CCCTB – Bye, Bye Irish Veto?

Corporate tax avoidance is a high salient political issue in Brussels.

This is largely a response to demands from citizens across the EU to ensure that large MNC’s, particularly from the US, pay their fair share of taxes when operating in the EU single market.

Ireland, as we all know, has been called out, and challenged on this issue.

The companies that the EU have in mind are large Silicon Valley firms, and finance firms operating in the shadow banking sector.

The Commission have recently called for the introduction of a common consolidated corporate tax base (CCTB), to be introduced over two stages. They are also keen to introduce a financial transaction tax (FTT).

These are directly aimed at tackling corporate tax avoidance.

Ireland has said it would veto any attempt to introduce either of these at the EU level. But it was Britain that was most vocal about it.

It’s therefore worth noting that Jean Claude Juncker stated in his state of the union address this morning that he is in favour of moving toward qualified majority voting (QMV) on decisions related to the CCCTB and the FTT.

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A post-Brexit EU is going to be a very different terrain for Ireland.

QMV will be used more often. This empowers German and French interests in the European Council, and the numbers stack up to ensure they get what they want.

Is the writing on the wall for Ireland’s veto against the CCCTB?

Full speech: http://europa.eu/rapid/press-release_SPEECH-17-3165_en.htm

 

 

Author: Aidan Regan

I'm an Assistant Professor at the School of Politics and International Relations, University College Dublin (UCD), and Director of the Dublin European Research Institute (DEI). My research is primarily focused on comparative and international political economy.

33 thoughts on “CCCTB – Bye, Bye Irish Veto?”

  1. You might like to note Article 15.4 of the TEU. “Except where the Treaties provide otherwise, decisions of the European Council shall be taken by consensus” i.e. unanimously.
    A number of particularly sensitive policy areas, touching mainly on core issues of national sovereignty, including the right to levy taxes, has been subject to decision by unanimity since the EU’s inception. The Lisbon Treaty introduced the concept of “enhanced cooperation” which allowed a group of EU countries to agree unanimously to proceed if they wished. If I am not mistaken, it is this provision which underpins the efforts to agree an FTT. If there has been no agreement on this among an ostensibly like-minded group of countries, how likely do you think it is among the EU27, with or without the presence of the UK?
    In any event, the “veto” is an invention of the Irish commentariat. No member state can operate on the basis that whatever emerges from discussion, it will veto it. This would be contrary to the principles that Ireland signed up to when it joined the EU.
    Not that the Irish corporation tax is safe from attacks. Anything but! But let’s meet them when they actually happen.

    1. @DOCM

      Thanks! Yes. I agree.

      Even if there was a move to introduce QMV, it would have to get unanimous approval, so at that point, Ireland could “veto” the attempt to even discuss moving to QMV. But as you say, real politics rarely works like this. Ireland would lose too much credibility if it were to adopt a gung-ho British-style approach.

      I think CCCTB will happen, eventually, and Ireland is better off accepting this, and then using their leverage to bargain on other policies that are far more important.

  2. According to RTE Radio 1 news at 3.00pm, Mr. Juncker’s speech, as delivered to the European Parliament, dropped the reference to QMV for a CCCTB previously included in the written version. Recognising a political reality, perhaps?

    1. @VMcD Or simply an oversight? He was speaking in German and difficult to hear because of the interpreter’s voice-over.(The interpreter did not mention the CCCTB). It hardly matters. The issue is that of using QMV to decide matters in relation to taxation. Had the entire paragraph been dropped, that would have been really news. (The national broadcaster is dismal when it comes to reporting on EU business).

      1. Posted a response to your comment earlier, but machine chewed it up!

        Key points: 1. ‘Check against delivery’ is standard jounralistic practice. 2.As shown in copious literature on European public sphere, all member-state media systems show national orientation in coverage of EU affairs. 3.Irish media coverage of EU, including RTE, has distinctly improved in quantity and quality, especially in wake of economic ‘crash’; especially when compared with UK which has always been an outlier, even among larger m-s.

