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Partially Informed Juries Convict the Innocent: New at Reason

Early in the evening on October 1, 1984, Catherine Fuller, a 48-year-old mother of six, was robbed, sodomized with a foreign object, and beaten to death in a garage off an alley in Washington, D.C. After police concluded that Fuller had been attacked by a group of young men, prosecutors obtained two guilty pleas and eight convictions. Today the Supreme Court will hear an appeal by seven of those men, who argue that prosecutors violated their right to due process by withholding evidence that would have cast doubt on the government’s allegations. As Jacob Sullum explains, the case shows why, more than half a century after the Court told prosecutors they have a constitutional duty to share evidence that might help defendants, prosecutors have little incentive to take that duty seriously.

View this article.

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When The “Solutions” Become The Problems

Authored by Charles Hugh-Smith via OfTwoMinds blog,

Those benefiting from these destructive "solutions" may think the system can go on forever, but it cannot go on when every "solution" becomes a self-reinforcing problem that amplifies all the other systemic problems.

We are living in an interesting but by no means unique dynamic in which the solutions to problems such as slow growth and inequality have become the problems. This is a dynamic I have often discussed in various contexts. In essence, a solution that was optimized for an earlier era and situation is repeatedly applied to the present–but the present is unlike the past, and the old solution is no longer optimized to current conditions.

The old solution isn't just a less-than-optimal solution; it actively makes the problem worse.

As a result, the old solution becomes a new problem that only exacerbates the current difficulties. The status quo strategy is not to question the efficacy of the old solution–it is to apply the old solution in heavier and heavier doses, on the theory that if only we increase the dose, it will finally resolve the problem.

Take borrowing from the future, i.e. debt, as a prime example of this dynamic. Back when credit was scarce and expensive, unleashing a tsunami of cheap, abundant credit supercharged growth by enabling millions of people who previously had limited access to credit to suddenly borrow and spend enormous sums of cash.

This tsunami of new spending supercharged growth such that servicing the debt was easy, as incomes and wealth both expanded far beyond the cost of the new debt.

Fast-forward to today, and adding 50% of the nation's GDP in new federal debt ($9 trillion) and trillions more in corporate and houshold debt in the past 8 years has yielded subpar growth–roughly 2% a year.

This poor response to massive floods of credit, borrowing and spending has flummoxed conventional economists, who incorrectly assumed old solutions would always work as they had in the past.

In a similar fashion, conventional economists expected fiscal stimulus to boost growth. Fiscal stimulus–one-time tax refunds, infrastructure spending, tax cuts and various forms of "helicopter money"–central banks creating money out of thin air for the government to spend or distribute–have all failed to generate the self-sustaining virtuous cycle of boosting the output of the engines of income/wealth creation.

As I noted in Fragmentation and the De-Optimization of Centralization (January 2, 2017), The 4th Industrial Revolution has de-optimized centralization. Centralized control, power and money are now the problem, not the solution.

In the past, centralizing control of industries, credit and production increased the productivity of the whole economy. But that was then, and this is now. In the current era, centralization only breeds corruption, moral hazard, revolving doors between state agencies and private industry, opaque, rigged markets, rentier cartel parasitism and state-cartel crony capitalism, in which the central state regulates industries like Big Pharma, defense weaponry, higher education and so on to benefit entrenched interests, elites and cartels.

Regulations have also slipped from being solutions to problems. Everyone weighing the costs and benefits agrees that building and zoning codes enacted at the turn of the 19th century and the beginning of the 20th century greatly reduced the health hazards posed by slums and unregulated industries. Everyone weighing the costs and benefits agrees that clean air and water regulations imposed in the early 1970s benefited the public and the nation, despite the higher costs for goods and services that industry passed down to the consumer.

Technological improvements and efficiencies offset much or all of these costs by the 1980s, and by the 1990s, technological gains were increasing the income and wealth of almost every participant in the economy.

Recently, these technological gains have become concentrated in the top 5% of wage-earners and the owners of the capital. There are several drivers for this, including proximity to cheap credit, tax evasion techniques available only to corporations and the wealthy, pay-to-play lobbying for tax breaks and regulatory barriers to competition, and so on–all the foul fruits of centralized power and the crony-capitalism it breeds.

But technology is also exacerbating the trend to a winner-take-all or winners-take-most asymmetry between the most profitable and productive and "everyone else."

