Michel Barnier: Interview in the FAZ
Michel Barnier's interview with the Frankfurter Allegemeinen Zeitung as reported and translated by the BBC.
In his interview he notes his strong opposition to Prime Minister May's Chequers plan. He is quoted to have said:
“The British have a choice”
"They could stay in the single market, like Norway, which is also not a member of the EU - but they would then have to take over all the associated rules and contributions to European solidarity. It is your choice.”
"But if we let the British pick the raisins out of our rules, that would have serious consequences.”
"Then all sorts of other third countries could insist that we offer them the same benefits."
"We have a coherent market for goods, services, capital and people - our own ecosystem that has grown over decades."
"You can not play with it by picking pieces”.
House of Commons Exiting the European Union Committee Oral evidence: Michel Barnier
The committee has published the transcript of the oral evidence delivered by Michel Barnier, Chief Negotiator European Commission, and Sabine Weyand, Deputy Negotiator European Commission, from 3 September 2018. The full transcript can be accessed here.
Asked whether, following his interview with the FAZ (see above) the facilitated customs arrangement in chequers deal is "dead in the water" Mr. Barnier stated:
“First of all, let me say once again, unlike what I have seen and heard over recent days, following a rather too brief reading of my interview to Frankfurter Allgemeine Zeitung, basically in the White Paper there are lots of positive things, lots of useful things, just to make that absolutely clear. I did not just reject the White Paper outright; that is just not true. I hope that you will understand that.
Secondly, we have two major problems, two issues that we cannot accept. Our customs union, our customs system, as it works, is a fully integrated system that cannot be undermined and we cannot split up the four freedoms of the single market. We are prepared to discuss a customs agreement of some sort that simplifies customs arrangements between the United Kingdom and the EU. Customs co-operation could even be part of a free trade agreement, if it went that far, but we do have a problem with the way in which our customs controls and checks work at the moment. There is a clear link between customs controls and regulatory controls and that is not covered in your White Paper. Your proposal does not seem workable to us, basically.”
Asked about the common rulebook for goods he replied:
“In choosing to leave the European Union, how could we accept conditions that would run counter to our economic interests, which are based on the single market, which we built together with you? Why would we agree to weaken that single market today? I do not know whether the issues we are talking about are the key issues in the White Paper. There are others as well. The free trade agreement, for example, is something that we could discuss and work on and then on military co-operation as well. Again, that is something that we can work on and support, but you talked about the two key proposals there in the White Paper. When it comes to those two proposals, there is a real problem of substance for us, because they would weaken and would lead to the unravelling of the single market. That is why they are not acceptable, so you cannot ask us to make concessions on the very foundations of the European Union.”
HMT: (Draft) Payments and Electronic Money (Amendment) (EU Exit) Regulations 2018 and (Draft) THe Credit Transfer and Direct Debits in Euro (Amednment) (Eu Exit) REgulations 2018
This regulation, made under section 8 of the European Union (Withdrawal) Act 2018 amends primary legislation relating to payment services to take account for the fact the UK is leaving the European Union. It also creates a temporary permissions regime for electronic money and payment services providers in the UK. The Payments and Electronic Money Regulation can be accessed here and the Credit and Directs Debits in Euro Regulation here. The explanatory note for both regulations can be accessed here.
The explanatory note states:
“EU legislation on payments and e-money (implemented in the UK through the Payment Services Regulations and Electronic Money Regulations) creates the regulatory regime for payment institutions (PIs), electronic-money institutions (EMIs) and open banking firms such as registered Account Information Service Providers (rAISPs). It sets rules for making payments and issuing e-money for these institutions and banks (all together Payment Service Providers – PSPs). It also applies some of the conditions for membership of the Single Euro Payments Area (SEPA).”
“SEPA represents a key enabler of trade between the UK, EU, and existing third-country members, and the government therefore intends to retain relevant EU payments law in such a way that it maximises the prospects of the UK remaining in SEPA.”
“To cater for the scenario where the UK is unable to continue to participate within SEPA, and PSPs are therefore unable to fulfil the above regulatory obligations, the government is proposing a power to enable it to remove the SEPA Regulation from the statute book and to reduce transactions in Euro to a SEPA member to a ‘one-leg’ transaction (where Part 7 of the PSRs only applies to the part of the transaction carried out in the UK).”