  3. @Aidan Regan. That’s not how it works. Interests in one area cannot be traded for interests in another.The era of the “package deal” (except in clearly defined areas of the common policies of agriculture and fisheries) is long gone. The reaction of the commentariat in Ireland with regard to any of the national sacred cows, the 12% tax rate in particular, is that of Sergeant Wilson in Dad’s Army.
    Juncker is an old hand at this game.Luxembourg, after all, is also in the firing line.Its government remains serene.
    I checked the FTT legal base. It is an enhanced cooperation. From the recitals;

    “The proposal and variants thereof were extensively discussed in the meetings of the Council which started under the Polish Presidency[6] and continued at an accelerated pace under the Danish Presidency, but failed to get the required unanimous support because of fundamental and un-bridgeable differences amongst Member States.

    At the Council meetings of 22 June and 10 July 2012, it was ascertained that essential differences in opinion persist as regards the need to establish a common system of FTT at EU level and that the principle of harmonised tax on financial transactions will not receive unanimous support within the Council in the foreseeable future.

    It follows from the above that the objectives of a common system of FTT, as discussed in the Council upon the Commission’s initial proposal, cannot be attained within a reasonable period by the Union as a whole.

    On the basis of the request of eleven Member States (Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia) the Commission submitted a proposal[7] to the Council for authorising enhanced cooperation in the area of financial transaction tax.”

    One state has since dropped out. I forget which one. The minimum number of states is 9 (a figure which, one assumes, will have to be adjusted when the UK leaves. “Some progres”s is continually being reported.

    1. Glad you mentioned the moral argument.
      It seems the green jersey does not do morals.
      Ireland is against FTT.
      Ireland is against CCCTB.
      Ireland is against social housing.
      It’s not a pretty postcard picture.

      The issue is already being framed to narrowly.
      The fundamental question is when will Ireland’s corporate sector, native and foreign, start to pull it’s weight in society.
      If it takes a European intervention to achieve that, then the blame lies fully with the corporate sector, and craven governments that have given the corporate everything with little in return.

  4. Even in his rare sober moments, Juncker is a fool and its largely because of him that Brexit passed.

    If implemented, these proposals scupper any chance of Britain reversing its decision to exit the EU (which would be the best solution for Ireland).

    Although I’d rarely agree with him, Nigel Farage made a very good speech yesterday when he pointed out that Juncker (and Merkel, Macron et al) have learned nothing from Brexit.

    Ireland needs to veto every proposal that threatens its interest. It should make allies with countries like Poland and Hungary who oppose the centralisation of government in the EU and should certainly vote against any sanctions that Merkel and Macron wish to oppose on them for their failure to Islamisise.

    On a different note, JTO strikes again. I’ve been posting for years here that the number of empty houses was greatly exaggerated.

    xhttps://www.irishtimes.com/news/politics/number-of-vacant-homes-may-be-grossly-overstated-1.3220063

    1. Juncker and other EU bureaucrats bear part of the responsibility for Brexit. Looks like they will never learn. They are cocooned in a dream world. It is time to stand up to them. Not an inch!

      We have the spectre of the French lecturing Ireland on multinational taxation. Their own system is not exactly transparent. Time to hammer home this point to them!! The French economy is riven with inefficiency. The lily livered French government will likely chicken out of the reforms necessary. Much easier to bully a small country like Ireland on taxation.

      We live on the periphery of Europe and need a very competitive taxation system to compensate. Under no circumstances should we concede. It is very regrettable that we have some left wing commentators and extreme left politicians in Ireland in the same camp as the French and Germans who want to decimate our receipts from company taxation.

      The Brexiteers can point to CCCTB and FTT as evidence of Brussels attempt to erode the sovereignty of national governments on economic policy. Unfortunately, they are correct. It is a propaganda coup for them and may solidify British public opinion behind Brexit.

      Are Junker and the EU bureaucrats prepared to ignite anti EU public opinion in Ireland and risk losing another EU member country? A destruction of our competitive taxation system will see to that!

