The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

mailing list
donate now
join now
shop

Brexit: Same goals; different paths - Managing divergence

On the 5th of December 2017 the Secretary of State for Exiting the European Union David Davis MP (speaking in a House of Commons debate) said:

"She [The Prime Minister] said that there are areas in which we want to achieve the same outcomes, but by different regulatory methods. We want to maintain safety, food standards, animal welfare and employment rights, but we do not have to do that by exactly the same mechanism as everybody else. That is what regulatory alignment means."[1]

How could this work in practice? How could the UK align with the EU but still be free to 'take back control' to make its own laws?

There is a way that this could be achieved, which contains three main elements.

First, the UK has been a member of the European Union and its earlier incarnations the European Economic Community (EEC) and European Community (EC) for decades. At time of writing, we are still in the EU and our rules are synchronised (and will remain so until we leave).

Secondly, the Government's intention is to absorb EU law into UK law as part of the Great Repeal (EU Withdrawal) Bill to ensure a smooth transition.[2]

The first two stages of the 'plan' are therefore already government policy and official planning. The next stage describes how the government can actually achieve what David Davis set out when he said:

"…alignment is not harmonisation. It is not having exactly the same rules; it is sometimes having mutually recognised rules, mutually recognised inspection and all that sort of thing. That is what we are aiming at."[3]

The third stage then would be to sign a new UK-EU agreement in which the parties would restate and reaffirm their commitments to each other under the following agreements:

  • General Agreement on Tariffs and Trade (GATT)
  • The Helsinki Final Act (1975)
  • WTO Technical Barriers to Trade (TBT) Agreement

Each of these separate agreements is worth considering.

The General Agreement on Tariffs and Trade (GATT):

Article III* National Treatment on Internal Taxation and Regulation

The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or proportions, should not be applied to imported or domestic products so as to afford protection to domestic production.

The products of the territory of any contracting party imported into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products.

Moreover, no contracting party shall otherwise apply internal taxes or other internal charges to imported or domestic products in a manner contrary to the principles set forth in paragraph 1. The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.

While at first glance this agreement seems quite clear, there are a few terms in it whose vagueness allows for countries to circumvent it – most notably whether the products at issue are in provably 'like'.

The Helsinki Final Act (1975) which led to the establishment of the OSCE (known as the Helsinki Accords):

Harmonization of standards

The participating States,

Recognizing the development of international harmonization of standards and technical regulations and of international co-operation in the field of certification as an important means of eliminating technical obstacles to international trade and industrial cooperation, thereby facilitating their development and increasing productivity, reaffirm their interest to achieve the widest possible international harmonization of standards and technical regulations, express their readiness to promote international agreements and other appropriate arrangements on acceptance of certificates of conformity with standards and technical regulations; consider it desirable to increase international co-operation on standardization, in particular by supporting the activities of intergovernmental and other appropriate organizations in this field.[4]

World Trade Organisation's TBT Agreement:

Technical Barriers to Trade

2.1 Parties shall ensure that technical regulations and standards are not prepared, adopted or applied with a view to creating obstacles to international trade. Furthermore, products imported from the territory of any Party shall be accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country in relation to such technical regulations or standards. They shall likewise ensure that neither technical regulations nor standards themselves nor their application have the effect of creating unnecessary obstacles to international trade.

2.2 Where technical regulations or standards are required and relevant international standards exist or their completion is imminent, Parties shall use them, or the relevant parts of them, as a basis for the technical regulations or standards except where, as duly explained upon request, such international standards or relevant parts are inappropriate for the Parties concerned, for inter alia such reasons as national security requirements; the prevention of deceptive practices; protection for human health or safety, animal or plant life or health, or the environment; fundamental climatic or other geographical factors; fundamental technological problems.[5]

The common thread running through these agreements is a desire for harmonisation and an expectation that parties will not only participate in international rule-making but also make use of those rules.

The EU and its member states are signed up to many international bodies which cover issues as broad and diverse as Veterinary and Phytosanitary matters, health and safety, product standards and food standards. Under the EU's own treaties, it is mandated to follow the rules agreed by these organisations:

The Treaty on the Functioning of the European Union:

Article 216

1. The Union may conclude an agreement with one or more third countries or international organisations where the Treaties so provide or where the conclusion of an agreement is necessary in order to achieve, within the framework of the Union's policies, one of the objectives referred to in the Treaties, or is provided for in a legally binding Union act or is likely to affect common rules or alter their scope.

2. Agreements concluded by the Union are binding upon the institutions of the Union and on its Member States.[6]

So in the new UK-EU agreement, the parties (EU and UK) would start by restating and reaffirming their commitments to each other under the above mentioned agreements.

