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May launches high-stakes parliamentary debate on #Brexit plan

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British Prime Minister Theresa May urged parliament to back her EU divorce deal at the start of the five-day debate that could determine the future of Brexit and the fate of her own government, writes Elizabeth Piper.

May’s plan to keep close ties with the EU after leaving has been criticised by Brexit supporters and opponents alike, leaving her struggling to secure parliament’s approval in a vote that will follow the debate on Dec. 11.

If, against the odds, she wins the vote, Britain will leave the EU on 29 March 2019 under terms negotiated with Brussels - the country’s biggest shift in trade and foreign policy for more than 40 years.

If she loses, May could call for a second vote on the deal. But defeat would increase the chances of Britain leaving without a deal - a prospect that could mean chaos for Britain’s economy and businesses - and put May under fierce pressure to resign.

Defeat could also make it more likely that Britain holds a second referendum, three years after voting narrowly to leave the EU, or lead to Brexit not happening.

May, 62, has toured Britain, spent hours being grilled in parliament and invited lawmakers to her Downing Street residence to try to win over her many critics.

But the deal, sealed in Brussels last month, has united critics at both ends of the political spectrum: eurosceptics say it will make Britain a vassal state while EU supporters - expressing the same idea though with different language - say the country will become a rule taker.

Her allies in parliament, the Northern Irish Democratic Unionist Party which props up her government, have also rejected the deal and opposition parties say they cannot back it.

May is pressing on nonetheless.

“The British people want us to get on with a deal that honours the referendum and allows us to come together again as a country, whichever way we voted,” she told lawmakers on Tuesday (4 Deember).

“This is the deal that delivers for the British people.”

Few in the House of Commons, the lower house of parliament, seemed convinced so far.

On Monday, her government’s bid to calm another row over the legal advice received on the deal did little more than inflame tensions in parliament. Her former Brexit minister David Davis said flatly: “This is not Brexit.”

More than two years since Britain voted to leave the EU, the testy debates that shaped the referendum have increased, deeply dividing the country and increasing uncertainty over its future which has unsettled markets and businesses.

May hopes that if she forces her deal through parliament, those firms who have put off investment decisions and brought in contingency plans for fear of trade drying up will be able to move forward again.

She says her deal will offer close economic ties with the EU, enable Britain to trade freely with the rest of the world while meeting one of the demands of voters to end free movement and reduce immigration into Britain.

But the compromise deal, which ministers openly say is not perfect, has done little more than strengthen opposition at the hardline edges of the debate.

Brexit supporters have vowed to vote down the deal and threatened to bring May down. Pro-EU lawmakers have also said they will vote against it, and some, especially in the main opposition Labour Party, will also try to unseat her.

The DUP’s anger over the deal has even seen the socially conservative party support a bid by leftist Labour to bring contempt proceedings against the government.

May’s job looks to be on the line.

During the five-day debate, the strength of that opposition should become clear when lawmakers make speeches or try to amend, or change, May’s motion to approve the deal to try to alter or delay Brexit, or derail it altogether.

Labour has already submitted an amendment designed to ensure that the government cannot, under any circumstances, leave the EU without an exit agreement, and must consider all alternatives to doing so.

Pro-EU lawmakers have also put forward another amendment to block the deal and to rule out a no-deal Brexit.

But her team is sticking to the script.

“This deal ... is the best way I firmly believe of ensuring that we leave the European Union on 29 March,” Attorney General Geoffrey Cox told parliament.

“This is the deal that will ensure that happening in an orderly way with legal certainty.”

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Brexit - EU starts infringement process for UK's failure to act in good faith

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As anticipated, the European Commission today (1 October) has sent the United Kingdom a letter of formal notice for breaching its obligations under the Withdrawal Agreement. This marks the beginning of a formal infringement process against the United Kingdom. It has one month to reply to today's letter.

The Withdrawal Agreement states that the European Union and the United Kingdom must take all appropriate measures to ensure the fulfilment of the obligations under the Agreement (Article 5). Both parties are bound by the obligation to cooperate in good faith in carrying out the tasks stemming from the Withdrawal Agreement and must refrain from any measures which could jeopardise the attainment of those objectives.