  5. Ah, the unparalleled statesmanship of Mr Juncker again.

    Remember “Why are you here?” after the vote, and when asked on camera when he the UK should invoke Article 50 stating “If the next Prime minister is from the Brexit side it will be seconds, if from the Remain side, days”

    He is the gift that keeps on giving for the hard line Brexiteers – and so timely an intervention. Gone down like a lead balloon even among Remainers in the UK.

    1. See my reply to Dan McLaughlin below.This is about relations between states in a set international context to which all countries involved, the UK included, have freely signed up. The UK has been going around for decades with its heart on its sleeve. Making Juncker, or any other individual, apart from Cameron, responsible for Brexit, does not stand up to serious examination. Juncker was appointed against the declared opposition of the latter. This did not happen by accident.Given his treatment by the UK media, Juncker is restrained in his language.He may not be everyone’s cup of tea but compared to the collection currently in charge of the destinies of the UK, he bestrides Europe like a colossus.

      1. @docm

        The UK electorate “freely signed up” with about as much understanding as they vote to leave – ie very little.

        Who made Junker “responsible” for Brexit? Lets put it this way, he hasn’t helped, both in terms of optics and substance. He has been the accidental ally of the Brexiteers.

        1. @grumpy

          Juncker made a good choice in appointing Michel Barnier as the chief negotiator.

          Cameron had opposed Juncker’s appointment as Commission chief but you hardly believe that charming the Brexiteers would make any difference? The EU holds all the key cards to play and Barnier need only wait for the British bluster to give way to cold reality.

          1. @MH

            Nobody sensible would suggest that Juncker charming the Brexiteers would make a difference. What mattered before the referendum, and may yet, is his impact on everyone but the Brexiteers.

            Just like with Camilla, and Mary Archer, sometimes less is more.

            On recognising who holds the cards I think I have form on spotting the lack of leverage of states with respect to European institutions – the Article 50 procedure being one of them.

  6. If Ireland loses its MNCs (and I’m not saying they’re here SOLELY for tax reasons, but it is a hugely significant factor, and furthermore CCCTB can have unanticipated consequences, including incentivising increased tax competition and encouraging movement of real activity rather than ‘ paper profits’), expect Irish support for continued membership to weaken significantly. The EU will not want further ‘fraying at the edges’ and this will be a factor to be taken into account..

  7. I’m surprised there hasn’t been a post on Mr. Coffey’s excellent, comprehensive and sensible report on Irish corporate taxation:
    http://www.finance.gov.ie/wp-content/uploads/2017/09/170912-Review-of-Irelands-Corporation-Tax-Code.pdf

    It provides the context in which an Irish response will have to be formulated to these noises emerging from Brussels. However, it appears that the regular seasonal and largely windfall gains of the Leprechaun Economy look set to continue though the scale may decline and the harvesting will have to be put on a more solid and transparent footing.

    In addition, and partly because the Brits have decided to take themselves outside, it looks like the traditional Franco-German motor of the EU is being re-fired with the other four of the original six broadly rowing in. Even the Italian economy is starting to pick up a little. The Dutch are likely to be their usually picky selves and share some of this pickiness with the Scandinavians, but a way forward will be secured and the smaller east European members will come on board. Poland, like Ireland in the past, having exported so many of its young people with energy, hope and enthusiasm, is temporarily in thrall to conservative, blinkered craw-thumpers. And the Magyars seem to have this knack of being invariably on the wrong side of history for period of time. But this too will pass.

    The EU may often be accused of having a formal democratic deficit, but there can be no doubt that those exercising power and influence are not responding to the votes of many citizens across the EU expressing varying degrees of discontent. And the push to force the aggressively tax-avoiding MNEs to pay a fairer share – however that might be defined – is part of this response.

    Ireland may have been successful in elevating its concerns about the “border” to be among the three issues requiring resolution before negotiations on the UK’s future relationship with the EU can begin, but such hardwon gains can evaporate very quickly if seeking to sustain these gains runs in to conflict with a key interest of one or more of the major players. We have seen how quickly our sovereignty evaporated when that happened in 2010. Ireland’s corporate tax regime is in a similar category.

