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January 10, 2018

Yes, the choice is between Canada and Norway

We were more optimistic about the first phase of the Brexit negotiations than most other analysts. But we also have been more sceptical about the second phase, especially on trade, partly due to our knowledge of the German position on this issue. Germany wants an Article 50 deal and a transitional period. And it wants both badly. But Germany is implacably opposed to Theresa May's vision of managed divergence.

Peter Foster has a good report on this story in the Telegraph this morning, ahead of a visit by Philip Hammond and David Davis to Germany this week. They will put forward the argument that managed divergence is not an attempt to cherry-pick, but a pragmatic way to prevent damage to business on both sides of the Channel. We would like to add that these are false opposites. Both statements can be true simultaneously. The UK's idea of managed divergence is based on a neat division of policy areas into three categories or baskets: one where it wants to stay close to the EU, one where it wants to diverge, and a middle-ground category.

The German view is that there should be no bespoke agreements, at least not on trade, and that the UK should make up its mind on whether it wants to stay in the EEA or seek an ordinary third-country trade arrangement, like Canada's or South Korea's.

Foster notes correctly that there are different views within the EU, and that we are now entering a battle of ideas about the future relationship between the EU and the UK. The position attributed to Angela Merkel is shared by most of the other political parties in Germany, and is unlikely to shift irrespective of political developments. 

We always believed that the UK's decision to reject the EEA even as a temporary model would necessarily imply a Canada-type trade agreement, covering traded goods only but not services. 

The FT has a story this morning warning UK services companies in particular to prepare for Brexit, as they should not take market access for granted even in the event of a deal. UK-issued operating licences for airlines will no longer be valid after the transitional phase, and transport operators would also require an effective and stable presence in an EU member state if they want to continue to function as they do now. Even UK mineral water can no longer be automatically marketed in the EU because the water is extracted from the ground of a third country. Many people in the UK find this mean-spirited and small-minded, but we see this as a logical consequence of a decision to leave both the single market and the customs union.

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January 10, 2018

Who is resisting Macron and his government?

Two new controversial French laws are to stir controversy in the public debate over the coming months.

The first is the law to enforce judicial procedures to prevent fake news from spreading in election campaigns, announced by Emmanuel Macron last week. Intellectuals are expressing their concern that Macron seems to be more interested in economic than political freedom. The law is likely to bring out grievances about Macron's omnipresence, and the lack of democratic control, including effective majority in parliament.

The other is the reduced speed limit for country roads from 90km/h to 80km/h. Édouard Philippe announced this measure yesterday as unpopular but necessary to reduce the number of road deaths. The car lobby is up in arms against the measure, and both sides cite their own benchmark studies and examples to prove their cases. Macron was not a fan of this measure either, according to Journal du Dimanche, but for another reason: it breaks the harmony of the whole speed-limit system, with odd multiples of ten: 30, 50, 70, 90, 110, and 130km/h.

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January 10, 2018

Greece and Macedonia to solve name dispute

An age-old diplomatic dispute in the EU is on the verge of being resolved. The Balkan press reported widely that Greece and Macedonia have agreed to the name of "Republic of New Macedonia" or "New Macedonia" citing an informal document from Greek sources, we learn from Pontos News

This has not yet officially been confirmed, neither in Athens nor in Skopje. Instead they announced the start of talks to go on for the coming six months, along with several bilateral political working groups and an entrepreneur forum.

The former Yugoslav republic has a decades-long dispute with Greece over the use of the name Macedonia, which from a Greek perspective is seen as an irredentist claim to its northern province also called Macedonia. The name dispute prevented Macedonia, officially called Former Yugoslav Republic of Macedonia or FYROM, from joining Nato or the EU, according to Reuters. The new bilateral initiative was possible following the election of a more moderate government in Skopje.

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