It’s good to be here in this great city of Florence today at a critical time in the evolution of the relationship between the United Kingdom and the European Union. The British people have decided to leave the EU; and to be a global, free-trading nation, able to chart our own way in the world.
Here in Italy today, our two countries are working together to tackle some of the greatest challenges of our time; But while the countries and the peoples of Europe continue to demonstrate their ability to work constructively together, I can not disguise the fact that the UK Government is disappointed with the progress being made in our negotiations with the European Union.
Perhaps that should be no surprise. After all the interests of the EU institutions, jealous of their influence and budget contributions, may not be in all respects the same as those of the member states and their populations, who have trade, jobs and livelihoods to consider.
But it is with the Council that, under the terms of Article 50, we are bound to negotiate. I hope therefore you will forgive me for addressing these remarks to the EU institutions directly.
You have said you will not discuss a trade deal until sufficient progress is made on the UK’s outstanding financial obligations. I am happy to be able to resolve this matter as of today. The UK has no ongoing financial obligations to the EU after 29 March 2019 and will not be paying any “divorce bill”.
It has been said leaving the EU is not like leaving a Golf club. We beg to differ. Our legal advice is that, under the terms of Article 50, it is very much like leaving a golf club. When we leave we will stop paying the membership fee, and we will also stop paying the supplementary fee for use of the Sauna in the clubhouse, to which we will no longer have access.
We will of course continue to contribute to European institutions of which we remain involved. Many of these do not require EU membership in any case, such as the European Space Agency, Eurocontrol (for air traffic control) and the Erasmus programme.
As for institutions the UK will no longer be a part of, such as the Single Market and the Customs Union, the UK has no ongoing obligations and will not be paying anything after March 2019.
It has been suggested the UK is committed to sums agreed for the current EU budget period. If you wanted to tie the process of leaving the EU to the budget term you should have put that into the Treaty of Lisbon. However Article 50 sets a two year notice period for leaving and says nothing about ongoing obligations. The budget is your problem.
It has also been said the UK should underwrite the pensions of British EU Commissioners and other officials, such as Lord and Lady Kinnock. This is as absurd as suggesting that an ex-member of a golf club continue to pay for the pensions of its staff. The EU, as the employer, is responsible for the pensions. The nationality of the staff is irrelevant. If you think you are going to struggle to pay without the UK’s ongoing contributions, well, you should have thought of that before you sent my predecessor David Cameron away with nothing but his dick in his hand. The UK will not be paying.
The Council has insisted that the ECJ must have supremacy in any dispute between an EU citizen and the UK courts. This absurd position, more than anything, reveals the Council’s lack of good faith in these negotiations. A Frenchman who chooses to live in the USA is subject to US law. The ECJ has no say in it. Nor is there any kind of bilateral tribunal for resolving disputes between EU citizens and their American hosts. In the USA, US law is supreme, and Americans would laugh at any suggestion to the contrary. After the UK leaves the EU, UK law will be supreme once more. Anyone who does not trust the UK courts does not have to visit the UK. UK citizens abroad will of course be subject to the law of the country they have chosen to live in.
I wish to point out that the granting of residency to citizens of third countries is not in fact an EU competency. Any EU member state can let in the citizens of third countries on whatever terms it chooses (as, for example, when Angela Merkel invited in a million middle-eastern refugees in 2015).
Since the Council is unwilling to negotiate seriously on this matter, we will now cease talks about citizens rights with the Council. We will instead seek individual agreements with EU member states on reciprocal treatment of our nationals. Where such agreements are not forthcoming the nationals of both countries will have to return home in March 2019 taking their bank balances and pensions with them. We think such agreements will be forthcoming.
Guy Verhofstadt has said it is up to the UK to find a way to avoid new controls on the Irish border. Not so. The UK, Ireland and the EU have all said they do not want a new hard border. The UK’s solution is simple. We won’t put up any new border controls. As a sovereign state we will be under no obligation to impose border controls if we don’t want to.
It is not a problem for us that EU nationals will be able to enter the UK unchecked on the island of Ireland. We were never intending to require visas for EU nationals anyway. Mere entry will not confer a right of residence or a right to work or claim benefits. Passports will be checked when entering the rest of the UK.