    It won’t happen of course, but it would be prudent to plan for a significant reduction in these Leprechaun Economy gains and to begin to curtail the Great Redistribution that it partly finances by tackling the parallel phenomena of pervasive rent-seeking and low levels of participation in the formal economy whose impacts the Great Redistribution is required to ameliorate.

    When one considers that the triple blow-outs of 2008 actually consolidated rather than encouraging effective reemedies of these malign phenomena, it appears that only the “Great Levellers” described in Walter Scheidel’s recent book will do the job.

  8. Whatever about the prospects for CCCTB, we should acknowledge the shift of the establishment from the conventional wisdom.

    Irish conventional wisdom is a stubborn thing to change but the once sceptics on tax reform including Seamus Coffey, are no longer sailing against the wind.

    The Irish Times also has come a long way on tax reform. It has an editorial today on the issue which contrasts with May 2013 when it recommended “a major diplomatic initiative in the US to ensure there is a better understanding of the Irish position on corporate taxation”:

    https://www.irishtimes.com/business/economy/ireland/tax-policy-under-the-spotlight-1.1403091

    While conventional wisdom has shifted, still be it Brexit or corporate tax reform/fearing an exodus by FDI firms, all roads appear to lead to Brussels.

    John Kenneth Galbraith (1908-2006), the Harvard economist who coined ‘conventional wisdom’ in his book ‘The Affluent Society’ (1958), wrote “Familiarity may breed contempt in some areas of human behaviour, but in the field of social ideas it is the touchstone of acceptability.”

    The Irish Times published a story on Monday with the headline ‘Our diplomats facing a fight in Brussels and it’s not about Brexit,’ on “new corporate tax proposals” that “open up another battlefront for Ireland.”

    Globalisation has been good for Ireland but isn’t it time at last to address the persistent underperformance of the indigenous international sector?

    http://www.finfacts.ie/Irish_finance_news/articleDetail.php?Irish-Exports-Eurozone-top-market-but-poor-for-local-firms-Part-2-793

  9. It is often implied that Ireland is alone in supporting low corporate tax rates and that support for a CCTB or a Tobin Tax ( on financial transactions ) is overwhelming. A glance at current corporate rates across the EU would suggest that the larger economies lost the battle on tax rates a long time ago and why would the EU bring in a Tobin tax when Frankfurt and indeed Paris are seeking to attract financial institutions when London, the financial capital of the world, would not,
    By the way, Juncker and the Commission will not decide anything on tax or Brexit so who cares what he or they think.,

    1. There is one small problem with regard to your final sentence and that is the Commission’s sole right of initiative under the treaties. The Council can only act on the basis of a Commission proposal and in co-decision with the European Parliament, except where the treaties provide otherwise. In short, the Commission has a role the equal of any member state in the process and which has been in place since the inception of the EEC aka the “Community method”. It is part of the unique character of the EU, a sui generis form of federalism with a system of checks and balances similar to all federal systems but with the difference that the states are also the executive for whatever is agreed.That this so little appreciated in Ireland, after nearly half a century of membership, tells us something What I do not really know.

      1. This and previous comments on the ‘letter of the law’ as spelled out in Treaties since the foundation of the EC are both useful and instructive. However, they represent a technocratic vision of how the EU works, eschew its politics and shifts in the balance of power between the various institutions of the EU as ‘circumstances’ (i.e political events such as the 2008 ‘crash’; threatened collapse of the EZ etc.) that intervene from time to time. Sticking to the letter of the Treaties is thus potentially misleading. As indicated in voluminous studies, and commentary, on the distribution of power between the supranational institutions of the Commission and Parliament and the intergovernmental European Council,the division of competences as stipulated by the Treaties is one thing; what happens in practice may be quite another.

