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The Looming Brexit Deadline: What to Expect in March 2019?

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On June 23, 2016, an historic vote in the United Kingdom forever changed the course of history.  The UK voted to break away economically and to a lesser degree politically from the ‘constraints’ of Brussels, and the EU. The media frenzy surrounding the Brexit referendum had pundits believing that there was no possible way Brexiteers would get their wish. They were considered a fringe group of extremists, but the media got it wrong. They have gotten it horribly wrong many times since then, more recently with the election of US President Donald J. Trump. But it’s the Brexit issue that lingers and presents the greatest challenges to Europe and the United Kingdom. Come Friday, 29 March 2019 at 11 PM, the UK will be required to leave the EU.

The issue of what to do with Britons living abroad and Europeans living in Britain is an important one. For starters, there are millions of people from both the EU and Britain living outside of their countries. This large expatriate population is already experiencing all manner of financial difficulties through the recent volatility of the GBP. Global transfers from Europe to the UK and the UK to Europe have been increasing in recent years, thanks to the Brexit issue. The list of service providers offering these international money transfers is currently populated by many non-bank financial institutions, Recall that its zenith, the GBP was trading around 1.47/1.48 to the USD. It soon plunged to 31-year lows, and only recently started to claw its way back to those levels. Expatriates can benefit from GBP weakness by sending EUR, USD, JPY, SEK and other currencies back to the UK. This results in boosted performance of the GBP, and has a lag effect on stock portfolios.

The Brexit issue presents as an unprecedented economic and political calamity for Europe, the likes of which it last encountered with the overhyped Grexit (Greek Exit) fears. According to the terms of the Lisbon Treaty, Britain had 2 years from the date it announced its intention to leave the EU for the formal ratification of a Brexit. Article 50 of the Lisbon Treaty is an interesting legal triggering mechanism, and the process got underway in March 2017. With approximately a year to go, the UK government must muster all the support it can to prepare for Brexit. The negotiations have been exceedingly difficult, with both EU and UK officials struggling to come to consensus on any number of issues.

What was the Final Vote Tally in Favour of Brexit in the UK?

According to the BBC, 72.2% of the UK electorate voted in the Brexit referendum. Of that, 51.9% voted to leave the EU, amounting to 17,410,742 votes. The Bremain (Britain remains in the EU) vote amounted to 48.1% or 16,141,241 votes. There were some 26,033 rejected ballots. It is interesting to point out which parts of the UK voted overwhelmingly in favour or against a Brexit. Scotland (62% to remain) was largely against a Brexit, as was Northern Ireland (55.8% to remain). But it was England (53.4% to leave) and Wales (52.5% to leave) with their large populations that swung the needle in favour of a Brexit.

And so, the Brexiteers got their wish and history was made. The areas in the UK overwhelmingly preferring a Brexit included Arun (62.5%), Northumberland (54.1%), Stoke-on-Trent (69.4%), Derby (57.2%), Northampton (58.4%), Cornwall (56.5%), Amber Valley (60.3%), Ashfield (69.8%), Lancaster (51.1%), Luton (56.5%), and many others. The listing of pro-Brexit cities and districts in and across England sent a powerful message to 10 Downing St., and Brussels alike. The British Prime Minister at the time, David Cameron was taken aback by the results, even though he was heading the Tory government. The London Mayor, Boris Johnson was spearheading calls for a Brexit, posing a serious challenge to the PM.

According to Article 50 of the Lisbon Treaty, ‘any member state may decide to withdraw from the union in accordance with its own constitutional requirements’. Once Article 50 has been triggered, the European Council is officially notified of the UKs desire to leave the EU and it will no longer be bound by EU rules. Of course, there are many complications inherent in the extrication process. These include the rights of EU citizens living in the UK, and vice versa. There are also existing business agreements, financial partnerships, and related deals between UK and EU companies that need to be consolidated, amended, or ratified.