Regulations have now become burdens rather than low-cost means of improving the commons shared by all. Advocates for "tiny houses" and similar solutions to homelessness run into buzz-saws of regulations that prohibit such construction and zoning, and advocates of innovations from urban farming to crypto-currencies find regulations (often serving the interests of political donors rather than the public) are stifling innovations and efficiencies that would benefit the many rather than the few.

The regulatory agencies are prone to self-serving complexity that justified their budgets and power; as the regulations become more voluminous and arcane, "experts" in reading the runes and keeping up to date justify their big salaries and departmental budget.

The Lifecycle of Bureaucracy (December 2, 2010)

As I explain in my book Resistance, Revolution, Liberation: A Model for Positive Change, the state only knows how to expand; there is no mechanism, no institutional memory and no reward motivation to reduce the size of state power or revenues, or reduce the reach of the regulations and laws that empower the state to control virtually every aspect of life.

There are many other "solutions" that no longer solve their intended target problem but have become burdensome problems in themselves. One need only look at healthcare, higher education and weaponry acquisition programs to find hundreds of examples of perverse incentives and unintended consequences that are the direct result of anti-competitive, intentionally opaque, centralized regulations that are implicitly designed to benefit the few (wealthy political donors, lobbyists and entrenched interests) at the expense of the many who are shut out of the regulatory game.

Student loans are an excellent example of a "solution" becoming a problem itself, while the underlying problem–soaring costs for diminishing-return diplomas–rages on, enabled by the "solution": force student debt-serfs to borrow another trillion dollars to fund sclerotic, self-serving bloated bureaucracies.

The Nearly Free University and the Emerging Economy: The Revolution in Higher Education.

Borrowing and spending $9 trillion did little but indenture future taxpayers to pay for for our massive malinvestment in diminishing-returns dead-ends.

If we look at yesterday's chart of overlapping crises, we note each crisis began as a purported "solution." The "solutions" are: more debt (now a problem); more centralization (now a problem); financialization (now a problem); promising more benefits to everyone (now a problem), and so on.

Real solutions are optimized for the 4th Industrial Revolution and the emerging economy, not the economy of 1946. These solutions are the opposite of all the institutional-state-cartel "solutions": decentralize power and control, transparency rather than self-serving obfuscation; empowerment of communities rather than centralized agencies and cartels, and embracing disruptive technologies–technologies that disrupt existing rentier skims, cartel rackets, regulatory barriers, etc.

The cold truth is all these institutional-state-cartel "solutions" serve the few at the expense of the many. This is not a side-effect; it is the intended output of these "solutions." In other words, these "solutions" work great for the parasitic few at the top skimming all the wealth, power and income, at the expense of the exploited many and the stability of the system as a whole.

Those benefiting from these destructive "solutions" may think the system can go on forever, but it cannot go on when every "solution" becomes a self-reinforcing problem that amplifies all the other systemic problems.

Recent podcasts/video programs:

Keiser Report: Jon Corzine’s Big, Bad Bond Bet (25:43 min., 2nd half)

Self-Employment & Financial Bubbles (1:26 hrs)

Charles Hugh Smith On Inequalities And The Distortions Caused By Central Bank Policies (30 min.)

Rogue Money (56:59 min.)

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Anti-Abortion Activists Face Dubious Eavesdropping Charges in California

Yesterday California Attorney General Xavier Becerra announced 15 felony charges against two anti-abortion activists, David Daleiden and Sandra Merritt, in connection with their hidden-camera recordings of conversations with Planned Parenthood employees they sought to implicate in the illegal sale of fetal tissue. “The right to privacy is a cornerstone of California’s Constitution, and a right that is foundational in a free democratic society,” Becerra declared. “We will not tolerate the criminal recording of confidential conversations.”

The right to freedom of the press, which Daleiden and Merritt claim they were exercising, is also foundational in a free democratic society, and it conflicts with California’s dubious definition of the right to privacy. That conflict is especially troubling when law enforcement officials use privacy as a pretext to attack political opponents, which is what seems to be happening in this case.

Federal law and the laws of 38 states (as well as the District of Columbia) allow any participant in a conversation to record it, with or without the consent of the other parties. California, by contrast, requires the consent of all parties. Recording a “confidential communication” without the consent of all parties is a crime that can be charged as a misdemeanor punishable by up to a year in jail or as a felony punishable by up to three years in prison. The felony charges against Daleiden and Merritt include 14 secretly recorded conversations, plus a conspiracy charge.

