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Original title: In-depth interpretation of the Brexit III agreement 丨 There is little suspense in the final approval of the parliament. Strength determines status. Britain is not afraid of “financial disaster”
Brussels hopes to build a deep capital market to reduce its dependence on London, but there are not enough strong players in the EU, which will put London at a disadvantage.
On December 30, members of the upper and lower houses of the British Parliament will be summoned for the legislative debate and vote on the “EU-UK Trade and Cooperation Agreement” officially signed on Christmas Eve. Although the Liberal Democrats and the Scottish National Party (SNP) expressed their intention to vote against, Keir Starmer, the leader of the largest opposition Labor Party, has promised to support the Conservative Party. The Conservative Party already has an 80-seat majority in the House of Commons. With the support of the Shanghai Labor Party, the agreement is expected to be approved within one day on Wednesday as scheduled, paving the way for the new agreement to take effect on January 1 of next year.
At the ambassadors meeting in Brussels on the 28th, the 27 EU member states have collectively adopted the agreement. The European Parliament has postponed the vote until February or March next year, when the formal EU approval process will be completed.
In early trading on the 29th, the FTSE 100 index hit a 9-month high, and the FTSE 250 index also hit a 10-month high.
As British Prime Minister Boris Johnson has achieved what was previously considered impossible, the perceptions of many people are changing. The turn of the new president of the Confederation of British Industry (CBI), Lord Karan Bilimoria, is very typical. The leader of the UK’s largest manufacturing lobby group previously strongly supported the stay-in-Europe stance and once called for a second referendum. Now, he publicly praised Johnson’s trade deal with Brussels as a stepping stone to the recovery of the British economy. He said the torture of waiting for a deal or not reaching a deal is over, and he called on the government to take bold steps to formulate policies more attractive to foreign investors, lower taxes to promote growth and stimulate exports.
Billy Moriah was born in India, moved to the UK as a student in 1981 at the age of 19 and managed to start a business. He has been reminded that he will never get the highest position due to his immigration status and will face racial discrimination due to Brexit.
The deal faces the ultimate torture
The European Research Group (ERG), a conservative organization made up of Eurosceptics, has convened a group of experts to carefully study the details of the 1,246-page Brexit trade deal with a magnifying glass, which will be on Tuesday afternoon local time. Make a decision.
News at the time of writing showed that ERG’s senior members are broadly supportive of the deal but still have doubts about the future of fishing rights and the financial industry.
The former shadow finance minister from the opposition Labor Party and former shadow cabinet ministers and other senior MPs also urged Labor leaders to change their minds and oppose the Brexit deal. Collectively, they issued a statement in which they warned: “The agreement will greatly reduce the relationship between the UK and the European Union. It aims to open the door to rampant economic deregulation, leading to the loss of rights and protections for work, the environment, food standards and many other aspects “.
Some professionals also questioned that while Johnson claimed that the Brexit deal allowed the UK to regain control of the law and fate, and “regained control of every detail of the law in a completely unfettered way”, the reality behind is the from Great Britain and Europe. The Trade and Cooperation Agreement (ATT) will introduce a series of new mechanisms and the power to make legally binding decisions.
At the top is the Association Committee (PC), a political body made up of representatives of the European Commission and British government ministers. The committee will consider TCA “any matter related to implementation, application and interpretation” and, in some cases, even the right to modify the agreement itself. The two sides also established a large number of technical committees: a trade association committee to assist the association committee, under which there are 10 special trade committees, involving issues such as rules of origin and services; There are also 8 special committees responsible for aviation and road transport. In addition, 4 working groups will be formed to deal with issues such as automobiles and spare parts and pension coordination.
Some legal professionals are concerned that this means that the future of the UK and the European Union will be caught up in several lengthy negotiations.
The British government is trying to appease serious discontent in the fishing industry. The latter believes that the government has given up too much of its original position on this issue, sacrificing the interests of its own fishing industry to win concessions in other areas of the EU. Under the agreement, within the next five and a half years, the European Union will gradually abandon 25% of its catches in the exclusive waters of the United Kingdom, which is well below the original British requirement.
The UK Cabinet Office Secretary (Michael Gove) announced on the 28th that the government will develop a major investment plan for fisheries in the near future to help it make the most of the benefits of Brexit.
