Making social science accessible

17 Jul 2018

UK-EU Relations

After reading the Brexit white paper for a short while, I tweeted a stream of initial thoughts starting with the idea of “kid in the first year of senior school applying to join the sixth form. Trying to understand what that means and not really succeeding.” For at first sight this was one of the oddest official documents I had encountered, never reading as a single document with a single guiding principle, but rather a huge mix of stuff thrown together slightly randomly.

Of course we know from the narrative around the release of the paper that the primary intention was to allow goods to cross borders seamlessly without the ensuing commitments crossing Theresa May’s red lines. This, not surprisingly, led to some contortions to which we’ll return, but it is the secondary aim of the paper, to show a UK government thinking seriously about the future relationship, which is where most of the oddness comes from.

My favourite paragraph, 22 in Section 4, illustrates this well, and is worth quoting. It starts:

“In areas where the UK commits to a common rulebook, where the UK makes an upfront choice to commit to ongoing harmonisation with the relevant EU rules and requirements, it will be important for the UK to be able to share its views with the EU as those EU rules are developed.”

Ok, you would expect we’d want to be able to influence EU legislation, though this will be hugely reduced compared to what we currently enjoy. The paragraph goes on to state that we want the same say as member states, which we’re saying third countries already have. This is possibly a convoluted reference to EEA countries, but frankly it makes no sense. No third country is consulted on the same basis as an EU member.

The paragraph finishes “As part of that process, the UK government could also seek the opinion of the relevant domestic UK legislatures,” which feels like a different debate entirely, on the UK’s internal arrangements.

It is worth picking up that last point further. Typically a document as important as this would be accompanied by backing documents, providing evidence and other relevant information such as devolved issues. That the white paper isn’t suggests a certain lack of seriousness and joined-up thinking.

The document is not all bad. Upfront the pledges to meet commitments to Northern Ireland are welcome. Though the assumption that the backstop could not be used because the solution is so great is somewhat heroic, as most trade experts have pointed out.

But the detail is frequently a mishmash of standard elements of a free trade agreement, UK exceptionalism, and a desire for a close relationship. Take the protection of geographical indications for foodstuffs, such as West Country farmhouse cheddar, or parmigiano reggiano, without which the EU will not sign a free trade agreement, let alone a close economic partnership. The document says that the UK will establish our own scheme, “open to new applications, from both UK and non-UK applicants, from the day it enters into force.” There’s not a chance that’s acceptable to the EU.

On services and mutual recognition of professional qualifications there is a desire for “broad coverage”, “deep commitments”, and “not constrained by existing EU FTA precedents” but no real detail. As you might expect financial services has more detail, but it’s contradictory. We want “a new economic and regulatory arrangement” but one that would “respect the regulatory autonomy of both parties”, however that could happen.

There are sections on labour and environment standards which present, with great virtue, a UK position on non-regression which is standard in new EU trade agreements. It is however highly likely that these have not been thought through or promised in bad faith, since we appear to actually want to bind ourselves to avoiding changes such as abolition of the working time directive

Meanwhile in the trade section we’re still going to be seeking agreements with Australia, New Zealand and the US, but adding the Trans Pacific Partnership to the mix. We still don’t justify why those countries should be first, or what beyond vague platitudes should be included.

But back to the main issue that probably drove the paper’s release, avoiding a hard border in the Irish Sea or on the island of Ireland. The paper’s main features of a facilitated customs arrangement (FCA) and common rulebook were trailed in advance and are clearly unacceptable to the EU.

The FCA allows the UK and EU to have different tariffs, but not pay tariffs for trade between them. Some of the issues that this opens up the paper addresses but doesn’t try to answer. For example, UK customs will ensure the right tariff is paid, but where goods land at Rotterdam for the UK market “the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK.

The UK and the EU will need to agree mechanisms, including institutional oversight, for ensuring that this process is resilient and verifiable.” Some issues are not even asked, such as the situation where one side gains by reducing tariffs on intermediate goods.

Not much more thought has been given to the common rulebook, which would cover “only those rules necessary to provide for frictionless trade at the border,” a spectacularly vague statement.

Soon afterwards the document says that “The adoption of a common rulebook means that the British Standards Institution (BSI) would retain its ability to apply the “single standard model” for which it applied some time before the white paper was released. In fact much of the rest of this section then starts to describe the single market for goods, but without ever naming it.

Meanwhile whenever the EU or UK want to change something they would “notify each other through the Joint Committee of any proposed and adopted legislative proposals” which will then “agree on whether the rule changes were in scope of the future relationship and whether the relevant agreement may need to be updated to reflect this change.” This sounds like a never ending job, once again trying to mimic without saying the single market.

Of course, the EU already has a common rulebook in some areas with some non-members, the European Economic Area. Quite why it should want another is unsurprisingly never stated.

Where, then, does this document leave us? As an opening statement as to what a country might want in a free trade agreement it could be passable, albeit only in that parties would spend months interrogating it to find out what it actually meant, and dropping large parts when it was clear they were unworkable (or the UK didn’t actually mean them).

As a document to unblock negotiations on an agreement intended to come into force in nine months it looks tangential at best, adding perhaps a bit of flavour to a non-binding declaration of future intent, while focusing on the real issue of what happens after March 2019.  It might actually be most useful as an insight into the direction of the UK government in July 2018, where it could be given a simple one word description: confused.

By David Henig, Director, UK Trade Policy Project at European Centre for International Political Economy. 


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