Concerns for the UK Post Brexit

Other challenges to a successful Brexit include passports, travel, work permission, and borders. While the UK was part of the EU, residency requirements for all nationals in the single bloc were easier to understand. Now there is the issue of what to do with people post-Brexit. These are but a handful of the many challenges facing the UK government as it looks to carve out new alliances with Asia and the West, post-Brexit. Of course, one of the most urgent concerns is the UK economy, and the currency. The GBP has whipsawed wildly since the June 23, 2016 referendum. It plunged spectacularly from 1.47/48 prior to the Brexit and hit a 31-year low soon thereafter.

This has far-reaching implications for UK business, listed companies, and UK indices. Every time the GBP weakens, the FTSE 100 index strengthens, and vice versa. This well-established relationship saw the FTSE 100 index rising well above 7,000 as sterling continues to plummet. However, there has been a strong resurgence in the value of GBP, leading many to believe that the separation from the EU will not be as detrimental as once thought. Negotiations began in earnest, and both parties agreed to making significant headway in the Brexit discussions. However, the EU’s head negotiator Michel Barnierand his EU counterpart, David Davis have been at loggerheads many times.

Upcoming Meetings Prior to the Looming Brexit Deadline

According to Davis however, the UK has set March 29, 2019 at 11 PM GMT as the official date that Britain will depart from the EU. Some of the most important dates to remember moving forward include September 24 when elections in Germany will determine what becomes of Chancellor Angela Merkel, and then another meeting in October 2018. The latter is a crucial date to watch, since it is 6 months prior to the official divorce between Britain and the EU.

At that point, details of a final Brexit deal can be ratified. A big part of the reason Britain left was money. The UK was subsidizing Brussels to the tune of billions of pounds, and many UK conservatives commented that foreigners were using up valuable NHS resources and costing Britons a fortune. It’s a difficult predicament to be in, given that the UK is now negotiating to repay the EU a tidy sum in the separation agreement.

It was once thought that £350 million per week was sent by the UK to the EU. This according to Boris Johnson, is precisely what Britain pays the EU. However, the UK’s membership fee with the EU is £17.8 billion. Once the Treasury report was conducted, that figure was actually £375 million weekly, or £19 .5 billion. In November, The Guardian ran an article stating that the UK could pay upwards of £50 billion after UK leaders and EU leaders could not come to consensus. That’s the figure that was needed for heavy hitters like Germany and France to sign off on any new trade deals post-Brexit with the UK. Figures as high as £89 billion have been floated, but UK government ministers are insisting that the true figure will be approximately 50% of that. In any event, these are serious concerns for the UK post-Brexit, given that the burden will be brought to bear on UK workers.

Is the Brexit officially on?

According to Labour and Conservatives, the Brexit issue will move ahead as planned. However, several politicians and parties have threatened to derail any Brexit plans by requesting a snap referendum on the issue. It looks as if Britain will be leaving the EU in March 2019, preferably with a framework for Brexit in place. The British Prime Minister was against a Brexit during her early days, but promised to support a Brexit once she was sworn in. The UK economy has been in all sorts of turmoil since the Brexit saga became priority number one.

The GBP/USD pair is back at parity with pre-Brexit levels, but the GBP remains approximately 15% weaker against the EUR. UK economic growth remains robust, despite reports that the Brexit issue will destroy UK manufacturing and service industries. The purported single market refers to the EU bloc and if Britain leaves, it will no longer enjoy all of the privileges such as no customs duties, tariffs and trade fees. However, there is a customs union in place. The single market is a reference to broader integration and interaction between the EU and the UK.

In summary, it is important to manage personal finances well during this volatile period in Britain’s history. Britons with assets abroad stand to benefit significantly by repatriating their earnings, salaries, wages and so forth back to the UK. If the GBP strengthens, much the same can be said of Europeans living in the UK. Of course, banks will be having a field day with all the money changing hands, and the high spreads, fees and commissions they can charge on unsuspecting clients. After the dust has settled, it’s money transfer companies that will reap the rewards of these actions since they offer the best value to Britons.

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Libya is in no state to rescue migrants in the Mediterranean

Samantha Maloof

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Italy’s new government—an unholy alliance of the populist M5S and far-right League parties—careened into office on an uncompromising anti-migrant platform, soliciting the warnings of politicians and financial institutions around the world. With its recent decision to hand naval control of a large swath of the Mediterranean—extending almost to Malta and Crete— to failed-state Libya, the coalition government may yet set a new low more rapidly than expected.

