Understand Everything – European Brexit Fund, 5 Billion Pie for 27 Shares

In Brussels the “adjustment reserve” of 5 billion euros for the weakest states from Brexit has been the subject of bitter discussion in recent weeks. As soon as negotiations enter the house directly, resolutions from the Council and the European Parliament suggest an envelope of EUR 672 million for France.

The European Union wants to heal the wounds of Brexit. After tough negotiations, the 27 member states are close to reaching an agreement on the “adjustment reserve”, which aims to “reduce the socio-economic consequences” of the divorce between London and Brussels.

Even then it was far from a win. Introduced in December 2020 by the European Commission, the terms of disbursement of this fund helping the countries most vulnerable to Brexit were far from unanimous. Some member states, including France, initially felt distressed by the payment method adopted.

But bitter discussions over the last few weeks resulted in a compromise at the European Council in late April. The latter would still have to come to an agreement with the Parliament, but with some details the status of the two institutions seems relatively close today. So that an agreement can be valid before July 1.

> How will the Brexit adjustment reserve work?

The Brexit Adjustment Reserve provides assistance of 5 billion euros (at 2018 prices – or 5.4 billion euros at current prices) to help areas and areas of activity that are not affected by negative impacts (trade, fishing, etc.). This is most needed to deal with. Regarding the United Kingdom’s exit from the European Union. And as the functioning of the European Union requires, the European Parliament and Council each had to decide on their own, on the device, based on a resolution of the European Commission.

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MEPs, through the European Parliament’s Committee on Regional Development, seek to target this financial support to SMEs and self-employment as a priority “to remove administrative burdens and increased operating costs”. They also want this aid to reach artisanal fisheries and local communities that rely on UK water as well as re-integration of EU citizens leaving the UK. On the contrary, he demanded that “financial and banking entities benefiting from the UK’s withdrawal from the EU be excluded from the support of the Brexit Adjustment Reserve”.

This position was approved by a large majority (for 35, 6 restraints, 1 against) by the European Parliament’s Regional Development Committee on Tuesday. It also prescribes a payment schedule with pre-financing of EUR 4 billion in two equal installments, namely EUR 2 billion in 2021 and EUR 2 billion in 2022. The remaining billion will be allocated in 2025.

“We need to ensure that EU aid reaches the countries, regions, businesses and people most affected by Brexit. European businesses already suffering from the COVID-19 crisis should not have to pay twice for the Brexit debacle “That’s why this reserve is so important and should be paid as soon as possible based on statistical and measurable data”, said Pascal Arimont, the Brexit Adjustment Reserve’s reflector

The European Council, for its part, requests the payment of 4 billion in three installments from 2021 to 2023, and the remainder in 2025. And among measures that could be fully covered by the fund, it cited “assistance to businesses and fishing communities”. , Short-time working and retraining programs, customs, customs, sanitary and phytosanitary controls, collection of indirect taxes and reintegration of EU citizens who have left the UK due to withdrawal ”.

Finally, the Council decides for a period of four years from January 1, 2020 to December 31, 2023, on the eligibility period for investments that can be covered by the Reserve. MEPs want a wide range starting from January 1, 2019.

> What distribution among member states?

This is the question that set the debates on fire. How to determine the share of funds going to each respective party? In its initial proposal, the Commission planned to distribute reserves among member states according to two main criteria: the value of fish caught in the UK’s exclusive economic zone and the extent of each country’s trade with the UK.

This “distribution key” would have enabled France to touch around 421 million euros and thus be the fourth beneficiary after Ireland, the Netherlands and Germany. An insufficient amount of money for French negotiators who, along with other member states, pushed to negotiate a delivery method that is reasonable in their eyesight.

Finally, the Council agreed to add a criterion related to the size of the population of the maritime areas bordering the United Kingdom (in this case, the population of Brittany, Normandy and Haute-Haute-de-Seine de-France on the French side). But) with this new distribution key, France should be the third beneficiary, after Ireland (1.064 billion euros) and the Netherlands (810 million), with a payment of 672 million euros. It is followed by Germany (591 million) and Belgium (353 million).

In total, 4.150 billion euros will be allocated on the basis of trade criteria, 600 million euros according to the fishing factor and 250 million euros under the test of border maritime zones.

> What are the next steps?

If the council’s proposal is ready to be negotiated, the MEP’s proposal must receive a green light from Parliament during the first plenary session in June, which should be a formality. The trial would then begin: the stage of negotiations between the European Council and the Parliament, which would have to put their proposals face-to-face and enter into an agreement under the auspices of the European Commission, which would play its arbitration role.

As noted above, points of disagreement remain, particularly on the payment schedule and eligibility period of the investment that may be covered by the fund. Nevertheless, the Council and the European Parliament already agree on the most sensitive point of distribution key. Therefore, the amounts to be distributed among the member states are similar in the two resolutions, making the discussions very convenient.

Pascal Arimont said, “I think this part of the file that I find the hardest has been settled before the trial began.” Hence a certain optimism about the possibility of reaching an agreement at the end of June.

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About the Author: Forrest Morton

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