Good morning. David Meyer here in Berlin, filling in for Alan.
Was Brexit worth it? There’s no definitive answer to that question yet, less than eight months into the U.K.’s divorce from the European Union, but we are nonetheless at an illustrative juncture.
In the yes-it-was-worth-it corner: The hope of slashing red tape. “For the first time in a generation, we are free to implement rules that put the U.K. first,” said David Frost, the lead Brexit negotiator (and not the Nixon interrogator) this morning as the government unveiled a consultation on seizing “our new opportunities as an independent nation.”
At this early stage, the U.K.’s rulebook is still aligned with that of the EU. Divergence was always one of the main arguments for Brexit, and here’s how the government wants to make that happen: regulatory “sandboxes” that lift some rules as new products are tested in a real-world setting; mandatory reviews of regulations after two rather than five years; a duty on regulators to “promote innovation and competition”; and a shift away from the EU’s precautionary approach, so that “regulation is reset to focus on outcomes, not process, and be proportionate to the issues and impacts on businesses and people.”
It remains to be seen what this would mean in practice, but these are nonetheless significant proposals with obvious attractions for business. However, let’s now look at the other corner, because the impossible dilemma posed by Brexit—the standoff over customs checks between Northern Ireland and the rest of the U.K.—is back on the agenda, big-time.
The British government is now trying to rewrite the Northern Ireland protocol, an essential part of the Brexit withdrawal agreement that says there must be no impedance to the free movement of goods between Northern Ireland (which did not vote for Brexit) and the Republic of Ireland, the EU member that it borders—the aim is to preserve peace in the province by allowing people there to continue living a sort of hybrid British-Irish life.
This agreement is one of the two reasons why border checks are now supposed to take place in the Irish Sea—a mechanism that is causing trade disruption and, in bad news for peace, infuriating unionists who don’t want Northern Ireland separated in any way from the rest of the U.K. The other reason is the British government’s insistence on avoiding regulatory alignment with the EU; this is what makes the checks necessary in the first place.
The dilemma has been apparent for years, but here’s Frost on the U.K.’s demands: “We cannot go on as we are.” And Business Secretary Kwasi Kwarteng: “A deal is a deal but it wasn’t something that was going to last forever.” Reminder: Frost himself negotiated the protocol less than two years ago, and the government made it part of British law just last year.
Unsurprisingly, the EU’s response to this display of bad faith has not been positive. EU Vice-President Maroš Šefčovič: “We are ready to continue to seek creative solutions, within the framework of the protocol, in the interest of all communities in Northern Ireland. However, we will not agree to a renegotiation of the protocol.” Now the EU is planning to formally detail the U.K.’s breaches of the protocol, an escalation that could see the argument head to the EU’s highest court.
The Brexit circle remains unsquared, to say the least. More news below.
J&J, McKesson, Cardinal Health and AmerisourceBergen have announced their $26 billion settlement with states over the U.S.'s opioid pandemic. J&J will pay $5 billion to settle claims it illegally marketed opioids, while the distributors will pay $21 billion over allegations of allowing suspiciously large shipments to go through. Fortune
Nearly 700 Alphabet workers have signed a petition calling on the Google parent to change how it handles sexual-assault complaints. The call was sparked by the case of an employee who was allegedly raped by a colleague and who has now been put on unpaid leave. The petition demands Alphabet "immediately cease the insidious process of pushing workers into EAP [employee assistance program] therapy when they face harassment or other workplace abuses and using EAP to gather information on complainants before future lawsuits." Insider
Elon Musk did Bitcoin a favor again by noting a "positive trend" in the use of clean energy for Bitcoin mining, and suggesting that Tesla might start accepting the cryptocurrency as payment for its cars again. He also said SpaceX owns some Bitcoin, and that he personally owns Bitcoin, Ethereum and Dogecoin. Having fallen below the $30,000 mark earlier this week, Bitcoin's bounced back on his words and is now north of $32,000. Fortune
Unilever has joined rival consumer goods giant P&G in warning about the rising cost of raw materials. Unilever says it will need to raise its prices, though slowly so as not to shock consumers; profitability goals are being scaled back. CFO Graeme Pitkethly: "This is something that a business like Unilever is able to handle, but it takes time." Bloomberg
AROUND THE WATER COOLER
Lumber prices could rise again due to wildfires in western Canada. British Columbia is in a state of emergency and local lumber titan Canfor has had to curtail production as a result. If more curtailments follow, expect higher prices to return. Fortune
Uber and Lyft drivers in major U.S. cities staged a strike yesterday, protesting for better pay and the ability to unionize—they want lawmakers to pass federal legislation called the PRO Act, which has already cleared the House and now faces the Senate. Fortune
Nord Stream 2
Ukraine is understandably unhappy about the U.S. dropping its opposition to the Russia-Germany Nord Stream 2 pipeline, which it fears could undermine its crucial geographical role in passing gas from Russia to Europe. Kiev wants formal talks with Brussels and Berlin. Under the U.S.-German deal, Germany promises to "support Ukraine's energy security." Politico
Congressman Peter DeFazio responds to a recent Fortune commentary piece that criticized his objections to precision scheduling in the U.S. railroad industry: "Investor calls demonstrate that Wall Street investors’ myopic focus on short-term profits demands that railroads boost quarterly profits by cutting costs and increasing revenues. In doing so, great freight rail service and the long-term health of the industry is sacrificed." Fortune
This edition of CEO Daily was edited by David Meyer.
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