We will allow any tariffs (I will come to this in a minute) to be registered and paid online before crossing the border. We reserve the right to carry out random checks on foreign lorries at the border or anywhere in Northern Ireland. But there will be no permanent infrastructure at the border. Generous duty free allowances will make it unnecessary to stop cars and other small private vehicles. Of course this may result in some avoidance, but we can decide to take that risk.
It is the Republic of Ireland that, under EU law, is obliged to impose customs checks in order to enforce the EU’s common external tariff. If you intend to make an exception to that rule then you had better start working on a new EU treaty right away. You may find other small countries with external borders may want to be excepted from the requirements of the external tariff at the same time. I don’t know how you are going to resolve this. It is your Customs Union. It is your problem.
Of course the Republic could avoid the requirement to impose a hard border by leaving the EU itself.
Trade with the EU
Since Article 50 negotiations have continued for three months without any progress on trade talks, and Brexit is now only 18 months away, the UK Government feels obliged to provide certainty for businesses on both sides of the channel on the terms of ongoing trade.
After March 2019 the UK will trade with EU members on WTO terms. We believe 18 months is more than enough time to prepare for this.
Why? First, most of the UK’s international trade is currently on WTO terms. The only exceptions are trade with the EU itself (which accounts for 44% of our exports) and with those few countries with which the EU has a free trade agreement. From memory that is Mexico, South Africa and a couple of South-Sea Islands. Second, there are no new rules to agree or new processes to put in place. Our biggest exporters, who are used to trading with both EU and non-EU countries will just have to move their EU clients from the ‘EU’ box to the ‘WTO’ box. Similarly European importers are used to dealing under WTO rules with most of the rest of the world. Some smaller UK exporters who currently trade only with EU companies will have to learn the WTO process. But there is no shortage of expertise in the UK to help them achieve that. Of course 93% of UK companies do no trade with the EU and will not be affected. Both British and European ports will need some additional physical infrastructure to cope with the increased quantity of goods on which customs checks have to be made. I am confident this can be reduced by innovative use of new technology.
We are not unduly concerned about EU tariffs making UK goods uncompetitive in Europe since this is in most cases more than offset by the welcome fall in value of the pound sterling which has already happened since June 2016.
A new team within the Brexit department , headed by a senior civil servant and represented in Government by a Minister of State will be tasked with ensuring that all necessary preparations are made for trading on WTO terms, and for assisting British exporters and importers. Now that the timetable is clear and the outcome known, we believe businesses on both sides of the channel will work together to ensure a smooth transition. We no longer seek a trade deal to come into force before Brexit is completed.
The UK will adopt an external tariff that initially mirrors that of the EU. We will couple this with a generous and universal offer to all the countries of the world of a no-strings-attached free trade agreement. By that we mean mutual tariff-free access on goods and services of all kinds, with no requirement to harmonise regulations, employment practices or other internal matters.
By default an exporter will have to ensure its goods and services meet any standards of the market it intends to export to. Additionally, once a free trade deal is in place, we will be willing to open talks about the mutual recognition of standards, in order to reduce non-tariff barriers and red tape, to mutual advantage.
Future UK-EU trade deal
While we believe it there is no longer time to put a UK-EU trade deal in place before 2019, we are open to such a deal in the medium to long term. The government I lead believes that in the long term free trade is beneficial to everyone. But in the short term, since the UK has a trade deficit with the EU running at over £70bn/yr, we are happy to sit here taking your money.
Since we import twice the value of cars from you that we sell to you, the UK stands to gain $2bn/yr on car tariffs alone. Of course the tariffs may reduce the numbers of cars sold in both directions. But if we import two fewer cars from Europe of each sale lost, then we will have no trouble selling those cars in our domestic market (provided we swap the steering wheel over to the correct side). Our analysis suggests the effect on the UK car market to be greater employment, greater inward investment, profits and tax revenues, as well as the tariff windfall. Similar conclusions hold for most areas of the UK economy. We can put up with being thrown into this particular briar patch for a while.
The only remaining question for you is: Do you want a trade deal or not? Take as long as you like to answer.