Italy’s hope is that the Libyan forces it has ceded responsibility to will prevent shipwrecked migrants from reaching European shores, instead returning them to the very country they are trying to flee. While this plan might sound attractive to a government which has lamented it can’t deport its own citizens from minority backgrounds, NGOs working in the area have stressed the grave threat the new policy poses to migrants. Those rescued now face a return to prolonged detention and harsh treatment in a country which has been desperately torn apart for seven years. From the spate of warring militias which control Tripoli to General Khalifa Haftar’s lengthy campaign against Islamist forces in the country’s east, Libya is plagued with conflicts which make it no safe haven for migrants.

In this context, Italy’s decision to hand over responsibility of such a large portion of the Mediterranean to Libya is likely not only against international law, but an affront to basic human rights. The Italian government is set to donate 12 boats to enhance the capabilities of the Libyan coast guard—such as it is— given its new responsibilities. Libya will need these twelve vessels and more before they can carry out even the most basic search and rescue operations. At present, the country only has three operational patrol boats; barely seaworthy, they are often forced to stay at port due to lack of fuel. “It’s very clear that the priority is not saving lives”, one spokesman from the German charity Sea Watch remarked about the sorry state of Libya’s fleet; “I have not seen a single life jacket.”

Unsurprisingly, Libya’s track record on saving migrants at sea is hardly exceptional. More than 100 migrants, including young children, recently drowned off Libyan shores after the coast guard picked up just 16 survivors when their overloaded vessel capsized. In a separate incident, a shipwreck east of Libya’s capital Tripoli saw 63 people go missing after their inflatable boat sank. The Libyan coast guard was unable to even locate their bodies.

The number of migrants dying during the dangerous crossing has significantly increased since the European Union began to back away from rescue missions and close crucial ports. At the same time human traffickers are exploiting the desperation of those attempting to flee violence on the African continent, the European bloc seems ever more reluctant to extend a well-trained, well-resourced helping hand.

That reluctance has had deadly consequences. According to the United Nations Refugee Agency (UNHCR), one out of seven migrants attempting the journey across the Mediterranean died at sea last month, compared to last year’s average of one in 38 migrants.

Though it is becoming increasingly obvious the EU cannot accept further significant inflows of migrants without exacerbating tensions that risk breaking the bloc apart, plans to send migrants back to be detained in war-torn Libya under horrific conditions are simply inhumane.

If Italy is determined to turn over control of migrant rescue operations to the Libyan government, it first needs to make sure that that government is stable and just. So far, the West has done little to support Libya, privileging short-term solutions to the country’s deeply-rooted problems. Many Western countries have also stubbornly continued to push for the unelected, UN-backed-government in Tripoli, long after it has proven to be weak and ineffective. Upon the violent end of Muammar Gaddafi’s four decades of dictatorial rule, the US abdicated responsibility for “picking up the pieces” of Libya. At the same time, the UN worked to reconcile adversarial political blocs under the Libyan Political Agreement (LPA). This top-down approach has proven profoundly flawed, not least because it has sidelined actors outside the UN government, such as General Haftar, who already commands significant respect and power in the country.

Thankfully, Western attempts to stabilize Libya are slowly becoming more effective. Major international powers now finally recognize that all principal Libyan stakeholders must necessarily be involved in crafting a sustainable solution. France in particular is taking the lead on pushing for a workable way out of the crisis. Paris believes Haftar, whose four-year-long military campaign has been successful at rooting out the Islamic State and its affiliates from Derna and other fundamentalist strongholds, must inherently be a part of that process. In an encouraging breakthrough, Haftar and the three other key Libyan leaders have met and even tentatively agreed to hold elections in December.

This new approach to diplomacy within Libya’s chaotic borders is promising, and may point to a more stable future in years to come. In the meantime, Libya cannot be trusted with patrolling a huge section of the Mediterranean until a steadfast Libyan government can prove its mettle in ensuring the rule of law domestically.