The UK government tabled the UK Internal Market Bill on 9 September the Commission consider this a  flagrant violation of the Protocol on Ireland Northern Ireland, as it would allow the UK authorities to disregard the legal effect of the Protocol's substantive provisions. Representatives of the UK government have acknowledged this violation, stating that its purpose was to allow it to depart in a permanent way from the obligations stemming from the Protocol.

The UK government has failed to withdraw the contentious parts of the Bill, despite requests by the European Union. By doing so, the UK has breached its obligation to act in good faith, as set out in Article 5 of the Withdrawal Agreement.
Next steps

The UK has until the end of this month to submit its observations to the letter of formal notice. After examining these observations, or if no observations have been submitted, the Commission may, if appropriate, decide to issue a Reasoned Opinion.

Background

The Withdrawal Agreement was ratified by both the EU and the UK. It entered into force on 1 February 2020 and has legal effects under international law.

Following the publication by the UK government of the draft ‘United Kingdom Internal Market Bill' on 9 September 2020, Vice-President Maroš Šefčovič called for an extraordinary meeting of the EU-UK Joint Committee to request the UK government to elaborate on its intentions and to respond to the EU's serious concerns. The meeting took place in London on 10 September between Michael Gove, Chancellor of the Duchy of Lancaster, and Vice-President Maroš Šefčovič.

At the meeting, Vice-President Maroš Šefčovič stated that if the Bill were to be adopted, it would constitute an extremely serious violation of the Withdrawal Agreement and of international law. He called on the UK government to withdraw these measures from the draft Bill in the shortest time possible and in any case by the end of the month of September.

At the third ordinary meeting of the Joint Committee on 28 September 2020, Vice-President Maroš Šefčovič again called on the UK government to withdraw the contentious measures from the bill. The UK government on this occasion confirmed its intention to go ahead with the draft legislation.

The Withdrawal Agreement provides that during the transition period, the Court of Justice of the European Union has jurisdiction and the Commission has the powers conferred upon it by Union law in relation to the United Kingdom, also as regards the interpretation and application of that Agreement.

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Irish foreign minster says EU-UK trade deal breakthrough possible

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There is a window of several weeks for Britain and the European Union to reach a breakthrough in trade talks before Britain’s upper house of parliament considers the contentious Internal Market Bill, Ireland’s foreign minister said, writes Conor Humphries.

“I believe there is a window for negotiations that I hope the two negotiating teams, in particular the UK, will take in terms of giving the signals that are necessary to move this process into a more intensive phase,” Simon Coveney (pictured) told parliament. “It is possible to get a deal here.”

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As Brexit talks intensify, banks see sharply higher risk of no-deal exit

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The chances of Britain leaving the European Union without a trade deal have risen dramatically in the last three months, according to major investment banks, most of which now see the probability of such an outcome at 50% or higher, writes Elizabeth Howcroft.

Britain left the EU in January but is currently in a status-quo transition period, which ends on 31 December irrespective of whether or not a deal is agreed. On Monday (28 September), the two sides started a decisive week of talks, with one diplomat noting an improvement in “mood music”. But all six banks which participated in a Reuters poll in June are more pessimistic, with most citing UK legislation that would breach parts of the withdrawal agreement signed with the EU in January. The move has drawn threats of legal action from the EU.

The most dramatic re-assessment was by Societe Generale, which said the bill “gravely damaged” trust. The probability of no-deal now stands at 80%, according to the bank, which had assigned a 17% chance in June.

Germany’s Commerzbank, meanwhile, puts the probability of no-deal at slightly below 50%, versus 10% in June, a scenario which strategist Thu Lan Nguyen warns could hit the pound hard, possibly resulting in depreciation of “something around 10%”. The currency has fallen around 5% this month but with three months still to go before the transition period expires, options markets are pricing in more volatility ahead.

ING now believes the risk of no deal is 50%, up from 40% three months ago. Only a small proportion of this risk premium is priced by sterling, according to economist James Smith, who sees the currency possibly heading towards parity versus the euro.

In a more detailed forecast, Standard Chartered stuck with a one-in-two chance of an agreement by the end of the year but also saw a 20% chance of the transition period being extended and a 30% chance of exiting without a deal. JPMorgan, not included in the Reuters poll, expects the worst-case outcome to wipe at least three percentage points off UK gross domestic product in 2021. It puts the risk of no-deal at one-in-three but told clients that “with brinkmanship part of the process it may appear higher than that before agreement is reached”.

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