Many Britons are confused with matters relating to current affairs during this politically perplexing juncture that I like to refer to as the Brexit Befuddlement. To try and decode Boris’ Brexit brain-teaser, it is important to first familiarise ourselves with a few of the terms we hear so frequently that we seem to have become almost immune to them.
What is Brexit and what do all these terms actually mean?
In a nutshell, Brexit is the planned withdrawal of the United Kingdom from the European Union (EU), and consequently out of the European Union Customs Union (EUCU) and the European Single Market (ESM). When goods and services are imported or exported, a tax or duty may be payable upon them. This tax is known as a tariff. States that have decided to abolish these tariffs on goods and services across their borders are known to have established a customs territory with a customs union. These unions have tariffs which they apply on imports into their common territory and are applicable to all states in the customs territory; these tariffs are known as Common External Tariffs (CETs). A relevant example of such a union is the EUCU. This is different to the ESM which can be described as a deeper form of integration that concerns the movement of the ‘four freedoms’; goods, services, people and capital. States in the ESM also benefit from sharing common rules and regulations surrounding animal health, manufactured goods and food safety and other areas.
For over 40 years, the UK has engaged in foreign policy and trade agreements with various other members of the EUCU and the ESM making it a difficult task to unravel these agreements. Fortunately, the UK has until the 31st of December 2020 to hold talks with the EU and come to some sort of a mutual agreement. This is known as the transition period. During this period, the UK would be required to follow all EU rules including the freedom of movement; meaning that UK nationals will be able to live and work in EU countries and vice versa. In addition to this, the UK will be required to pay the EU an estimated £33bn that will contribute to their share of EU budgets and liabilities up to the end of the transition period. This £33bn sum is referred to as the Divorce Bill.
What does the new Brexit withdrawal agreement propose and what impact will it have?
The section of the Brexit Withdrawal Agreement that will have the most impact is the section that concerns the exit of the whole of the UK from the EUCU. While this means that the UK will be able to strike trade deals with other countries without restrictions being imposed upon them by the EU, it also means that the UK will be subject to tariffs on goods and services exported/imported, both to and from the member states of the EUCU. To counter this additional tariff expense, UK businesses will either have to make their EU customers bear the brunt by increasing sales prices to account for the tariff expense, or they will be required to reduce their original pre tariff-price to maintain the same price for the end customer after the tariff has been added. Both solutions are likely to end unfavourably for UK businesses.
The withdrawal of the UK, (or the United Kingdom of Great Britain and Northern Ireland), from the EUCU creates the need for a legal customs border between Northern Ireland and the Republic of Ireland (which will remain part of the EUCU). Despite leaving the EUCU, Northern Ireland will remain in the ESM. This means that in practice the regulatory border for goods and services will be between Great Britain (which in effect constitutes England, Scotland and the Principality of Wales) and the island of Ireland and is one way of avoiding a hard border between Northern Ireland and the Republic of Ireland. This also means that there will need to be regulatory checks on goods moving between Northern Ireland and Great Britain but removes the need for such checks between Northern Ireland and the Irish Republic as they will effectively be part of an “an all-island regulatory zone”; as shown in the map below.
The lack of a hard border at the customs border between Northern Ireland and the Irish Republic opens up the possibility of goods being transported across borders without being checked. The Withdrawal Agreement states that ordinary people will not have their baggage checked and duty will not apply to individuals, but goods that are considered “at risk” will be subject to tariffs. The nature of these “at risk” goods will be decided by a joint committee made of UK and EU representatives. The diagram below (Figure 1), shows the treatment that has been proposed for these goods that are to be transported from Great Britain into Northern Ireland. All “at risk” goods moving between GB and NI are essentially crossing a regulatory border into the ESM and will be subject to tariffs. If it can be proved that these goods have remained in NI, the supplier will be able to claim a refund for the tariff that they have paid. If the goods have moved across the border and into the EUCU, the supplier will not be able to claim the refund and the tariff will have been paid.
Into this mix will be thrown the status of Gibraltar; with regards to their position within the EU, the EUCU, ESM or full incorporation into the United Kingdom. The Kingdom of Spain, is unlikely to accept any resolution short of full integration within its realm.
Overall, the uncertainty of the Brexit situation has a broad set of implications for the EU and the UK in both the short and long-term. With another Brexit extension looming, the future of the UK and the EU seems more uncertain than ever and we can only wait to see what the next steps will be for the United Kingdom.
Why German car giant Volkswagen should drop Turkey
War and aggression are not only questions of ethics and humanitarian disaster. They are bad news for business.
The German car giant Volkwagen whose business model is built on consumer appeal had to stop and pause when Turkey attacked the Kurds in Syria. A USD 1.4bln Volkswagen investment in a new plant in Turkey is being put on hold by the management, and rightly so.