Daleiden told The Washington Post he plans to argue that the conversations did not qualify as “confidential” because no party had a reasonable expectation that the discussion would not be overheard. On July 25, 2014, for instance, Daleiden and Merritt, posing as representatives of the fictitious Fetal Tissue Procurement Company, met with Deborah Nucatola, Planned Parenthood’s senior director of medical services, over lunch at a Los Angeles restaurant. While testifying before the House Oversight and Government Reform Committee in September 2015, Planned Parenthood’s president, Cecile Richards, said she had told Nucatola “it was inappropriate to have a clinical discussion in a nonconfidential, nonclinical setting.” Other Planned Parenthood videos posted by Daleiden’s Center for Medical Progress were also recorded in public settings, such as restaurants and conferences.

In 1999 a California appeals court ruled that NBC News producers did not violate California’s wiretapping law when they secretly recorded a lunch meeting at a Malibu restaurant, since the targets, executives of a company that allegedly sold fraudulent toll-free numbers, “had no objective expectation of privacy in their business lunch meeting.” The court noted that one of the executives conceded he “did not say anything he thought was a secret,” that the meeting involved a standard sales pitch, and that the executives showed no reticence around the restaurant’s staff.

According to the Digital Media Law Project’s explanation of California’s law, however, the setting of a conversation is not necessarily dispositive. “If you are recording someone without their knowledge in a public or semi-public place like a street or restaurant,” it says, “the person whom you’re recording may or may not have ‘an objectively reasonable expectation that no one is listening in or overhearing the conversation,’ and the reasonableness of the expectation would depend on the particular factual circumstances. Therefore, you cannot necessarily assume that you are in the clear simply because you are in a public place.”

Daleiden suggested another possible defense in an email to the Associated Press. “The public knows the real criminals are Planned Parenthood and their business partners,” he said. California’s eavesdropping law allows the recording of a confidential communication “for the purpose of obtaining evidence reasonably believed to relate to the commission by another party to the communication” of certain crimes: “extortion, kidnapping, bribery, any felony involving violence against the person,” and telephonic harassment. The illegal sale of fetal tissue does not seem to qualify.

Daleidan’s lawyer, Steve Cooley, a former Los Angeles district attorney, describes him as “nothing more than a First Amendment journalist pursuing a good cause and fighting a battle, now a martyr who’s being crushed by the power of the State of California.” California’s courts may not be receptive to a First Amendment defense in this case. A 1999 decision by the California Supreme Court suggests that Daleidan had a First Amendment right to post his Planned Parenthood videos, but that does not necessarily mean he had a First Amendment right to make the videos if doing so violated the eavesdropping law. “The press in its newsgathering activities enjoys no immunity or exemption from generally applicable laws,” the court said in that case, which involved a TV station’s recording of a car accident victim. “The First Amendment does not immunize the press from liability for torts or crimes committed in an effort to gather news.”

That principle makes sense as a general matter, but it does not resolve the question of whether California’s all-party consent rule for recording conversations protects a bona fide right that trumps what would otherwise be the First Amendment right to gather information. Unlike laws against trespassing and theft (which do not and should not become legal when committed by members of the press in pursuit of a story), the recording rule is arbitrary and does not apply in most of the country.

The First Amendment implications of the charges against Daleidan and Merritt become even clearer when you consider that the case was initiated by Becerra’s predecessor, Kamala Harris, during her successful campaign for the U.S. Senate. Harris, a pro-choice Democrat, is a loud supporter of Planned Parenthood who stood to gain politically by pursuing a criminal case against two of the organization’s most prominent critics. Her campaign website urged voters to “take a stand and join Kamala in defending Planned Parenthood.” Harris’s office collaborated with Planned Parenthood on A.B. 1671, a legislative response to Daleidan’s videos that makes it a crime to publish “the contents of a confidential communication with a health care provider” recorded in violation of the wiretapping statute. Becerra, until recently a congressman and chairman of the House Democratic Caucus, was appointed to replace Harris by Gov. Jerry Brown.

Would California’s attorney general have pursued felony charges against pro-choice activists who used hidden cameras to record meetings with the operators of “crisis pregnancy centers” that steer women away from abortion? If not, Becerra’s concern about “the right to privacy” is nothing more than a pious-sounding cover for a political vendetta.