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U.S. Crushes Europe

Eric Zuesse

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On June 28th, PwC (PriceWaterhouseCoopers) came out with their listing of “Global Top 100 companies (2018): Ranking of the top 100 global companies by market capitalisation”, and reported: “The increase in China’s market capitalisation has been close to that of the US this year. … China’s contribution to the top 100 market capitalisation increased by 57%, to $2,822bn. … European companies have never fully recovered from the 2009 financial crisis. Europe is now represented by just 23 companies (down from 31 in 2009) and accounts for only 17% of the top 100 market capitalisation (compared to 27% in 2009).

How much more can Europe’s wealth shrink?

Europe is shrinking as an international place to invest, even while it is exploding as an international place to receive refugees from the nations where the U.S. regime bomb and destroy the infrastructure, and leave hell for the residents, who thus flee, mainly to nearby Europe, and so cause the refugee-crisis there. Usually, the U.S. isn’t the only invader: it solicits any allies it can muster — mainly fundamentalist-Sunni Arab regimes, plus the apartheid theocracy of Israel, but also a few regimes in Europe — to join in this creation of hell for the escapees, and of immigrants to Europe. But, as Barack Obama put it, “The United States is and remains the one indispensable nation. That has been true for the century passed and it will be true for the century to come.” The U.S. aristocracy intend to keep things that way, and their allies just tag along.

The U.S. regime is solidly neoconservative, or imperialistic; and the way that it grows its wealth and its power now is at Europe’s expense. The data show this.

During recent centuries, Europe had led the world, but now the U.S. does, and at Europe’s expense, but especially at the expense of the people who live where we bomb. This is just a fact, but what are Europeans doing about it? Thus far, nothing. Is that about to change? Maybe things are finally getting bad enough.

On page 31 of the PwC report, is shown that whereas in 2009 the U.S. had 42% of the “Top 100” companies, that figure in 2018 is 54% — 54 firms, instead of the previous 42.

China has 12 instead of the former 9.

But most of Europe has seen declines, instead of rises.

UK now has 5 instead of the former 9.

France now has 4 instead of the former 7.

Germany now has 4 instead of the former 5.

Russia has been hit particularly hard by U.S. sanctions; it now has 0, instead of the former 2.

Three European countries had 1 in 2009 and now have 0 — none at all — and these three are: Italy, Norway, Finland.

No one can reasonably deny, in light of these data, that the U.S. aristocracy — the individuals who control America’s international corporations and U.S. Government and America’s ‘news’media (to control the public) — have continued to win against Europe’s aristocracies (the U.S. counterparts in the European subcontinent). What’s amazing is that Europe’s aristocrats are not fighting back — except (some of them) against the refugees from America’s invasions and coups (and opposing those refugees isn’t dealing with the source of Europe’s economic problem). Even if the publics in Europe are powerless, the billionaires who still remain there are not. How much longer will they continue to be sitting ducks for America’s billionaires to target and eat?

Europe’s power in the world could shrink to almost nothing, unless foreign affairs in Europe soon reverse 180 degrees, and turn against the U.S. and its allies, instead of stay with those regime-change fanatics — and against themselves.

Europe is not declining on account of some failure by Europeans, except a failure to fight back in an intelligent way, which means, above all: against the real source of Europe’s decline. America, after all, definitely is not a democracy.

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Customs Union: The world’s largest trading block turns 50

MD Staff

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The Customs Union is unique in the world. It is a foundation of the European Union and essential for the proper functioning of the Single Market.The Customs Union is a single trading area where all goods circulate freely, whether they’re made in the EU or imported from beyond its borders. This means that there are no customs duties at the borders between EU countries. Duty on goods from outside the EU is generally paid when they first enter the EU. From then on, there’s nothing more to pay and no more checks. National customs services in all EU countries work together as one to manage the day-to-day operations of the Customs Union. Member countries share one single system for handling the import, export and transit of goods.

The Customs Union comprises the 28 Member States of the EU, Monaco and British territories. Over 114,000 customs officers work around the clock at airports, border crossings, ports, inland customs offices or customs laboratories. The EU’s customs administrations need to work closely to facilitate trade and protect the health and safety of all EU citizens.

How does the EU’s Custom Union help to protect and keep us safe?