“If the UK leaves the EU without a deal, there will be no agreed legal framework upon which the passporting system can continue to function. As a result, without a deal, any references in UK legislation to the EEA passporting system will become deficient at the point of exit. To correct this deficiency, this SI seeks to create a Temporary Permissions Regime (TPR) akin to that contained within the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 for FSMA regulated firms.”
The explanatory notes note that the TPR will be different in two aspects from the one provided for in the EEA Passport Rights Regulation (which we have discussed in more detail here):
- FSCS does not apply to services provided by payment or e-money institutions under the PSRs/EMRs and will not apply to these institutions in the TPR. Instead, payments and e-money institutions in TPR are required to comply with requirements to safeguard UK customer funds under the PSRs/EMRs.Many payments and e-money firms participating in the TPR will have to establish a UK subsidiary in order to offer new business in the UK after the end of TPR.1 The UK subsidiary may take some time to become fully operational post-authorisation. Given this, the EEA entity’s temporary permission will not fall away automatically upon the authorisation of the subsidiary. Instead, the EEA entity will continue to be able to provide services using its’ temporary permission while the UK subsidiary becomes operational, for up to 3 years from exit day, subject to the TPR conditions.
- “A significant number of UK institutions hold safeguarding accounts in the rest of the EU. To avoid a cliff-edge for these firms, the government is proposing to allow institutions to hold safeguarding accounts anywhere in the world, providing the institutions meet specific criteria. This is in line with existing practices for protecting client assets in investments.”
“The EU’s Cross-Border Payments Regulation (CBPR) sets limits on charging for cross-border euro transactions. Were the CBPR to be automatically retained, it would be inoperable: cross-border transactions will not be regulated under the default approach to retained EU law (where regulation is UK-only, and not accounting for legislation required for SEPA access). Alternative options – such as applying CBPR to UK PSPs making cross-border Euro payments to the EEA - would place obligations on UK PSPs which they could not fulfil, as these obligations would require co-operation from PSPs in the EEA. The government has also confirmed that CBPR is not a requirement for third-country membership to SEPA. As such, the government is proposing not to retain CBPR.
Negotiations regarding CBPR2 are currently ongoing, and the UK will examine the final version to ascertain whether the above position continues to be the best approach.”
Other publications from the RegZone Brexit news feed
HoC: Brexit Reading list
The House of Commons published a reading list which brings together briefings on Brexit by the Parliamentary libraries and the Devolved Assembly research services following the result of the EU Referendum on 23 June 2016. The list can be accessed here.
BIS: Speech by Louis de Guindos
Speech by Luis de Guindos, Vice-President of the European Central Bank, talking about the euro area, its current status and challenges as well as Brexit. The speech can be accessed here.
BoE: Silvana Tenreyro Annual Report to the Treasury Select Committee
In her report she reflects on the UK financial situation in the past year, including the impact of Brexit and what the BoE is expecting moving forward. The report can be accessed here.
HoC Exiting the European Union Committee Oral evidence: Philip Rycroft
The committee has published the transcript of the oral evidence delivered by Philip Rycroft, Head of UK Governance Group and Permanent Secretary of the Department for Exiting the EU from 4 September 2018. The full transcript can be accessed here.
HoL EU Committee: Letter to Dominic Raab UK Government’s preparations for a ‘no deal’ scenario
A letter by Lord Boswell of Aynho to Dominic Raab asking further questions about the UK’s preparation for a no deal scenario following the governments publication of the no deal guidance. The letter can be accessed here.
CMS RegZone publishes weekly updates (available via email, on-line and via Twitter) on Brexit developments for financial services firms. These provide analysis and commentary on significant developments during the week in question. A daily digest of Brexit news (without analysis or commentary) is also available by email here and online via the RZ news wizard here (both of these can be filtered using the Brexit topic). Links to publications are contained in each update; publications released before the updates commenced in April 2018 can be found in a bibliography here. CMS RegZone publication ‘Where we stand’ provides an overview of the current position in a single report; this is updated regularly to take account of the key developments from the weekly updates.