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Gartman: “We Have No Choice But To Be Bullish Of Equities”

So much flip-flopping from Dennis Gartman, it is enough to make one’s head spin. After missing Friday’s move lower, on Monday morning Gartman said he was actively looking to “re-establish net short positions” when S&P futures were sharply lower to which we said “at the rate the S&P is covering its opening losses, he should be able “find a point” where the S&P turns green, and “reestablish shorts” on very short notice.” Indeed, the S&P eventually covered its entire move lower, and provided Gartman with ample opportunity to become short again. Of course, the very next day, US equity markets soared allegedly on the best consumer confidence print since 2000.

So where is he now? As he says in his latest letter, “We have no choice but to follow the “lead” from the CNN Fear & Greed Index and to be bullish of equities.“

Here is how he explains this latest momentum chasing:

STOCK PRICES… EVERYWHERE… ARE HIGHER AND SHARPLY SO as all ten of the markets in our International Index have risen. This is a rare event and historically such unanimity amongst our “universe” of markets has marked important panic tops if this has happened after extended bull runs, or has marked important panic lows at the end of extended bear runs. Certainly this is not the latter. We obviously have considered the markets overextended to the upside and have been reticent about buying into them aggressively. As we said the other evening when on CNBC’s “Fast Money,” and as we’ve said countless times here in TGL, this is a bull market and in a bull market one can have only one of three possible positions: Very, aggressively long of equities on balance; pleasantly long of equities on balance or, finally, neutral of equities, and there is no question but that we’ve tended to err upon the latter two positions and “Err” is the proper word here for we have indeed erred.

 

Those who’ve thrown caution to the investment wind and have remained aggressively long have reaped their rewards and we applaud them for either their tenacity, or their brilliance or their obeisance to the trend. We have been “too cute by half” in fearing a correction that never seems to avail itself.

 

Given the recent weakness in the CNN Fear & Greed Index we were coming very close to buying equities aggressively, if only had this Index fallen to 20 or below, having been to 85 only a few months ago. It fell to 29 yesterday… close to 20 but not quite there. It has turned up from there. If that was this indicator’s low it shall be the fifth time in a row that it has made a progressively higher low since late ’14. Previously, going back to late ’14, the lows were very near to 0; then 5 in the autumn of ‘15; then 15 in the first few days of ’16; then 15 in the late autumn of last year and now 29.

 

We have no choice but to follow the “lead” from the CNN Fear & Greed Index and to be bullish of equities. To make it simple we shall return to our original thesis regarding the Trump Adminisration and defer to the “Mahoning Valley” rather than to Silicon Valley; that is, we’ll buy steel, and coal, and ships, and railroads and ball bearings and cement and weaponry et al, for if the Trump Administration does stand for anything it stands of infrastructure and defense. These things we can count and these things we can count upon. These things are simple being the things that if dropped on your foot shall hurt:

And some bad news for rate bears: Gartman is shorting Trasurys, and not just one, but “two units.”

We were fortunate enough to have gotten long of the US Ten year note future several weeks ago and were further fortunate enough to have exited the trade late last week. Given that the market now appears to have forged a rather impressive “quadruple” top as evidenced by the chart this page, and given that the market’s weakness yesterday was on larger volume that has come in on the downside; and given further that the Fed is clearly erring on the side of tighter monetary policies, it is reasonable that we should venture to the short side of the bond market today, selling two units June T-notes at or near to  124 3/8’s-124 ½ and our stop shall be a close above 125 1/4. If we are able to sell a rally and then if notes close below 124.00 we’ll add a third unit to the trade… willingly.

Ironically, Gartman is shorting TSYs even as he admits “we here at TGL, in our retirement account, ended the day up 4.8% for the year-to-date, heavily invested in medium term closed end bond funds.” Perhaps that is indeed the best hedge: being long and short at the same time?

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“The Noise Level Is Deafening” Trader Warns Investors: “Stop Acting Like An Emotional Wreck”

We've been moving away from a world where investors were willing to say, "I see it, but I don’t believe it" and do something about it, warns Bloomberg's Rich Breslow. The contrarian view, where you hope to win big by standing your ground or catching the market offside just before prices reverse. There are few more empowering feelings than the belief that you’ve just got confirmation that you’re smarter than the next guy. And nothing more intimidating if you’re that next guy.

In the new zeitgeist, you’re more likely to hear, "I let my emotions get the better of me." Only day traders can get away with and thrive being wildly bullish one day and sure everything will collapse the next. Yet that’s increasingly the trap real investors are falling into.

 

It’s a tough trading environment and fair to say that confidence is low. Yet all you hear is people expressing themselves in binary absolutes. Which is a problem when the noise level is deafening and many of the issues that are driving markets analyzable only to the extent of supposition.