        In summary, it is observed that the relative power of the institutions is continuously shaped and reshaped by major political changes in the EU, particularly since the start of this century. These include structural pressures caused by enlargement, for example, and the both formal and informal redefinition of institutional roles following the 2008 crash. The latter has resulted in increased politicisation of the Commission itself, particularly in its enhanced role as an enforcer and overseer of national budgets and implementation of fiscal rules by member states. In the overall scheme of things, the literature indicates that the Council is dominant in determining outcomes, irrespective of whatever legislative procedure is involved. Overall, where decisions are politically contentious, the EU Council prevails. In their analysis, published in 2013, political scientists Rory Costello and Robert Thompson conclude: “it is not realistic to place either the EP or the Commission on a par with the Council as a whole in terms of its power. The power of the supranational institutions is lower than the formal procedural rules suggest.” (p.1036)

        My instinctive response to Mr. Juncker’s ‘state of the union’ address is that it is more aspirational than real; more a plea than any reliable prediction of things to come.

        1. @ VMcD I made no comparison between the institutions. I compared the role of the Commission to having the weight of any member state i.e. even the largest. The essential point is that, while the balance of power between, and within, the other institutions has changed over the year, notably by making the Council and the Parliament, acting jointly, the “legislature”, and extending the scope of this arrangement (notably to trade), the sole right of initiative of the Commission remains largely unscathed. The reason for this is obvious. Were it removed, the entire edifice of normal legislative decision-making would collapse.
          The Commission is also, of course, the regulatory authority, notably for competition. It is clear that Germany would like to see its regulatory role in relation to EMU placed elsewhere. It is a feature of the last mentioned that, while the bulk of the operative decisions have been taken by way of Regulation inside the EU legal structure, decisions in relation to the money are handled outside the normal EU decision making rules and Germany has an effective veto, voting strengths being related to capital participation etc. and on the basis of inter- govermental treaties i.e. the ESM.
          The EU is an inventive organisation.

          1. Technically yes, the Commssion has ‘the sole right of initiative’ when it comes to bringing forward legislation and the reasons why that should remain the case are indeed immediately obvious, as otherwise the system couldn’t function effectively. But in so doing, the Commission also responds to politically-driven requests from the European Council or Parliament for legislative proposals.In terms of outcomes, the interrelationships between the institutions, relative powerin respect of particular briefs, and acknowledgement of the Council’s position – at least currently – as the key decision-maker are important.

  10. In my comment above I wrote that “CCCTB can have unanticipated consequences, including incentivising increased tax competition and encouraging movement of real activity rather than ‘ paper profits’,” I meant “unintended” rather than “unanticipated”. I and others, including (at least) a number of Dutch analysts who have looked at the issue, have shown that these responses can indeed be anticipated.

  11. There will be CCCTB of some form.

    There is no way that France and Germany, the biggest consumer markets in the EU can continue to watch their small businesses close and town centres die because they can no longer compete with untaxed e-commerce.

  12. The Commission saying the CCCTB proposal is intended to reduce “tax avoidance” does not mean the policy will actually achieve that. The CCCTB is just another set of rules that companies will rightly respond to if it is ever introduced.

    The large US companies in the spotlight (GAFA) will consider what activities to place within the EU and the arm’s length principle will still apply to extra-EU transactions. Within the EU companies will assess the countries they have a permanent establishment (PE) in as only countries with a PE will be included in the allocation calculation. If a company withdraws from a country so has no PE there but still sells to customers in that country would that not be tax avoidance?

    If a proposal is intended to reduce tax avoidance then you would expect it to lead to a increase in tax revenue. The assessment published by the Commission of the latest CCCTB proposal shows it reducing corporate tax revenue collected in the EU from multinational companies by €36 billion (0.27% of GDP). There are lots of problems with the analysis but it is a bit incongruous for the Commission to claim the CCCTB will reduce corporate tax avoidance while providing an assessment that shows the proposal reducing corporate tax revenue.

    And it should be noted that the proposal only allows countries to have a single rate. Ireland currently taxes non-trading corporate income at 25% and corporate capital gains at 33%. This would not be allowed under the proposal and a single rate must be applied to all corporate income, trading and non-trading, as well as capital gains. This would almost certainly see companies in Ireland face lower tax bills on their capital gains regardless of what the allocation of taxing rights is.

    The consolidation is obviously the element of the proposal that attracts the most attention but the common base proposal is also worthy of consideration. It may be useful to compare some elements of the proposed common base to the existing Irish base.

