK in managing the negative fallout of Brexit in Northern Ireland, in a way that respects the territorial integrity of the UK.

Second, our proposal limits itself to be absolutely necessary to avoid a hard border: customs procedures and the respect of EU standards for products.

It does not include measures of free movement of people, services, healthcare or social and environmental policy. But the Common Travel Area between the UK and Ireland will continue as today.

And yet, our proposal gives Northern Ireland benefits that no part of a third country enjoys. In the Single Market for goods and services of the EU.

Our proposal also includes the continuation of the Single Electricity Market, as requested by the UK.

Over the past week, we have met the leaders of all Northern Ireland, and many of whom I will meet again. My door is always open. And my team puts on Monday a group of Northern Irish business leaders and a group representing local government.

Naturally, there have been questions, doubts and worries about our proposal - and Brexit in general.

But most conversations focused on the added value for Northern Ireland so long as we can mitigate the burden of doing checks.

Third, our proposal is just a net safety, a "backstop".

It is needed because it will be negotiated after the UK's withdrawal.

But the future relationship in itself might be necessary, or even make some unnecessary:

o For instance, a veterinary agreement would mean less frequent inspections of live animals.

o And we are still open to the idea of ​​having a customs union with the UK. Such a customs union would eliminate an important part of custom checks.

Ladies and gentlemen,

Apart from the issue of Ireland and Northern Ireland, the Withdrawal Agreement will include other important issues, on which we already agreed with the UK.

These issues are important for your businesses, your employees and your regions.

In particular, we already agreed that:

European citizens who arrived in the UK before the end of 2020 and British citizens who moved to other countries. We remain in close contact with the organizations representing the citizens concerned, most notably to discuss the implementation of the Withdrawal Agreement.

All financial commitments undertaken by the 28 EU Member States will be honored by the 28, for instance on the European Social Fund and the regional policy. All current programs will continue, with the UKs participating.

The UK will retain all the rights and obligations of a Member State for a transition period, until the end of 2020, at its request.

This will be ready for businesses to prepare.

And this will leave time to finalize the future relationship.

To be clear, all these points will be taken into account by the United States of America. Withdrawal Agreement, which will be ratified, I hope in the beginning of the next year by the UK and by the European Parliament.

*

Ladies and gentlemen,

Beyond a separation that is always difficult and which we wish to be ordered, the most important, in the common interest of our countries, economic stability, growth, will be our future partnership with the United Kingdom.

This future relationship, we must now define the outlines, the frame and the parameters.

To be clear, then, once the UK leaves the Union, the future relationship will be the subject of a new negotiation, in fact several negotiations, probably a dozen parallel negotiating tables during the transition period until the end of 2020.

We are therefore working with the British, in parallel with the withdrawal agreement, to a joint political declaration that will outline the framework for this future relationship.

Last March, the Heads of State and Government of the 27, together with the President of the European Council Donald Tusk and Commission President Jean-Claude Juncker, clearly expressed the desire for a very ambitious partnership with the United Kingdom. United for the future. This ambition is shared by the European Parliament and its President Antonio TAJANI.

In our discussions with the United Kingdom, we obviously take into account the positions expressed in the British White Paper of July. Since July, we have discussed all the chapters with the British negotiators, at the technical and political level.

This White Paper is useful, since it allows us to benchmark our proposals with British proposals and identify points of convergence. We found many. For example :

  •        in the field of internal security, foreign policy and military cooperation.
  •        numerous sectoral cooperation, for example in aviation and transport.
  •        on the United Kingdom's participation in Union programs, for example in research, where we will be ready to use all the tools we will have for our relations with third countries in the financial framework 2021-2027.
  •        where we are prepared to consider the use of unilateral equivalence or adequacy decisions. I am thinking, for example, of financial services and data protection.

Ladies and gentlemen,

On our future economic partnership, on the other hand, certain British positions expressed in the White Paper do not correspond to the guidelines of the European Council and to my mandate.

We agree to base our future relationship on a free trade area without a tariff or quota. This is a very important point.

But we have two points of divergence with the British proposals because these two points are clearly contradictory to the foundations of our, your single market.

Firstly, in customs matters:

The United Kingdom would like to maintain the autonomy of its trade policy, to be able to negotiate its own agreements, while remaining in our customs area.