 

Having a big-picture view is very important. And then you need to file it away for context. Markets are behaving like they’re in a step class, but the real economy and global demographics don’t bounce up and down at the rate people seem to think.

 

 

Decide questions for yourself like whether global growth is expanding or not?

 

 

At the end of the day is there likely to be additional or less quantitative easing pumped into the system? Are sovereign wealth funds apt to continue to increase their commitment to global equities or go back to sovereign debt coupon clipping?

 

The answers won’t help you trade the very real, if unfortunate, emotional panics and analytical excesses, if you don’t have technical discipline. But will provide the grounding to understand why a buy-the-dip mentality continues to exist in equities, emerging markets have been so happy or where the range in Treasury yields is likely to migrate to.

Judging by the epic rise and fall of VIX this week, Breslow's Zeitgeist is alive and well and everyone's a day-trader now…

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Government Shutdown Odds Rise To 40% According To Deutsche Bank

With rumblings growing about a possible Washington shutdown on April 28 when the current continuing resolution expires, Deutsche Bank’s Washington expert Frank Kelly yesterday hosted a client call on the political implications of last week’s events.

He suggested that the surprise withdrawal of the Republican healthcare bill on Friday is a sign of the continued division within the Republican Party and is perhaps a precursor to growing political and policy risks in the US, and as discussed yesterday, he notes that even before considering the difficulties involved in passing President Trump’s tax reforms, there exists a very real possibility of a government shutdown on April 28 when the current continuing resolutions set to expire.

According to Kelly, there is a significant chance that the Freedom Caucus will reject a new continuing resolution due to their opposition to the continued funding of Planned Parenthood and Obamacare, while Trump’s spending plans for a border wall will see opposition from both Democrats and Republicans in the Senate.

As a result, Frank estimates the probability of a government shutdown at roughly 40% and notes that the next 2 weeks will be critical to watch.

Beyond the risks of a government shutdown, policy uncertainty continues to manifest itself in the form of questions surrounding Trump’s tax reform bill: Frank expects that the controversial Border Adjustment Tax (BAT) will not even make it into the final bill (at least not in its current form) and that the new corporate tax rate will likely be closer to 25% rather than the expected 15-20% range. Also despite the failure of the healthcare bill there is unlikely to be any acceleration in the proceedings on tax reform to fill the gap. The bill remains likely to go to Congress sometime in the first two weeks of  May, and will likely only be picked up by the Senate in September.

Given these developing uncertainties, Frank suggests that markets should downgrade their expectations of progress going forward.

Meanwhile, in its latest morning note JPM takes the opposite view and writes that the risks of a shutdown are falling as Republicans will propose a bill void of some of the more controversial spending proposals, and it sounds like the GOP could be moving towards a “small” tax bill (note that Gary Cohn is expected to brief Trump on tax options this Thurs 3/30). As a result, and unlike DB’s recommendation to trim optimism, JPM suggests that “the broader domestic equity macro backdrop remains the same as before.”

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Brexit Divorce Papers Filed, Planned Parenthood Video Creators Indicted, Privacy Reg Repeal Heads to Trump: A.M. Links

  • The U.S. government will pay $1 million to the family of Anastacio Hernandez, who was beat to death by border control agents in 2010.
  • Brexit is officially in motion: On Wednesday, U.K. Home Secretary Theresa May sent notice to the European Union that Britain is out, starting (as The New York Times puts it) “a tortuous two-year divorce littered with pitfalls for both sides.”
  • The two men behind a series of undercover videos featuring Planned Parenthood executives were indicted in California Tuesday on 14 felony counts of unlawfully recording people without permission and one count of conspiracy to invade privacy.
  • A resolution to repeal Internet privacy protections approved by the Federal Communications Commission in 2016 has passed the U.S. Senate and House and now heads to Donald Trump’s desk.
  • European Catholics and feminists are teaming up to try and outlaw surrogacy.

Follow us on Facebook and Twitter, and don’t forget to sign up for Reason’s daily updates for more content.

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Michael Moore Loses It (Again): Warns Of “Extinction Of Human Life Due To Donald Trump”

In reaction to President Trump's roll-back of a number of President Obama's environmental protection and climate change regulations, Leftist documentary-maker Michael Moore lost it…

But he was not done… as he sees the most dire outcome from this terrifying regulatory roll-back…

So to be clear, global humanity is destined for extinction because America decides to unwind some burdensome regulations? Perhaps we should be more worried…

Judging his remarks literally, it seems the liberal fanatic believes that historians will survive the coming human extinction (in order to mark the event).