    In Ireland companies are not allowed make any deduction for “entertainment” expenses. In the “common corporate tax base”, the CCTB, companies will be allowed deduct 50% of such expenses. In the CCTB companies can deduct 150% of research costs – a so-called “super deduction” – while in Ireland the deduction is limited to the cost incurred.

    Ireland also has some base protection measures that are absent in the CCTB. Intangibles are obviously central to the structures of these companies and both Ireland and the CCTB allow for a depreciation deduction for intangibles. These are remarkably similar with the CCTB saying that second-hand fixed intangible assets are to depreciated over “15 years, unless the remaining period for
    which the asset enjoys legal protection or for which the right has been granted can be determined, in which case it shall be depreciated over that period.” For Ireland it is over 15 years or in line with the accounting treatment of the asset which will follow its actual lifespan like the CCTB approach.

    Ireland, however, has a “relevant trade” test. This means that the depreciation charge – the capital allowance – can only be used to offset income derived from the use of the intangible asset. There is no such ringfencing in the CCTB proposal which allows companies to use the acquisition cost of intangibles against all income earned by the company not just that derived from the use of the intangible. Ireland has some protection from companies overpaying for intangible assets.

    These are just a couple of examples but it is likely that companies operating in Ireland would see their taxable income reduced under the CCTB relative to what it would be under existing Irish law. Of course, if we go all the way to the CCCTB then the right to tax that income would be wholly changed. An extreme example might illustrate the logic of the approach.

    Consider a company with a manufacturing facility in Ireland which makes sales through permanent establishments in Ireland, France and the United States. Of the company’s sales to third parties:
    • 1 per cent are made in Ireland,
    • 9 per cent are made in France and
    • 90 per cent are made in the United States.

    To simplify assume that all of the profits are generated by the manufacturing facility and that the PEs through which the sales are made just break even. Under present rules Ireland has the right to tax 100 per cent of the profit generated by this company.

    If the taxing rights to these profits are to be allocated using just the sales principle in the CCCTB.* This would allocate taxing rights on the basis of the proportion of EU sales that take place in each Member State the company has a PE in. The allocation of taxable income would be:
    • 10 per cent to Ireland and
    • 90 per cent to France.
    • (The US is not included in the allocation and continues to tax the profit, if any, generated by the PE in its jurisdiction as determined by the arm’s length principle).

    Ireland goes from getting tax on 100 per cent of the profit to just 10 per cent of the profit. Previously France could tax the profit of the PE in its jurisdiction (which was zero) but now France gets to tax 90 per cent of the profit generated from manufacturing activity that takes place in Ireland for sales which are almost wholly made in the US. Ireland does the work, France gets the tax. Now that’s profit shifting.

    * Yes, this is an extreme example which omits the employee, pay bill, and tangible asset components of the CCCTB allocation formula but it illustrates the logic behind the approach. And, yes, the company could avoid having to pay any tax in France if it did not have a PE there but maybe it needs it to facilitate the sales. And, yes, that does mean companies can avoid tax with the CCCTB. You can change the rules of the game but people will still play.

    1. Your example might be a tad extreme, but it highlights the key political drivers. The bigger EU member-states have no problem with a lower total tax take from corporate income – once they get a bigger share, both absolutely and relatively, than they do now.

      I realise most economists feel obliged to project the illusion of the advanced economies being mixed economies with restrained capitalism operating through functioning markets in conjunction with the public sector providing public goods and services. But the capture of economic rents and the protection of this capture have become so pervasive that we no longer have capitalism in a mixed economy arrangement; we simply have feudalism.

      Increasingly the scales on voters’ eyes about some of the fictions that support this illusion are beginning to fall. For example, more and more voters realise that banks are not maturity transformers – accumulating deposits to lend; they create money out of nothing. And if they’re big enough they can do what they like as they’ll be bailed out by public funds. Another example is the fiction that governments must identify the sources of taxation before they spend. In fact they spend by drawing on their accounts with their central banks – and these central banks simply create the money required. And the governments levy taxes after the event. The QE boondoggle revealed this. And more and more voters quite rightly are treating all large companies that deal directly with the public as conspiracies against the public. These companies have little else to do except to come up with schemes to rip-off the public.

