July 19, 2017
The comeback of the British rebate
The British rebate was bound to make a glorious entry into the Brexit negotiations eventually. It happened yesterday. The EU negotiators made the logical point that the British rebate was linked to agriculture. Britain justified the rebate on the grounds that its vastly more productive agricultural sector depended much less on EU farm subsidies. But surely that argument ends the minute the UK leaves the CAP, which it will do in 2019 under any scenario. So, as a result, if Britain were to seek a transitional agreement followed by some form of association agreement, the rebate has to be taken out of the financial basis of this future relationship.
The FT reports that France in particular was insistent on this issue. Without the rebate, the share of the UK in the EU’s future liabilities would rise from 13% to 15%, for an additional €10bn.
The two sides did not make any headway in the discussion on the Brexit divorce bill - but that was unlikely to happen anyway. At this stage, the emphasis is to set out some of the principles on which the calculations are to be based. The Guardian writes the divorce bill will be presented as a bill to cover the future relationship, because that is easier to sell politically. It also notes this:
"Seasoned Brussels negotiators think a deal is most likely to emerge at a late-night summit of EU leaders in the autumn of 2018."
There will be a further three rounds of Article 50 discussions in the next three months, before a European Council meeting in late October which will decide whether sufficient progress has been made in the Article 50 discussions. If so, that would pave the way for parallel talks on the future trade regime.
European debates, like the one on the rebate, move in cycles. They come up again and again. That’s true even of proposals you would have thought were dead and buried. In this context we read with some surprise a comment by David Allen Green that the UK and the EU should cast Article 50 aside, and negotiate a separate exit agreement or, if this is not possible, at least extend the two-year time period. While that may be technically possible, this proposition totally ignores the EU’s own preference. It wants to do this through Article 50 because this is the only prescribed procedure available. And it wants this completed in two years because it has other, more important business to attend to.
Meanwhile, a report in the house of Lords warned that Brexit is already undermining the political stability of Northern Ireland. According to the Irish Times the report says that Brexit has exacerbated the divisions between the communities in Northern Ireland, and calls on the British government to reassure nationalists following the Conservatives’ confidence-and-supply agreement with the unionist DUP.