Of course, what Mr. Moore perhaps is missing that if indeed President Trump's cunning plan is human extinction, then this is a truly progressive agenda since the end of humanity would surely be great for the environment.

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EUCOM Commander Calls For Larger “Enduring Armored” Force To Deter Russia

The commander of U.S military forces in Europe told lawmakers Tuesday that he needs a larger combat force, including an armored division and increased naval power, to deter Russian military forces on the continent.

Military.com's Matthew Cox reports that Gen. Curtis M. Scaparrotti, commander of U.S. European Command, testifying before the House Armed Service Committee, said:

"We need a greater force there, I think, potentially in the land component,"

The general said he needs the "enablers of an armored division — a fires brigade, an engineer brigade, air defense — those kinds of systems in the numbers that I need there."

Currently, the Army has one armored brigade combat team on a continuous rotation to Europe to bolster the Stryker and airborne infantry brigades stationed there permanently.

"I am suggesting an additional division because … I need armored and mechanized brigades," Scaparrotti said.

 

"The reason a division is so important is at that level you can then have the command and control, communications capability to integrate the different domains in the way we fight. And that division brings the enablers like appropriate artillery, engineers, air defense, etc. that fill out a proper defense."

Scaparrotti said he could also use an "additional naval component on rotation through Europe to deter specifically with respect to anti-submarine warfare," an area Russia continues to modernize.

"It would be wonderful to have a carrier support group with amphibious forces, more than I have now," he said.

In addition to modernizing conventional ground, naval and air forces, Russia is refining the capability of its nuclear arsenal, Scaparrotti said.

"One of the things that you see that is disturbing is the fact that they are using similar weapon systems that can either be conventional or nuclear, which then makes it difficult for us to clearly understand what they have employed," he said.

 

"And secondly, within their doctrine, they have made the statement openly again that they see a use for nuclear tactical capabilities within what we would consider a conventional conflict, which is very alarming."

Rep. Mike Turner, a Republican from Ohio, asked Scaparrotti if he believes forward stationing an armored unit on a permanent basis rather than rotational would be helpful in deterring Russia.

Though that is a U.S. Army decision, "I would prefer to have an enduring armored force in Europe," Scaparrotti said.

…

Scaparrotti said the "real trigger" was Russia's 2014 annexation of Crimea.

"The occupation of Ukraine, for instance, was an act that clearly set out that we have Russia as a competitor that is willing and did break international law," he said.

 

"And I think what you see in their activities today often is pushing whenever they can against the international norms. They still occupy Ukraine and Georgia with troops without invitation."

Russia has also been behind cyber-attacks that are "criminal in some cases," such as the attack on the Ukranian power grid and attempts to impact elections in the United States, France and Germany, Scaparrotti said.

"So I think if you look their actions, it tells us that we have a nation here that we need to be very sober about," he said. "We don't seek conflict with them; deterrence in fact has its mission to prevent conflict of war. But at this point, Russia has not been very responsive to the international community."

*  *  *

And the scaremongery, fake facts (Ukraine hack disavowed by CrowdStrike now, and power grabs will continue.

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This Is The 6-Page Letter Delivered From The UK To The EU Triggering Article 50: Full Text

Moments ago, the UK Prime Minister’s office posted the 6-page letter that was delivered by the UK to the EU, triggering Article 50 and officially starting the 2 year Brexit process.

 

In the letter, Theresa May proposes “bold and ambitious” Free Trade Agreement between the United Kingdom and says the agreement should cover important sectors, including financial services and network industries. Some of the key highlights from the letter, courtesy of Bloomberg:

  • U.K. Seeks to Minimize Disruption in Brexit Talks
  • U.K. Seeks Technical Talks on Policy Details ASAP
  • U.K.’s May Wants to Avoid Return to Hard Irish Border
  • U.K. Seeks Implementation Periods to Ease Transition to Brexit
  • U.K. Seeks Free Trade Agreement That Includes Finance

* * *

A scanned version of the letter can be found here, and below is our attempt to quickly OCR the text:

On 23 June last year, the people of the United Kingdom voted to leave the European Union. As I have said before, that decision was no rejection of the values we share as fellow Europeans. Nor was it an attempt to do harm to the European Union or any of the remaining member states. On the contrary, the United Kingdom wants the European Union to succeed and prosper. Instead, the referendum was a vote to restore, as we see it, our national self-determination. We are leaving the European Union, but we are not leaving Europe — and we want to remain committed partners and allies to our friends across the continent.

