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June 25, 2020

Spain may reject German asylum-reform plan

One of the priorities of the incoming German EU presidency is asylum reform, spearheaded by Horst Seehofer, the German interior minister. The EU was aiming to roll out a reform proposal this spring, but the pandemic intruded. Earlier this month, Seehofer outlined a three-part German plan, but the European Commission is signalling that it would be more practical to delay the asylum discussion until after the summer after a deal on the EU budget and the recovery plan. In the meantime, we note opposition to Seehofer's plan from the SPD and, more importantly, from Spain. 

The outline of the plan is as follows: first, an expedited asylum processing system at the EU's external borders, which would allow people with little hope of being granted asylum to be turned back; second, a quota system to redistribute asylum seekers among member states, with alternative support being provided by countries that reject quotas; and third, measures to prevent people with asylum from moving between member states. 

Spain's problem with this plan is that it makes no allowance for a distribution of migrants rescued at sea. According to El País, Spain is trying to chart a middle way between supporting the expedited asylum proposal together with Germany, France and Italy; and building a coalition of the Mediterranean states on the sea rescues. The existing compromise on sea rescues involves only Italy and Malta. Spain decided not to take part last autumn. Despite the importance of the sea migrants issue, the paper notes that 80% of asylum seekers in Spain come from Latin America.

The expedited asylum procedures at the border would require processing migrants before they are actually on EU soil, which poses problems of due process. This is the main objection of the SPD. We would expect a coalition within the European Parliament to oppose this as well. 

Countries like Austria, with no external EU border, seem to be the winners of the compromise pushed by Seehofer. Austria is opposed to mandatory quotas, having hosted a large number of refugees in recent years. Seehofer is in fact proposing that countries can refuse to take in refugees in exchange for so-called flexible support. This seems to be thought mostly as beefing up the external border protection with material and personnel, which Austria says it is providing. But border countries will likely complain that they will disproportionately bear the cost of settling and integrating successful asylum seekers, and there doesn't seem to be a plan for the EU to help materially with that.  

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June 25, 2020

What Scottish whiskey and Leica camera lenses have in common

As we keep writing, we are heading for a new wave of transatlantic conflicts. The US troop relocation out of Germany looks like a done deal. Yesterday the US Trade Representative issued a draft list of 30 European goods, with a US sales volume of $3.1bn, earmarked for punitive tariffs. This is in connection with the long-standing dispute over aircraft subsidies. The WTO has ruled in favour of the US in a dispute relating to aircraft subsidies, but it has not yet ruled on a counter-case brought by the EU in respect of US subsidies. The tariffs are thus in line with the WTO ruling.

The list includes various categories of food and drink such as whiskey or French wine, but also German camera lenses. The latter is interesting. Leica and Zeiss are German manufacturers with a niche in high-quality optics used in expensive still and film cameras. But it's a small market overall. There is no alternative US supplier and the competition is mostly Asian. So, this is a tax on the US consumer.

This is still a draft list. Affected products stem from the countries that were most heavily involved in Airbus production, hence the inclusion of the UK. 

We note a distinct shift for the worse in the atmosphere of US/UK relations. Robert Lighthizer said recently that he did not expect a trade deal with the UK this year. Yesterday, Liz Truss, the UK international trade secretary, said she was not seeking a deal with the US at any price. This reminded us of the no-deal-is-better-than-a-bad-deal episode in relation to the EU withdrawal agreement. She said consumers had no reason to worry about chlorinated chicken as it's already banned.

As UK trade relations with the US deteriorate, the mood is definitely improving in the European talks. We put this down entirely to the expiry of the extension deadline. After a period of initial posturing, both sides are finally serious. The FT reports that Brussels was now working on a compromise on the issue of the level playing field, which we consider the single biggest red herring in these negotiations. You can think up a lot of theoretical conflicts that might arise in the future, but the UK is not the EU's biggest problem when it comes to labour or environmental standards, let alone state aid. Michel Barnier is now talking about landing zones, robust agreements, and what he called an operational and clever compromise. We make no predictions, but this is the kind of language to use if you are really serious about a deal. 

Barnier is right, of course, that the EU should not allow the UK to undermine the single market.

If a trade deal is agreed, it will be small. Economically it will be only marginally less disruptive than a WTO arrangement. It will place the UK outside the single market. The reason a deal is important nevertheless is to avoid physical disruptions at the border when neither side can afford them, and to provide a framework that can be added to later. We are still holding out hopes for a future association agreement between the EU and the UK, as the convergence of geopolitical interests is becoming increasingly obvious.

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