09 Jan 2018


Brexit, Brussels, Brussels Daily

Excerpts from Speech by Michel Barnier at the Trends Manager of the Year 2017 event

Today the UK is still an important partner for your country, representing 7 % of Belgian trade in goods.

But, at the same time, 68 % of your trade is with the other Member States of the European Union. Almost 10 times more!

What makes our European economies strong is the Single Market. The British know this well, since it was the main reason why they joined the EEC in 1972.

Our Single Market will still have 440 million consumers and 22 million businesses after the UK’s departure.

Beyond facilitating trade between us, it helps our businesses succeed in international competition, thanks to our collective negotiating power and our rules and standards, which are often adopted worldwide.

This is why, in these negotiations, one of my main concerns is to maintain the integrity of the Single Market, which is our common good – and is not, and will not be negotiable.

But naturally, alongside this home market, the UK will remain an important market for many of you, and I understand the concern which is expressed here and throughout Europe about the consequences of Brexit, which we did not want.

Since day one, I have asked – and I have asked myself – three questions. And it is in the answer to these three questions that we will see the form of our future relationship.

I – Does the UK want an orderly withdrawal or a disorderly withdrawal and is it ready to assume the immediate consequences of its decision to leave the European Union?

We have obtained a positive answer to this first question. On 8 December we reached an agreement with the UK that represents a significant step towards an orderly withdrawal.

In other words, the risk of a disorderly withdrawal has receded, even though we must remain prepared for all options.

This agreement addresses the three most urgent subjects of these negotiations:

1) Citizens’ rights, which is our priority and that of the European Parliament. There are 30 000 Belgians in the UK and 27 000 British citizens in Belgium. In all, 4.5 million people are involved. Our agreement guarantees their rights for their lifetime.

2) Ireland, whose unique situation calls for specific solutions to prevent the return of a hard border.

3) Finally, with regard to the financial settlement, all the commitments undertaken by the 28 will be honoured by the 28.

On the basis of our Joint Report, the European Council agreed that ‘sufficient progress’ had been made to begin discussions on a possible transition period and on the framework for our future relationship.

This is the subject of my second question.

II – What kind of future relationship does the UK want with the European Union?

We don’t yet have the answer to this question. However, we can proceed by deduction, based on the Union’s legal system and the UK’s red lines. By officially drawing these red lines, the UK is itself closing the doors, one by one.

The British government wants to end the free movement of persons, which is indivisible from the other three freedoms. It has therefore indicated its intention of leaving the Single Market.

The British government wants to recover its independence to negotiate international agreements. It has therefore confirmed its intention of leaving the Customs Union.

The UK no longer wishes to recognise the jurisdiction of the Court of Justice of the European Union, which guarantees the application of our common rules.

It follows that the only model possible is a free trade agreement, which could obviate the need for trade barriers, such as customs duties, and could facilitate customs procedures and product certification.

This will of course be adapted to the specificities of the relationship between the EU and the UK, in the same way that our agreement with Canada is not identical to our agreements with Korea or Japan.

But one thing is clear: a free trade agreement, however ambitious, cannot include all the benefits of the Customs Union and the Single Market.

For example, with regard to financial services, a free trade agreement may include provisions on regulatory cooperation – as is the case with Japan. This regulatory cooperation may also take the form of a regular dialogue like the one we have with the United States.

But we have never given up our regulatory autonomy.

The regulatory framework we have constructed as a Union of 28, including the United Kingdom, learning from the financial crisis, is extremely precise. We have developed a single rulebook and more integrated European supervision, which guarantee financial stability, protection for investors, market integrity and a level playing field.

A country leaving this very precise framework and the accompanying supervision gains the ability to diverge from it but by the same token loses the benefits of the Internal Market. Its financial service providers can no longer enjoy the benefits of a passport to the Single Market nor those of a system of generalised equivalence of standards.

This is not a question of punishment or revenge; we simply want to remain in charge of our own rules and the way in which they are applied. As it seeks to regain its decision-making autonomy, the United Kingdom must respect ours.

Where allowed by our legislation, we will be able to consider some of the United Kingdom’s rules as equivalent using a proportionate and risk-based approach, in particular for financial stability, which will remain our main concern.

Let us not have short memories: the financial crisis was not that long ago. It cost us a lot and it destroyed value and millions of jobs, creating an unprecedented social crisis.

Full Speech available here

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