Earlier this month, the United Kingdom Parliament confirmed the result of the referendum by voting with clear and convincing majorities in both of its Houses for the European Union (Notification of Withdrawal) Bill. The Bill was passed by Parliament on 13 March and it received Royal Assent from Her Majesty The Queen and became an Act of Parliament on 16 March.

Today, therefore, I am writing to give effect to the democratic decision of the people of the United Kingdom. I hereby notify the European Council in accordance with Article 50(2) of the Treaty on European Union of the United Kingdom’s intention to withdraw from the European Union. In addition, in accordance with the same Article 50(2) as applied by Article 106a of the Treaty Establishing the European Atomic Energy Community, I hereby notify the European Council of the United Kingdom’s intention to withdraw from the European Atomic Energy Community. References in this letter to the European Union should therefore be taken to include a reference to the European Atomic Energy Community.

This letter sets out the approach of Her Majesty’s Government to the discussions we will have about the United Kingdom’s departure from the European Union and about the deep and special partnership we hope to enjoy —as your closest friend and neighbour — with the European Union once we leave. We believe that these objectives are in the interests not only of the United Kingdom but of the European Union and the wider world too.

It is in the best interests of both the United Kingdom and the European Union that we should use the forthcoming process to deliver these objectives in a fair and orderly manner, and with as little disruption as possible on each side. We want to make sure that Europe remains strong and prosperous and is capable of projecting its values, leading in the world, and defending itself from security threats. We want the United Kingdom, through a new deep and special partnership with a strong European Union, to play its full part in achieving these goals. We therefore believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the European Union.

The Government wants to approach our discussions with ambition, giving citizens and businesses in the United Kingdom and the European Union — and indeed from third countries around the world — as much certainty as possible, as early as possible.

I would like to propose some principles that may help to shape our coming discussions, but before I do so, I should update you on the process we will be undertaking at home, in the United Kingdom.

The process in the United Kingdom

As I have announced already, the Government will bring forward legislation that will repeal the Act of Parliament — the European Communities Act 1972 —that gives effect to EU law in our country. This legislation will, wherever practical and appropriate, in effect convert the body of existing European Union law (the “acquis”) into UK law. This means there will be certainty for UK citizens and for anybody from the European Union who does business in the United Kingdom. The Government will consult on how we design and implement this legislation, and we will publish a White Paper tomorrow. We also intend to bring forward several other pieces of legislation that address specific issues relating to our departure from the European Union, also with a view to ensuring continuity and certainty, in particular for businesses. We will of course continue to fulfil our responsibilities as a member state while we remain a member of the European Union, and the legislation we propose will not come into effect until we leave.

From the start and throughout the discussions, we will negotiate as one United Kingdom, taking due account of the specific interests of every nation and region of the UK as we do so. When it comes to the return of powers back to the United Kingdom, we will consult fully on which powers should reside in Westminster and which should be devolved to Scotland, Wales and Northern Ireland. But it is the expectation of the Government that the outcome of this process will be a significant increase in the decision-making power of each devolved administration.

Negotiations between the United Kingdom and the European Union

The United Kingdom wants to agree with the European Union a deep and special partnership that takes in both economic and security cooperation. To achieve this, we believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU.

If, however, we leave the European Union without an agreement the default position is that we would have to trade on World Trade Organisation terms. In security terms a failure to reach agreement would mean our cooperation in the fight against crime and terrorism would be weakened. In this kind of scenario, both the United Kingdom and the European Union would of course cope with the change, but it is not the outcome that either side should seek. We must therefore work hard to avoid that outcome.

It is for these reasons that we want to be able to agree a deep and special partnership, taking in both economic and security cooperation, but it is also because we want to play our part in making sure that Europe remains strong and prosperous and able to lead in the world, projecting its values and defending itself from security threats. And we want the United Kingdom to play its full part in realising that vision for our continent.