Thus, it could charge lower rates than ours at the external borders while remaining in a single goods market with us. This, from our point of view, could cause a major risk of diversion of trade flows, to the detriment of our companies.

The United Kingdom wants to apply its own external tariffs while collecting for us European customs duties.

This would lead to a loss of control for the Union in the collection of tax revenue, whether it concerns customs duties for the European budget or VAT revenues for the Member States.

We know that the United Kingdom wants to regain control of its borders, policies and money, and we respect that choice. But the British government must accept, in the same way, that we retain control of our customs borders.

Another point of divergence concerns the regulatory framework for goods:

  •  The United Kingdom has asked to align with a substantial part of our standards for goods, but only part of them, in order to maintain the same participation as today in our internal market, for these goods only.
  •  And at the same time, the United Kingdom wishes to remain free to diverge on all the regulations that apply to the factors of production of these goods, whether we think of services, labor, capital or social standards and environmental.

Everyone here understands that such a system of "single market à la carte" would be tantamount to offering the UK and its companies a major competitive advantage over companies working in the single market.

Let's take two examples:

  •        In the regulatory cost of chemicals:

o 31% of the regulatory price - I am not talking about raw materials - is linked to compliance with the product standards - anyway any exporter must respect to enter our market, it is for example the REACH regulation.

o The rest, 69%, is induced by compliance with other Union regulations, for example environmental standards. And it is on this part that the British would like to remain able to diverge with us. For steel, the numbers are even more eloquent.

And you know that in certain economic sectors where margins are low, minor regulatory divergences can create a significant comparative advantage for the UK if it stays in the single market of goods by diverging on everything else.

And that is why many business leaders, including here at Eurochambres, have asked us clearly, in all the countries of the Union, to do nothing in this negotiation which weakens the internal market. ; this internal market will always represent after Brexit 60%, sometimes more, of our commercial exchanges. And the survey you did earlier shows clearly your commitment to this internal market.

We have therefore proposed to the United Kingdom, taking into account our principles and the British red lines, an economic partnership based on an ambitious free-trade agreement, probably accompanied by customs cooperation, regulatory cooperation, and also a level playing field that is at the height of such a free trade agreement.

It is this partnership that we want to outline in our joint political statement with the British, which will form the bedrock of our future economic relationship.

Nothing will prevent us from enriching this economic relationship during the negotiation, provided that our principles are respected.

*

Ladies and gentlemen,

Negotiations with the UK continue this week intensively, day and night, in the goal set by the leaders of the 27 that the agreement is "at hand" at the time of the European Council of 17 October, Wednesday next!

This is how we try to maximize the chances of an orderly withdrawal and minimize the costs of Brexit for your businesses.

In case of "no deal", these costs would be very high, first for the United Kingdom but also for certain sectors of our economy. That's why the "no deal" is not, never was, our scenario - although our responsibility is to be prepared for all options.

Ladies and gentlemen,

I would like to be sincere with you: even in the case of an agreement, there will be adaptations for many of your companies because of the British choice. It can not be business as usual .

To help your businesses cope with these adaptations, the European Commission has published more than 70 notes on the Brexit preparation, covering many economic sectors, from e-commerce to shipping, to the energy market and financial services. I would like to thank Eurochambres and its members for your support for this preparation. The Task Force that I lead also remains at your disposal.

Ladies and gentlemen,

I would just like to conclude with a more personal word in my place as responsible for this negotiation, under the control of the European leaders and the European Parliament.

I would like to tell you what I think, as someone who voted for the first time in his country in 1972 in favor of the United Kingdom joining the European Union.

I campaigned for the yes and I have never regretted this vote, because I think the union is strength, that already at that time, even more today, it is better to be together to be made respect, defend our interests and values.

I think Brexit has no added value. It's a negative negotiation. It's a " lose-lose game ".

Its outcome is important for the future of Europe, beyond our relationship with the United Kingdom.

On our side, we strive to achieve the fairest and most precise separation and most ambitious agreement for the future, by defending the interests of the citizens, the European companies and preserving the foundations of the European project. .

To achieve this, I will continue to pursue this negotiation to the end, on behalf of the Union, respecting the principles defined by the European leaders and the European Parliament the day after the referendum.

I will do it with the same calm, without any spirit of revenge, without any aggressiveness, with great respect for a great country which, in all cases, will remain our ally and our partner.

Thank you very much for your attention.

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