      The EU’s politician and officials might be accused of playing to gallery by seeking to change the taxation rules for these rent-seeking rip-off merchants, but I would see it as some small evidence of democracy in action.

  13. @DOCM

    I appreciate you extensive Knowledge of the EU and its workings but the negotiator, as I understand it,may ‘present an agreement proposal’ but ‘the European Parliament must give its consent, by a vote of simple majority, including Members of the European Parliament from the UK ‘ and ‘The Council will conclude the agreement, by a vote of strong qualified majority’.
    Seems to me that the ultimate decision, de facto, lies with the larger economies, which is presumably why the UK now seems to want to bypass Barnier and deal directly with Merkel.

    I do accept that my perception of Juncker as a pompous ass may be colouring my view of the Commission.

    1. I must point out that you are not correct either in relation to taxation or Brexit. The two cases are very different. The first relates to the Commission’s right of initiative in the context of tabling a legislative proposal.
      The second is sui generis. There is only one Article 50 and it is being used for the first time. The language is very nuanced. It is the European Council, acting unanimously, that decides the guidelines for the negotiation but it is the Commission, using a procedure set out in Article 218(3) TFEU that acts as the Union’s negotiator (in the person of Barnier). It is the European Council that will make the final decision – acting unanimously – on whatever final withdrawal agreement (WA) emerges. It will, however, be the Council [of Ministers] that will formally conclude it, after obtaining the consent of the European Parliament (with the participation,curiously, of British MEPs, including Farage, the Pied Piper of Brexit). National parliaments will debate it but there is no formal ratification procedure at their level.
      The situation is made more complex by the fact that the WA must “take account” of the “framework” for the departing state’s future relationship with the EU (a relationship which the UK is steadfastly refusing to spell out in detail, probably because it still does not know what it wants). The UK, nevertheless, wants to talk trade in return for agreeing the financial aspects of the WA. The EU is technically incapable of doing this, even if it wanted to. It cannot make a trade deal with one of its own members.The UK has to become a third country like any other.
      The situation is deadlocked. May’s speech in Florence may unlock it. As the UK has now grasped that it needs a “status quo” deal i.e. it is unprepared for actual Brexit, the chances that it will must be high.

  14. “The EU is an inventive organisation.”.

    Thank you DOCM. Had you used the term ‘organism’ rather that ‘organisation’ the above would be a nifty definition of a parasite. The EU is tanea solium writ large.

    1. fergaloh – that may indeed be so. But maybe you – and many others, should be a tad more concerned that our parliament (not just our governments) and our local and national vested interests have for such a long time been so successful in ‘resisting’ the enactment of so-called ‘progressive legislation’ – that some outlanders have to step in and take action. But is their legislation really progressive? – in the sense that it has neither demolished nor significantly attenuated our local and national vested interests? Well has it? I believe the answer is No! And its unlikely to do so absent a bloody revolution or a real war and an occupation. Where are those Normans when you need them? 😉

      The elites of our barely democratic parliamentary parties, our cartelized public service, our very powerful (politically, economically and socially) vested interests are not stupid. They have, and will respond. But in ways that scarcely matter to the overall economic and social well-being of the majority of us citizens. Those elites will artfully herd together to protect themselves. Individuals (the lame, the diseased or the redundant) will of course be ‘sacrificed’ for the Common Good – you do understand?

      The more the EU expands its political and economic reach the greater its internal complexity has to become. With this increased internal complexity comes a slow, steady, inexorable sclerosis as the political, economic and social vested interests assemble and cartelize themselves. Regrettably for us citizens, slower and lower rates of annual economic growth axiomatically follow.

      There may be the occasional flurry of Leprechaun-style economic activity in some disparate regions. But it’s the overall, aggregate economic rates within the EU and the EZ that are crucial. They’ve been below ‘sustainable’ for at least a decade.

      My tanea solium analogy is valid; a parasite is a parasite. Or were those actual Vap rings wafting from J-C J’s fundament the other day?

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