EU-UK deal allows Cameron to campaign against Brexit

Subject The package of reforms on a new EU-UK relationship. Significance The agreement between the United Kingdom and its EU partners sets the stage for the UK referendum on EU membership, which Prime Minister David Cameron has set for June 23. Cameron said he had negotiated new terms that would allow the United Kingdom to remain in the EU. Impacts The deal bolsters the campaign to remain in the EU, but the referendum outcome is still highly uncertain. The deal will only come into effect if the outcome is for remaining, forestalling a second referendum for better terms. If the outcome is for leaving, a new relationship with the EU would have to be negotiated during a two-year transition period. It would also probably lead to a second Scottish independence referendum and UK break-up.

Significance The process has been plunged into further uncertainty by the outcome of the June 8 UK general election, which has sparked renewed debate about what kind of Brexit the United Kingdom wants and what kind of future economic relationship with the EU it should seek to negotiate. Impacts The UK government’s weakness is a cause for concern elsewhere in the EU, raising fears that it may not be able to compromise on key issues. Many businesses will begin implementing strategies for dealing with Brexit early next year, before knowing the outcome of the negotiations. Pressure for a lengthy transition period will continue to build. The political turmoil and slowing economic growth in the United Kingdom may increase support for EU membership elsewhere in the bloc.


Subject UK-EU trade talks. Significance The United Kingdom will leave the EU on January 31, 2020, but will abide by EU rules as part of the transition period, which runs to December 31, 2020. During this limited period of time, London and Brussels will seek to negotiate a permanent trading relationship. While the transition deadline can be extended, the UK government has committed not to seek an extension. Impacts The impact of no trade deal or a 'thin' one may force the UK government to increase taxes in order to meet spending pledges. UK financial services will rely on an equivalence deal with the EU; London hopes to agree this by mid-2020. The EU’s future trade policy will focus on having stronger sanction powers as well as legal ones for those that unfairly undercut EU firms.


Significance Cameron is gauging his counterparts' positions before presenting his reform agenda at the June 25-26 EU summit. He seeks the other EU states' support for a package of reforms that will enable him to claim that he has secured a better deal for the United Kingdom in the EU, and thus campaign for an 'in' vote in the EU membership referendum he has promised by end-2017. Cameron is seeking to build backing for some reforms that would apply across the EU, rather than only seek special treatment for the United Kingdom. However, some of the reforms he has mooted are unacceptable to many other EU states. Impacts The greatest impact of the reforms that Cameron secures could be on the scale of the split in the Conservative Party over EU membership. Some of Cameron's reforms could bring important changes across the bloc, as well as set precedents for other member states. The UK renegotiation will generate bargaining between member states that will affect their negotiation of other issues.


Significance With the 2014 Scottish independence referendum and 2015 UK general election behind them, parties in Scotland are starting to focus on the May 2016 Scottish Parliament elections. Impacts The Conservatives' Scottish Parliament vote share is likely to rise at Labour's expense, through an appeal to hardcore unionists. In the UK EU membership referendum, the SNP will run its own campaign against leaving the EU ('Brexit'). A UK vote for Brexit, with Scotland voting for continued EU membership, would trigger a second independence referendum. The likely renewal of the Scotland-based UK Trident nuclear system, which the SNP opposes, could also be a pretext for a second referendum. Given the 2014 'no' vote, a second Scottish referendum could be more constitutionally controversial than the first.


Significance The next challenge for UK Prime Minister Theresa May is to reconcile the requirements laid down by the EU and domestic political pressures in progressing the Brexit talks still further. Impacts The EU’s proposals would not allow the United Kingdom to sign trade deals before the end of transition. A Canada-style trade agreement would damage the United Kingdom’s services sector. Failure to negotiate a transition period within the next few months could lead to some companies beginning to relocate.


Subject The impact of Brexit on the UK agricultural and food and drink sectors. Significance Agriculture and the food and drink sector will be among those industries most affected by Prime Minister Theresa May’s decision to pursue a ‘hard’ Brexit. It is uncertain to what extent domestic agricultural policies will replace the support and funding mechanisms of the EU. The food and drink sector will have to adjust to the possibility of future tariffs. Impacts Scottish independence would hit the drink sector, with Scotch whisky alone accounting for almost one-quarter of UK food and drink exports. The burgeoning UK wine industry could be damaged if the informal knowledge transfer from French wine experts slows down. The United Kingdom and the EU will need to cooperate on the issue of access arrangements for fishing.


Subject The government's preferred timetable for the UK referendum on EU membership. Significance The EU membership referendum will be a major event in both EU and UK political and commercial life. Prime Minister David Cameron's official position is that the poll could take place any time before end-2017. He is less concerned about the likely outcome of the referendum, which he is confident will produce an 'in' result, than about achieving a margin in favour of membership that decisively settles the question and minimises the damage to the Conservative Party arising from the process. Impacts The most likely referendum date is September 15, 2016. This timetable would make the key renegotiation period the first half of 2016, when the sympathetic Dutch government chairs the EU Council. The German government would also prefer the UK referendum to be dealt with relatively quickly.


Subject Anglo-French agreement to fund the next phase of their collaborative drone programme. Significance The accord announced at the Amiens summit on March 3 between French President Francois Hollande and UK Prime Minister David Cameron commits the two countries to investing 1.9 billion euros (2.1 billion dollars) in the production of Europe's most advanced combat drone. A sophisticated drone programme will be vital to both countries' industrial bases, especially as neither currently has plans to develop a next generation fighter aircraft to replace the Typhoon or Rafale. Impacts Closer industrial cooperation between Europe's most advanced defence powers will strengthen European capabilities. The project will underpin growing cooperation in the defence and security field between the United Kingdom and France. A possible Brexit could affect the relationship, and the United Kingdom might lose out on an increasing EU R&D budget devoted to defence.


Significance This comes after the Telegraph reported last week that Soros had donated 400,000 pounds to the group. There is an ongoing debate as to whether the United Kingdom will in fact leave the EU. Central to it is the question of whether the UK government can unilaterally revoke its decision to trigger Article 50 in March 2017. Impacts Voters would be less likely to support the revocation of Article 50 if the Council imposed conditions that made membership less attractive. Revoking Article 50 and remaining in the EU would reduce damage to the UK economy. If Article 50 is revocable, Eurosceptic governments could be tempted to use the prospect of triggering it as leverage in EU negotiations.


Subject Final stages of Brexit negotiations. Significance There has been much talk of the possibility of extending the Article 50 process to allow more time for further negotiations, and possibly a second referendum or a general election. With under 150 days to go until the United Kingdom is due to leave the EU, there is much debate about the circumstances under which a delay might be required and, if so, how it could be achieved. Impacts A new government may use an extended transition period to change or prevent Brexit. Calls of a second referendum will deeply polarise UK political opinion. The EU could decide to block an extension to the transition, heightening fears of a no-deal Brexit.


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