The aim of the Customs Union is to protect society at large while making sure that legitimate trade can flow easily. The Customs Union defends against international trafficking and smuggling, protects consumers against illegal and dangerous goods, and preserves the environment and European cultural heritage as well as the financial interests of the EU and the Member States. In the EU, there are 90 state-of-the-art customs laboratories to carry out this job. Some labs specialise in certain types of analysis – for example, toy safety. When human senses are not enough to detect certain types of illegal goods, customs officers partner up with sniffer dogs which specialise in detecting illegal drugs, suspicious food, explosives or even large amounts of cash. 

HOW THE CUSTOMS UNION PROTECTS  

 DRUGS AND CIGARETTES  
  • In 2016, EU customs seized almost 4.6 billion illegal cigarette and 298.9 tonnes of drugs in the EU.
  • In Spain, for instance, law enforcement dismantled an organisation producing contraband tobacco products. In three of these operations, 15 persons were detained and more than 275 tonnes of tobacco products, valued at more than €20 million, were seized. Two types of machines were confiscated: for the manufacturing of the tobacco products and for drying the tobacco. Additionally, numerous sacks containing chemical substances used to fabricate the final product were also seized.
  • In Poland, a tobacco sniffer-dog discovered 10.5 million cigarettes inside a sea-container at the container terminal of the Gdynia sea-port.
  • On the west coast of France, 19 tonnes of cannabis resin were seized in a sailing ship. Three tonnes of cocaine were found in a maritime container. In addition, 120 000 doses of diazepam were seized.
  • In Spain, a customs boat supported by a customs helicopter intercepted a sailing ship loaded with almost nine tonnes of hashish.
  • In Belgium, customs seized 2 275 kilos of drugs which were smuggled through passenger traffic (by air) and 476kg by express consignments.
 
WEAPONS  
  • Some 6,256 firearms were seized in the EU in 2016, along with more than 1 million pieces of ammunition and 1 520 pieces of explosives.
  • Customs officials in Belgium were able to stop 126 pieces of weapons/ ammunition/ explosives from entering the EU. These weapons were being smuggled into the EU through air traffic or post.
  • In Spain, 737 assault rifles and 72 grenade launchers, including chargers and instruction books were seized.
 
FAKE AND DANGEROUS GOODS  
  • EU customs intercepted products suspected of violating intellectual property rights on more than 63 000 occasions. In 2016, more than 41 million articles were detained with an estimated value of nearly €672 million.
  • Estonian customs seized almost 34,000 pieces of fake “Diesel” jeans in Muuga Port.
  • Greek customs seized more than 1.3 million batteries, 537,000 packs of cigarettes and 24,300 wallets.
  • There were almost 14 000 cases of goods presenting a risk for consumers in terms of health (sanitary, phyto-sanitary and veterinary technical standards). More than 37 million items were identified as unsafe or uncompliant in terms of product safety.
 
GOODS VIOLATING ENVIRONMENTAL RULES  
  • 3,500 infringements of regulations for endangered species (CITES) were detected. In 96 cases, exports were detected which did not respect the rules on exports of cultural goods.
  • Estonian customs seized almost 66,000 tubes of face cream which contained caviar.
  • In France, 110,000 cosmetic products with caviar and protected plants were seized, as well as 46 square meters of alligator skin and 20 tonnes of wood from the exotic “Dalbergia retusa” species.
  • In the United Kingdom, 300 map turtles (Graptemys spp), 5 live giant salamanders, 6 kg of caviar, 300 leather items made from python skin, 760 kg of traditional medicines containing protected plant species and 18 kg of ivory tusks were seized.
UNDECLARED CASH
  • Travelers entering or leaving the EU are obliged to declare amounts of cash valued at €10,000 or more (or its equivalent in other currencies or bearer negotiable instruments) to customs authorities. In 2016, there were 571 significant cases, where seizures of undeclared cash amounted to more than €50,000.
  • Each year, more than 100,000 cash declarations are submitted to customs, amounting to more than €62 billion. Each year, more than 10,000 cases of undeclared cash or incorrectly completed cash declarations are recorded
  • As part of the EU’s Action Plan against Terrorism financing, recently-agreed new rules will extend the rules to cover cash sent in postal parcels or freight shipments, to prepaid cards and to precious commodities.