Proposed principles for our discussions

Looking ahead to the discussions which we will soon begin, I would like to suggest some principles that we might agree to help make sure that the process is as smooth and successful as possible.
 
i.    We should engage with one another constructively and respectfully, in a spirit of sincere cooperation. Since I became Prime Minister of the United Kingdom I have listened carefully to you, to my fellow EU Heads of Government and the Presidents of the European Commission and Parliament. That is why the United Kingdom does not seek membership of the single market: we understand and respect your position that the four freedoms of the single market are indivisible and there can be no “cherry picking”. We also understand that there will be consequences for the UK of leaving the EU: we know that we will lose influence over the rules that affect the European economy. We also know that UK companies will, as they trade within the EU, have to align with rules agreed by institutions of which we are no longer a part — just as UK companies do in other overseas markets.

ii.    We should always put our citizens first. There is obvious complexity in the discussions we are about to undertake, but we should remember that at the heart of our talks are the interests of all our citizens. There are, for example, many citizens of the remaining member states living in the United Kingdom, and UK citizens living elsewhere in the European Union, and we should aim to strike an early agreement about their rights.

iii.    We should work towards securing a comprehensive agreement. We want to agree a deep and special partnership between the UK and the EU, taking in both economic and security cooperation. We will need to discuss how we determine a fair settlement of the UK’s rights and obligations as a departing member state, in accordance with the law and in the spirit of the United Kingdom’s continuing partnership with the EU. But we believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU.

iv.    We should work together to minimise disruption and give as much certainty as possible. Investors, businesses and citizens in both the UK and across the remaining 27 member states — and those from third countries around the world — want to be able to plan. In order to avoid any cliff-edge as we move from our current relationship to our future partnership, people and businesses in both the UK and the EU would benefit from implementation periods to adjust in a smooth and orderly way to new arrangements. It would help both sides to minimise unnecessary disruption if we agree this principle early in the process.

v.    In particular, we must pay attention to the UK’s unique relationship with the Republic of Ireland and the importance of the peace process in Northern Ireland. The Republic of Ireland is the only EU member state with a land border with the United Kingdom. We want to avoid a return to a hard border between our two countries, to be able to maintain the Common Travel Area between us, and to make sure that the UK’s withdrawal from the EU does not harm the Republic of Ireland. We also have an important responsibility to make sure that nothing is done to jeopardise the peace process in Northern Ireland, and to continue to uphold the Belfast Agreement.

vi.    We should begin technical talks on detailed policy areas as soon as possible, but we should prioritise the biggest challenges. Agreeing a high-level approach to the issues arising from our withdrawal will of course be an early priority. But we also propose a bold and ambitious Free Trade Agreement between the United Kingdom and the European Union. This should be of greater scope and ambition than any such agreement before it so that it covers sectors crucial to our linked economies such as financial services and network industries. This will require detailed technical talks, but as the UK is an existing EU member state, both sides have regulatory frameworks and standards that already match. We should therefore prioritise how we manage the evolution of our regulatory frameworks to maintain a fair and open trading environment, and how we resolve disputes. On the scope of the partnership between us — on both economic and security matters — my officials will put forward detailed proposals for deep, broad and dynamic cooperation.

vii.    We should continue to work together to advance and protect our shared European values. Perhaps now more than ever, the world needs the liberal, democratic values of Europe. We want to play our part to ensure that Europe remains strong and prosperous and able to lead in the world, projecting its values and defending itself from security threats.

The task before us

As I have said, the Government of the United Kingdom wants to agree a deep and special partnership between the UK and the EU, taking in both economic and security cooperation. At a time when the growth of global trade is slowing and there are signs that protectionist instincts are on the rise in many parts of the world, Europe has a responsibility to stand up for free trade in the interest of all our citizens. Likewise, Europe’s security is more fragile today than at any time since the end of the Cold War. Weakening our cooperation for the prosperity and protection of our citizens would be a costly mistake. The United Kingdom’s objectives for our future partnership remain those set out in my Lancaster House speech of 17 January and the subsequent White Paper published on 2 February.

We recognise that it will be a challenge to reach such a comprehensive agreement within the two-year period set out for withdrawal discussions in the Treaty. But we believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU. We start from a unique position in these discussions — close regulatory alignment, trust in one another’s institutions, and a spirit of cooperation stretching back decades. It is for these reasons, and because the future partnership between the UK and the EU is of such importance to both sides, that I am sure it can be agreed in the time period set out by the Treaty.

The task before us is momentous but it should not be beyond us. After all, the institutions and the leaders of the European Union have succeeded in bringing together a continent blighted by war into a union of peaceful nations, and supported the transition of dictatorships to democracy. Together, 1 know we are capable of reaching an agreement about the UK’s rights and obligations a:, a departing member state, while establishing a deep and special partnership that contributes towards the prosperity, security and global power of our continent.

via http://ift.tt/2nuPYby Tyler Durden