“No country or very few countries catch all the fish in their waters,” he wrote in an article published in local media in Scotland. “Of course this phased process gives us the opportunity to increase the size of the fleet and invest. For our coastal communities, of course, we will have the opportunity to further increase the (catch) quota.”
Browne (Anthony Browne) used to work for Morgan Stanley and also served as executive director of the British Bankers Association. He is now a member of the Conservative Party in South Cambridgeshire and a member of the Finance Ministry Select Committee in the House of Commons. He claimed he was not a fan of the current prime minister, and even hated him a bit, but had to praise Johnson’s “political genius” for completing the Brexit deal. In his view, Johnson made good use of the deadline, changing the deadline from an objective of oppressing himself to a positive factor for others, including political opponents, to accept the deal. Therefore, although the fishing rights that the United Kingdom recovered were worse than expected, and much lower than the former leader of the Brexit party, Farage, the representative of the hard-line Brexit faction assured after the signing of the agreement that “the war is over, “and Johnson is People who” get Brexit. “
“When someone is lucky all the time, it should be considered a skill,” Brown said.
Financial crisis?
In addition to fisheries issues, questions about the deal are more focused on the financial industry. The rules laid down by the Brexit deal are primarily aimed at physical trade, and there is no deal for the service industry, which accounts for 80% of the British economy, which also accounts for 50% of total UK exports. London is the largest financial center in Europe and one of two global financial centers on par with New York. The enormous damage that can be caused to the state of the City of London has always been one of the UK’s top Brexit concerns.
Johnson also admitted that in the financial industry, the deal “may not be as good as we want.” However, Gove defended that the future Brexit deal may trigger a wave of deregulation in the financial industry.
British Finance Minister Rishi Sunak also explained that the purpose of the UK-EU memorandum of understanding on the financial industry is to strengthen agreements on the same system so that British banks and other financial institutions can trade on a regulatory base. It is as if they are still in the EU.
Sunak said he expects the UK and the EU to reach a planned MOU on this issue in the coming months, which may overcome many hurdles, and the current Brexit deal provides a “stable regulatory cooperation framework” as a guarantee.
For those who still have firm confidence in the UK financial industry after Brexit, the most important thing about a country’s trade performance is the quality of the goods and services it offers, not the trade deals it negotiates. The European Union’s single commodity market is much more advanced than the services market, but this has not prevented the UK from achieving a huge surplus in trade in services. This is based on changes in the economic structure of the UK and its high competitiveness in the international service industry.
Research by the New Financial think tank believes that London will continue to be a major financial center for the foreseeable future and the largest financial center in the European time zone.
The EU’s restrictions on London in the financial sector can harm the EU’s own financial stability. One example is that Brussels previously agreed to terminate the current agreements for the settlement of euro-denominated derivatives, which has been dominated by the London Clearing House. In the short term, due to the small possibility of financial mergers around an EU hub and the development of the EU’s own capital market is still underdeveloped relative to London, transfers will be hampered.
Furthermore, British law remains the universal language of international contracts and an important basis for courts to resolve cross-border disputes.
Robert Ophele, president of the French Financial Market Authority (AMF), recently urged the European Union to adjust its rules to avoid penalties for EU bank branches that do business in London.
Under the EU “Derivatives Trading Obligations (DTOs)”, EU bank branches located in the UK must use EU-based trading platforms, or use platforms in countries / regions such as the US. That have been approved by the EU. UK rules oblige UK counterparties to trade on UK-approved platforms, so cross-channel transactions are not practical.
The European Securities and Markets Authority (ESMA) stated that the conflict is based on how the UK applies its own rules and will only monitor the market. Ophir warned the EU that doing so would cause irreparable harm to the EU’s own financial institutions. Since the majority of transactions covered by EU rules are concentrated in London, around 70% of transactions handled by EU branches in London are at risk of being transferred to the United States.
Ofir said that Brussels wants to build a deep capital market to reduce its dependence on London, but trying to achieve this goal with derivatives from scratch will be detrimental because there are not enough strong players within the EU, which as a result, the European Union is at a disadvantage compared to London. Ophir also warned that since the UK has made it clear that it will become “flexible and agile” as of January 1 next year, the EU needs to strengthen competition in financial regulation.
(Author: Yan Division edit: and good)