Unlike business areas more or less immune from consumer pressure – like some financial sectors, for example – car buying is a people thing. It is done by regular people who follow the news and don’t want to stimulate and associate themselves with crimes against humanity and war crimes through their purchases. Investing in a militarily aggressive country simply is bad for an international brand.
As soon as the news hit that Turkey would be starting their military invasion against the Kurds, questions about plans for genocide appeared in the public discourse space. Investing over a billion in such a political climate does not make sense.
By investing into a new plant next to Turkish city Izmir, Volkswagen is not risking security so much. Izmir itself is far removed from Turkey’s southern border — although terrorist attacks in the current environment are generally not out of the question.
The risk question rather lies elsewhere. Business likes stability and predictability. Aggressive economic sanctions which are likely to be imposed on Turkey by the EU and the US would affect many economic and business aspects which the company has to factor in. Two weeks ago the US House of Representatives already voted to impose sanctions on Turkey, which now leaves the Senate to vote on an identical resolution.
Economic sanctions affect negatively the purchasing power of the population. And Volkswagen’s new business would rely greatly on the Turkish client in a market of over 80mln people.
Sanctions also have a psychological “buckle-up” effect on customers in economies “under siege”, whereby clients are less likely to want to splurge on a new car in strenuous times.
Volkswagen is a German but also a European company. Its decision will signal clearly if it lives by the EU values of support for human rights, or it decides to look the other way and put business first.
But is not only about reputational damage, which Volkswagen seems to be concerned with. There are real business counter-arguments which coincide with anti-war concerns.
Dogus Otomotiv, the Turkish distributor of VW vehicles, fell as much as 6.5% in Istanbul trading after the news for the Turkish offensive.
Apart from their effects on the Turkish consumer, economic sanctions will also likely keep Turkey away from international capital markets.
There is also the question of an EU company investing outside the EU, which has raised eyebrows. It is up to the European Commission now to decide whether the Volkswagen deal in Turkey can go forward after a complaint was filed. Turkey offered the German conglomerate a generous 400mln euro subsidy which is a problem when it comes to the EU rules and regulations on competition.
The Chairman of the EPP Group in the European Parliament, Manfred Weber filed a complaint with the EU competition Commissioner about the deal, on the basis of non-compliance with EU competition rules. Turkey’s plans to subsidize Volkswagen clearly run counter EU rules and the EU Commission can stop the 1bln deal, if it so decides.
In a context where Turkey takes care of 4mln refugees — subject to an agreement with the EU — and often threatens the EU that it would “open the gates”, it is not clear if the Commission would muster the guts to say no, however. In that sense, the German company’s own decision to pull from the deal would be welcome because the Commission itself wouldn’t have to pronounce on the issue and risk angering Turkey.
While some commentators do not believe that Volkswagen would scrap altogether the investment and is only delaying the decision, it is worth remembering that the Syria conflict is a complex, multi-player conflict which has gone on for more than 8 years. Turkey’s entry in Syria is unlikely to end in a month. Erdogan has communicated his intention to stay in Syria until the Kurds back down.
In October it was reported that the Turkish forces are already using chemical weapons on the Kurdish population which potentially makes Turkish President Erdogan a war criminal. For a corporate giant like Volkswagen, giving an economic boost for such a state would mean indirectly supporting war crimes.
As Kurdish forces struck a deal for protection with the Syrian Assad forces, this seems to be anything but a slow-down. Turkey has just thrown a whole lot of wood into the fire.
Volkswagen will find itself “monitoring” the situation for a long time. There is a case for making the sustainable business decision to drop the risky deal altogether, soon.
The future of Brexit: Where will Boris Johnson’s “fatal strategy” lead Britain to?
British Prime Minister Boris Johnson will attempt to negotiate a new deal with the EU on Brexit in the course of early parliamentary elections in the UK scheduled for December 12. If the Conservatives take upper hand, then, according to Johnson, Great Britain will leave the EU no later than January 31.
How will the upcoming elections affect Brexit? How Boris Johnson’s agreement with the European Commission could be assessed? The answers to these questions were provided by the participants in an expert discussion at the Valdai Club.
Stewart Lawson, member of the Board of Directors of the Russian-British Chamber of Commerce, head of UK Business Center in Moscow, Ernst & Young, has said that the current situation in the UK can be described as a scene in a bar where an Englishman, a Scot and an Irishman drink to forget the concept of Brexit “. Lawson made it clear that leaving the European Union without conditions would be a disaster. Nevertheless, the expert said that the UK had managed to avoid a situation in which there would be no deal at all, and also, with the arrival of a new agreement which Boris Johnson has reached with the EU, the situation has improved. “This deal is the best option for now,” – the expert remarked. However, he said, Brexit seems to be a story with no end and what is happening around it now is not even its first chapter yet.
