The UK and EU have resumed face-to-face Brexit trade talks in London today, as the deadline to strike a deal moves ever closer. The transition period is due to end in just over a month, but the EU’s chief Brexit negotiator Michel Barnier claimed that talks would need to be done with “patience and communication” if both sides are able to land a deal. Negotiations were halted last week after a member of the EU’s team tested positive for coronavirus.
Tweeting on Friday, Mr Barnier said that the “same significant divergences persist” between the UK and the EU.
Both sides have been in deadlock for months over issues such as fishing rights, governance of the agreement, and the so-called “level playing field” conditions, which would prevent unfair competition by slashing standards or boosting state subsidies.
Downing Street insists that Britain is not afraid of leaving the bloc without an agreement – but business leaders are fearing a “dual impact” from both the coronavirus pandemic and a no deal Brexit.
As tensions are set to rise, a leaked memo reveals how the EU wanted to control Britain’s tax policies after the transition period.
The document was written by the European Parliament’s TAX3 secretariat following a meeting with the Brexit Task Force, the EU negotiating team led by Mr Barnier, in 2018.
EU’s mask slips as leak documents expose bloc’s attempt to control UK’s tax policies
The EU’s chief Brexit negotiator Michel Barnier
It stated: “The objective is that the UK will abide by the tools adopted at EU level to fight tax evasion/avoidance.”
The EU desire for alignment on tax reflected a fear in Brussels that Britain could become a Singapore-style low-tax economy after Brexit and a magnet for business and investment.
Although it has no current power over the UK’s tax, the EU made no secret of its desire to clamp down on low-tax member states, including Ireland, and has long called for a universal corporation tax rate.
Earlier that year, former Chancellor of the Exchequer Philip Hammond told a German newspaper that if Britain was denied access to European markets it would “change our economic model to regain competitiveness”.
John Longworth, co-chairman of Leave Means Leave said: “These leaked documents confirm what leavers have feared all along, that the EU will stop at nothing to stifle Britain’s competitiveness post Brexit.
“An agreement on tax provisions would of course also bind us to future regulations. If they are keeping this secret, what else are they planning for us? If Chequers wasn’t bad enough, it’s clear Brussels expects us to cave in further. We are now facing a complete sell-out.”
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EU-UK trade talks
ERG chairman Jacob Rees-Mogg
Jacob Rees-Mogg, chairman of the European Research Group of Tory backbenchers, said: “The worrying thing about this is that the EU wants more power over our taxes once we leave than when we were a member of the EU.
“This is part of a punishment Brexit and only serves to reiterate why it’s so important we leave. We need to free ourselves from such an uncompetitive structure before it is too late.”
The leaked paperwork was drawn up following a meeting with the Brexit Task Force on October 11, 2018.
TAX3 is the EU’s special committee on taxation, looking at financial crimes, tax evasion and tax avoidance.
The wording of the minutes of the meeting suggested Brussels would have tried to impose EU tax policies on the UK and its overseas territories.
Describing Theresa May’s Chequers proposal as “wishful thinking”, the documents said: “According to the Commission, it is not feasible that the political declaration will not include taxation provisions.”
The paperwork added: “The mandate for the negotiating team is to define and create a level playing field, taking into consideration four main areas, of which one is taxation.
“The objective is that the UK will abide by the tools adopted at EU level to fight tax evasion/avoidance, namely Code of Conduct on Business Taxation, Exchange of Information Directives (DAC) including Country by Country Reporting between tax authorities, Anti-Tax Avoidance Directive (ATAD).”
Economic loss per EU state in case of a no deal Brexit
Referring to Britain’s overseas countries and territories (OCTs), the document added: “The intention is that they commit to continue to align with EU standards, including for their OCTs.”
It is not the only time the EU was accused of not negotiating in good faith.
A recent report by a civil servant close to the talks reveals how the bloc is seeking to override the legal integrity and sovereignty of the UK through the “innocuous sounding” issue of safety in the Channel Tunnel.
Caroline Bell explained for Briefings for Britain: “Political commentators appear to have overlooked a significant decision by the European Council on September 9, which opens up a new front in the Brexit war.
“This time the assault is underground as well as underhanded, with the EU seeking to override the legal integrity and sovereignty of the United Kingdom through the innocuous sounding issue of safety in the Channel Tunnel.”
The European Council’s decision is quoted as saying: “The EU is working on legislation to ensure the safe and efficient operation of the Channel Tunnel railway connection between continental Europe and the United Kingdom (Channel Fixed Link) after the end of the Brexit transition period.
“Today, the Council’s Permanent Representatives Committee agreed on a negotiation mandate on two proposals aimed at maintaining a single safety authority, which would continue to apply the same set of rules over the whole infrastructure, including in its section under UK jurisdiction.
“Under the Council mandate, France will be empowered to negotiate an amendment to the Canterbury Treaty and the EU railway safety and interoperability rules will be amended so that the Intergovernmental Commission can be maintained as the safety authority competent for the application of EU law within the Channel Fixed Link.
“The draft regulation amending the safety and interoperability provisions will be split into two draft regulations, in order to amend the Statute of the European Court of Justice in a manner that respects the Court’s prerogatives while avoiding a delay in the start of the negotiations.”
Ms Bell claimed this is a power grab by the EU, which seeks to usurp a bilateral arrangement that is sound in international law in order to be able to impose EU regulation and the jurisdiction of the European Court of Justice in the UK.
Railway safety is admittedly an unusual place to start a legal coup, the civil servant noted.
However, the potential for imposing new EU technical standards, restrictions, conditions of carriage, health and safety rules, employment laws for train crew etc. is huge.
She concluded: “It is almost inevitable that such rules would be fixed to lock British companies out of the market to maintain and replace rolling stock and infrastructure. Technical standards are very effective as non-tariff barriers, and cover every tiny element of the railway – the scope for a very unlevel playing field against British firms is doubtless why the EU wishes to interpose itself into a treaty where it has no right and no need to be.
“The British government should rely on the no deal position for the Channel Tunnel and refuse to divert from international law – there is rather a nice irony in that, in view of the howls from Brussels about the Internal Market Bill.
“Agreeing to renegotiate the Treaty of Canterbury to enforce new EU law and the jurisdiction of the ECJ over the Channel Tunnel would be to repeat the Trojans’ error in flinging open the gates of Troy to the Greeks’ infamous wooden horse.
“The EU must not be allowed to create another version of the Northern Ireland Protocol under the white cliffs of Dover.”