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June 15, 2018

1:0 for Macron against the SNCF unions?

The SNCF reform turned into law yesterday with a final vote. Four months of strike actions did nothing to prevent this. The French government prevailed in its main objectives, including the end of the special status for new employees, and preparing the company for competition. This does not end strike actions, though. The smaller the troops and the more lost the cause, the more radical the strikes are likely to be, predicts Olivier Auguste in l'Opinion. For the CGT, the strongest union in the SNCF and the most opposed of the four unions to the reform, it is a fight not only about the politics of the reform but also about their own identity. 

What about the two more moderate trade unions, the CFGT and Unsa? After the reform was launched, the relationship with the government first took a turn for the worse, as the government seemed ill-prepared and unresponsive to the unions. This was the time when they agreed to strike actions two days out of five each week. The government then changed the strategy in May and started a dialogue. In the end the two moderate unions obtained some important concessions from the government: a guarantee that all employees would be taken over in case of privatisation, long term investments and the takeover of a large chunk of the SNCF debt. Will they now pull the plug and call for the end of the strikes, risking to break the line with the other two unions? Also, will the reforms help to turn the SNCF around? It is one thing to win a showdown with the executives of the trade union, and another to get the employees back on board, warns Les Échos.

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June 15, 2018

Brexit showdown still on

In the case of Theresa May's Brexit diplomacy, the unsustainable ended pretty quickly. The BBC's former political editor Nick Robinson (@bbcnickrobinson) summed it up nicely on Wednesday:

"Let me see if I’ve understood what happened today. PM bought off a Remain revolt by convincing MPs they’d get a meaningful vote on deal but avoided Brexiteer revolt by saying she would not allow one. What can possibly go wrong? (Watching from Moscow so may have misunderstood ...)"

It did go wrong yesterday when the rebels found out that Theresa May had lied to them. Or rather, as Downing Street would put it, that they misinterpreted her. The issue is the so-called meaningful vote, a legal procedure that would put parliament in the driving seat if there is no Brexit agreement by February. We think this is a rather theoretical issue because that situation is very unlike to arise. We agree with Tom Tugendhat, chairman of the Commons foreign affairs select committee, who said there is going to be a meaningful vote in any case. If parliament approves the deal, all is good. If not, there will undoubtedly be elections and a new government. The situation in which the meaningful vote amendment would most likely arise is for the government and the EU not to agree any deal by February. The timing was chosen to minimise the bluffing potential. But as the constitutional law expert Vernon Bogdanor pointed out, it is far from clear whether this amendment is in line with constitutional law, which gives the government the sole responsibility to negotiate international treaties. And, as we keep on pointing out, UK politicians have a tendency to frame the Brexit process purely in terms of their domestic political situation. They do not tend to take into account the other side. We doubt it very much that the European Council would start to negotiate with the British parliament, or even a government that has essentially lost its executive functions. It is also far from clear that an application for an extension of the Article 50 period would be acceptable if there is no pre-negotiated deal on the table. We only see the option of a short extension in case the ratification needs a bit more time. 

In proposing its amendment, the government has not given parliament the right to call the shots, only to have a meaningful discussion. Dominic Grieve, the former attorney general behind the meaningful procedure, called it unacceptable, and so did a few other rebels.

The bill will now go back to the House of Lords, which will pass its own amendment on Monday, and back to the Commons for a vote on Wednesday. The manoeuvre has bought Theresa May exactly one week, as MPs will be voting on essentially the same amendment they reject on Wednesday. This time, however, without the government's assurance of a compromise. 

The question is: has Theresa May been able to persuade enough of the rebels?

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June 15, 2018

Will Italy block Ceta?

Poor Canadians. First the insults from Donald Trump after the G7, and now they are becoming the political target of Trump's new European friends in the Italian government. The Lega's agriculture minister, Gian Marco Centinaio, has told La Stampa that Italy might not ratify the Ceta trade agreement with Canada. 

This was not a campaign issue, so we would at this stage not treat this as decided. But we would not be surprised if the Italian government were to make its approval of Ceta contingent on gaining other concessions from the EU, for example on fiscal policy. As we reported above, Angela Merkel is also desperate to strike a bilateral refugee deal, for which the new Italian government will surely exact a price. 

So far, 12 member states have ratified the Ceta treaty. France and Italy have not. Italy is the biggest uncertainty. Many politicians in the new government share Donald Trump's views on international trade. As the FT points out, the deal will only be dead once Italy notifies the EU that its decision not to ratify is permanent and irreversible. That has not happened yet.

We have been wondering why Italy would pick on Canada, and recalled the large imports of Canadian manitoba flour, used by Italian pasta manufacturers and also sold in shops. This is a special type of flour also produced in the wheat fields of northern Italy itself, so it would make sense for the Lega to speak for its local farmers. 

The FT also points out that a large share of the exemptions in the Ceta trade deal relate to Italy - many of the issues that might potentially arise for Italian farmers have already been taken care of. If Ceta fails, of course, that would also throw into doubt the ratification of the Japan and South Korea trade deals. 

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