How does the EU’s Custom Union help to facilitate trade?

The EU is one of the largest trading blocks in the world. In 2015, the EU accounted for almost 15% of world trade in goods, worth €3.5 trillion. Managing this volume of international trade requires handling millions of customs declarations per year in a fast and efficient manner. The Union Customs Code removed the need for hundreds of different customs forms and now allows the use of electronic transport manifests for customs purposes and the moving of goods under temporary storage without lodging a transit declaration. It also introduced centralised clearance, and is more straight-forward for businesses, providing uniform and harmonised rules on guarantees. Finally, it also reduces the administrative burden on compliant and trustworthy economic operators (AEOs) by allowing a number of simplifications of customs procedures, and of the use of guarantees, and by allowing self-assessment of customs debts under certain conditions.

What has the Commission proposed to support customs operations as part of the new EU budget?

As part of the plans for the next EU budget, the Commission has now proposed a continued financial commitment of €950 million for the EU’s customs programme, representing just 0.07% of the entire budget. The programme supports the essential cooperation between customs authorities across the EU and protects the financial and economic interests of the European Union and its Member States. It has helped to build a modern and innovative Customs Union that ensures the safety and security of all EU citizens, while at the same time facilitating growing global trade. It allows the joint development and operation of major, pan-European IT systems and establishes networks, bringing together national officials from across Europe.

The new proposed Customs Programme [LINK] will build on this success, helping customs administrations to deal with increasing trade flows and emerging trends and technologies, such as e-commerce and blockchain. It will also support customs authorities through enhanced cooperation on the ground and more training. The programme will help to provide better risk management to protect the EU’s financial interests and to respond to security threats and cross-border crime. A new Customs equipment instrument worth €1.3 billion is also being created to allow the purchase, maintenance and replacement of innovative customs equipment by Member States.

CUSTOMS UNION – TIMELINE AND KEY STEPS 

1 July 1968 

 

All customs duties and restrictions lifted between the six member countries of the European Economic Community (EEC). A common customs tariff replaces national customs duties on products from the rest of the world. Trade between the countries multiplies and investment and economic growth increases.
1987  One Single Administrative Document replaces hundreds of national customs declaration forms. At the same time, the common transit system is created.
1992  EU adopts the Community Customs Code, creating a common rulebook for customs legislation. This milestone leads to much simpler guidance for traders and customs alike.
1993 

 

Free movement of goods become a reality: no more customs formalities at internal borders of the EU and no more long queues for lorries filled with goods to be checked at border crossings. For the first time, uniform customs legislation becomes directly applicable in all Member States of the EU.
1994  Launch of the integrated tariff of the European Union in digital format (TARIC) with daily transmissions to the EU Member States. It replaced the first TARIC database with weekly transmissions since 1987.
1996 EU-Turkey Customs Union enters into force.
2003  A new computerised transit system becomes operational. It is the first European customs system that uses electronic declaration and processing.
2004  10 new countries join the EU and the EU Customs Union, marking the largest expansion of the EU Customs Union in its history.
2005

 

 

EU launches the Customs Risk Management system that connects more than 800 customs offices and provides a digital platform to exchange information about risks and irregularities. New security legislation is introduced providing for advance cargo information, risk-based controls and measures aimed at end-to-end supply chain security, including through use of technology.
2008 

 

 

EU introduces the Authorised Economic Operator (AEO) status: an internationally-recognised quality mark indicating that a company’s role in the international supply chain is secure, and that customs controls and procedures are efficient and compliant. It is voluntary and enables simplified customs procedures and in some cases the right to ‘fast-track’ shipments through some customs and safety and security procedures.
2011  Customs becomes a major actor for increased security in the EU. Common risk criteria for security and safety start to apply to all goods crossing the EU borders, ensuring equal protection of all EU citizens and member states.
2016 

 

 

The Union Customs Code takes effect, further modernising and streamlining customs procedures throughout the EU. It also introduces a number of IT systems to support harmonised customs rules and to reduce the administrative burden for trade. Full implementation of IT systems is foreseen in steps, with the majority of systems being available by 31 December 2020, with further upgrades during the period up to 2025.
2018 The EU Customs Union celebrates 50 years of operation.
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