Brexit continues to produce uncertainty, which, Lawson said is a big problem. In his opinion, the persisting uncertainty in connection with the UK leaving the EU affects business. On the one hand, the expert said, although Brexit will set Great Britain free from the US control, on the other hand, it will greatly affect the business climate, which continues to suffer amid the political uncertainty. The expert mentioned Nassim Taleb’s concept of the “black swan” according to which any forecasting may not take into account random, unknown factors. “We live in a world in which there are factors unknown to us. So it is necessary to have sufficiently flexible organizations capable of responding to situations that are in the process of development, ” – Lawson emphasized.
According to Alexander Kramarenko, Director of Development at the Russian International Affairs Council, Boris Johnson’s new agreement on Brexit is a major achievement for the British Prime Minister. Kramarenko attributes the success of Boris Johnson to his choice of a “fatal strategy” which allowed him to keep the stakes high until he won. With the help of this strategy, he managed to “cut open” the agreement on Brexit which had been signed by Theresa May. In addition, the “fatal strategy” has prompted the EU to concede on several issues.
The failure of Theresa May’s strategy is attributed to the fact that the former prime minister was a staunch supporter of a policy which required satisfying both parties, the UK and the EU. It was necessary to look for ways out of the EU instead of trying to stay there. “You cannot leave the EU and at the same time remain in the EU. And her agreement boiled down to just that, ” – Kramarenko said.
According to Theresa May’s agreement, by leaving the EU formally, Great Britain would lose the right to vote. Boris Johnson said that such an agreement perpetuates the “vassal” dependence of Great Britain on the European Union. “For a country with such a history as Great Britain, a position of this kind is not suitable. Either the UK is a member and takes part in all decisions, or it comes out and agrees on something special. As argued by Boris Johnson, this special agreement is a free trade agreement of varying range of coverage, intensity and depth, but it would be an agreement of sovereign Britain, ” – Kramarenko emphasized.
First and foremost, Johnson’s agreement solves the problem of maintaining the status quo on the land border of Northern Ireland and the Republic of Ireland. The fact is that under the agreement, Northern Ireland, as part of the United Kingdom, is to withdraw from the EU, while Ireland remains part of the European Union. Thus, the UK’s withdrawal from the EU and the establishment of a clear-cut border between Northern Ireland and Ireland would jeopardize the Irish peace process. The EU, the UK and the Irish Government pledged to maintain this border under a deal that ended the civil war in Northern Ireland. The EU insisted that Britain remain in the Customs Union until this situation is settled. This would de facto keep Britain within the EU.
Under a new agreement proposed by Boris Johnson on which he secured the approval of the European Union, the UK will have to leave the EU’s Customs Union, and the customs border between Britain and the EU will pass via the Irish Sea. However, this threatens the unity of the country and could be an important step towards unification of Ireland, the expert believes.
Boris Johnson’s strategy has led to serious concessions from the European Union, Kramarenko said. Exiting the Customs Union will also allow the UK to clinch trade agreements with third countries. Moreover, the provision on “equal conditions of competition” will no longer be valid in the future, since it was moved from the text of the agreement to the Political Declaration, which is not binding.
What creates a major obstacle to Brexit is the current state of the British constitutional system of government, the expert said. “The opposition has deprived the government of the majority, thereby stripping it of the opportunity to rule the country or adopt new laws,” – Kramarenko said. Johnson’s achievement is precisely due to the fact that despite the opposition, he was able to cope with the opponents and postpone the date of Britain’s exit from the EU. “Now there is a significant degree of confidence that Brexit will take place and, perhaps, it will come as a gift for the New Year,” – Kramarenko said.
From our partner International Affairs
Bulgarian far-right to shut down largest human rights NGO in Bulgaria
“Why don’t they defend those who get robbed? Why are they only defending those that have trouble with the police? Why are they defending minorities? Do you know how many policemen are being investigated because of them?”
This is what you hear when the Bulgarian Deputy Prime Minister, Krasimir Karakachanov and others speak about the human rights organisation, The Bulgarian Helsinki Committee. It is the largest and oldest human rights organisation in Bulgaria.
And now it is facing the threat of closure after the deputy prime minister – who is also Bulgaria’s Minister of Defense – called this week for the shutdown of the NGO. Members of his party, the Bulgarian National Movement (IMRO) – a Far-Right party participating in the ruling coalition – have filed a request with the Bulgarian Prosecutor General for a review of the activities of the human rights NGO, asking for it to be closed down.
Make no bones about it. This is an attack on our freedom.
This is why I have notified the relevant authorities at the United Nations about what is taking place in Bulgaria. Activities of this type directed against human rights defenders have no place in a rule of law state, let alone an EU state. As a prominent government official, Krasimir Karakachanov has a particular obligation to respect human rights defenders.
Amnesty International and Human Rights Watch criticised his and his party’s actions this week. Over 70 Bulgarian NGOs stood by the Helsinki Committee, having sent a public letter of support condemning the attack on the NGO.
While my signal to the UN is currently being looked at, it is worth discussing why the deputy prime minister and others have such a huge problem with the Bulgarian Helsinki Committee, and organisations of this type.
The concept of human rights – by its very definition – protects citizens against the State and its organs, including policemen. That is one of the issues for Karakachanov. Well, welcome to the 21st century, Minister.
Policemen being investigated for misconduct is something we have to applaud, not something which shows how far things have gone. Bulgaria, with its post-communist baggage, has had a police system which traditionally has gone over and beyond what is allowed by law. Things of course are changing but you’ll always have policemen who abuse their legal limits. It happens in virtually every country. That’s why we need human rights organisations to watch for these things. And that’s a good thing.
When policemen catch an alleged criminal, they don’t get to beat them up or lock them up indefinitely. Period. These are the kind of cases that human rights NGOs like the Bulgarian Helsinki Committee look into. And they, by definition, will be focused on the actions of policemen and the State. That’s the name of the game; that’s what human rights are about. This is a concept that Karakachanov is not comfortable with; why should anyone be allowed to criticise the police forces? This to him is rather unpatriotic.
“Why don’t they instead look at and help the victims of robbery?” Well, human rights are not about the victims of robbery — if only it was that convenient. They protect citizens from their own state when that state violates their rights. Policemen do not get investigated for no reason, without any evidence of wrongdoing. Defending human rights is a very uncomfortable task because – by definition – the NGO has to go against the State. And for some, like Karakachanov, that shouldn’t be done because it leads to punishments for policemen when they step over.
Working for the UN High Commissioner for Human Rights where I reviewed human rights complaints from around the world, I learnt that every country violates human rights – only the scale and extent differ. This is why it is crucial to have human rights defenders like the Bulgarian Helsinki Committee who can help victims on the ground. Having international organisations like the UN is not enough.
Let us turn now to the request to the Prosecutor General to look into the activities of the human rights NGO, with a view to closing it down for allegedly “interfering in the judicial system.” Interference with the judicial system is what lawyers and prosecutors both do, by definition. By presenting facts to push their own case, the judicial system is a place of interference. Justice is not static. Of course, human rights defenders advocate for, interfere, push for and defend their clients. This is their job. Karakachanov’s Far-Right party is uncomfortable with such a strong voice for human rights in the process. Prosecution is prosecution; human rights defense is, well, interference.
Next, we should discuss the role of the Prosecutor General who would have to opine on the request for the close down of the NGO. Euronews readers should be told at this point that Bulgaria is facing a scandal with the selection of the next Prosecutor General. Ivan Geshev, who is currently the number two in the Prosecutor’s Office, is nominated to become Bulgaria’s next chief prosecutor. The capital Sofia witnessed protests by thousands of people marching on the streets against Geshev’s selection as chief prosecutor, because among other things, he is the only candidate in the process. That is never a good sign. Questions are also raised about which oligarchic power circles Geshev would be serving.
Geshev, the deputy in the Prosecutor’s Office, is important in this case because his attitude towards this human rights NGO is well known. When he receives the annual report about the human rights situation in Bulgaria penned by the Bulgarian Helsinki Committee, he famously sends back literary works about the Bulgarian struggle for independence, in my view trying to educate the NGO about being pro-Bulgarian. Of course, criticising the system does not make an NGO anti-Bulgarian. The job of patriots is not to shut up.
A similar reaction has been noted by the current Prosecutor General who will be looking at the case. When he receives the human rights report about the situation in Bulgaria, he simply sends it back. The message by both is clear: they see no value in a report that reviews the shortcomings of the system. And they are the people who will be deciding whether this human rights organisation is closed or not.
Human rights violations are uncomfortable. They push officials to take a look at themselves and their colleagues, often loudly pointing out the injustices. Human rights are not about robberies; if only it was that convenient. Human rights are about what is wrong with the system. And the current top prosecuting duo are not interested in that.
Living in Bulgaria, I don’t want to see the country follow the example of Hungary where human rights NGOs and universities are pushed so hard by the authorities that they have to close and move. That is not the right path to follow.
The closing down of the Bulgarian Helsinki Committee would be a blow to Bulgarian leadership and its human rights record. This will be not only a test for the Prosecutor’s office, but for Bulgarians and the EU.
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