But the new agreement would go one step further and explicitly say that, as a result of these agreements and the long harmonisation of the UK with EU/EEA (European Economic Area) rules, that UK products and services could be bought, sold or provided to the EU as long as they were made (or conducted under) *either* EU legislation or the international standards on which they are based.

Such an arrangement would not be without precedent as Jersey, Guernsey and the Isle of Man are just some of the territories with special relationships to the EU.[7]

In practice, we imagine the agreement would establish a UK-EU divergence panel, which would meet regularly. When the UK planned to diverge from EU regulation, it would explain how the new approach differs but still fell within (or exceeded) international standards. This would prevent a 'race to the bottom' which some Brexit commenters have predicted.

If the EU were initially unwilling to sign this agreement, the UK government should remind the EU of two things, namely that:

  • -the majority of the new agreement would be re-stating commitments and obligations the EU and its member states have already agreed to.
  • -such an agreement would satisfy Article 8 of the TFEU which states 'The Union shall develop a special relationship with neighbouring countries, aiming to establish an area of prosperity and good neighbourliness, founded on the values of the Union and characterised by close and peaceful relations based on cooperation.'[8]

Such an agreement would be mutually advantageous, achievable and go a long way towards maintaining frictionless trade and allow UK lawmakers to take back control over new laws affecting UK businesses.


[1] Hansard online 05 December 2017 - Volume 632

[2] http://www.bbc.co.uk/news/uk-politics-39266723

[3] http://uk.businessinsider.com/david-davis-says-the-uk-will-stay-aligned-to-eu-trade-rules-after-brexit-2017-12

[4] https://www.osce.org/helsinki-final-act

[5] https://www.wto.org/english/docs_e/legal_e/tokyo_tbt_e.pdf

[6] http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-the-functioning-of-the-european-union-and-comments/part-5-external-action-by-the-union/title-5-international-agreement/504-article-216.html

[7]https://www.gov.je/Government/Departments/JerseyWorld/pages/relationshipeuanduk.aspx#anchor-2

[8] http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-european-union-and-comments/title-1-common-provisions/6-article-8.html

Dragi doesn’t understand how the bond markets are ...
A test of your EU compliance
 

Comments 2

Guest - Soumaya Keynes on Saturday, 16 June 2018 21:43

Hi - you're using the Trade Talks podcast logo as the image associated with this article.

https://itunes.apple.com/gb/podcast/trade-talks-piie/id1270804213?mt=2

Would you mind changing it?

Thanks,

Soumaya (one of the podcast's hosts)

Hi - you're using the Trade Talks podcast logo as the image associated with this article. https://itunes.apple.com/gb/podcast/trade-talks-piie/id1270804213?mt=2 Would you mind changing it? Thanks, Soumaya (one of the podcast's hosts)
Guest - Janet Tanner-Tremaine on Wednesday, 20 June 2018 14:49

Ariane thank you for a considered and truthful article on the Brexit from the EU that is being negotiated by the UK Government at this time. Well done, you! I particularly like the following quote taken from the end to your commentary:
"Such an agreement would be mutually advantageous, achievable and go a long way towards maintaining frictionless trade and allow UK lawmakers to take back control over new laws affecting UK businesses".

However, because of the manner displayed by the Brussels Barnier-bunch it would seem they have not read that part of Article 8 of the TFEU which states:
"The Union shall develop a special relationship with neighbouring countries, aiming to establish an area of prosperity and good neighbourliness, founded on the values of the Union and characterised by close and peaceful relations based on cooperation.'[8]

Their attitude of trying to punish the UK for daring to want something different for this country than the political dictatorial institution offered by the EU - which is anything but a trading bloc - is just puerile and deplorably bad for both the UK and the EU.

Ariane thank you for a considered and truthful article on the Brexit from the EU that is being negotiated by the UK Government at this time. Well done, you! I particularly like the following quote taken from the end to your commentary: "Such an agreement would be mutually advantageous, achievable and go a long way towards maintaining frictionless trade and allow UK lawmakers to take back control over new laws affecting UK businesses". However, because of the manner displayed by the Brussels Barnier-bunch it would seem they have not read that part of Article 8 of the TFEU which states: "The Union shall develop a special relationship with neighbouring countries, aiming to establish an area of prosperity and good neighbourliness, founded on the values of the Union and characterised by close and peaceful relations based on cooperation.'[8] Their attitude of trying to punish the UK for daring to want something different for this country than the political dictatorial institution offered by the EU - which is anything but a trading bloc - is just puerile and deplorably bad for both the UK and the EU.
Already Registered? Login Here
Guest
Tuesday, 20 November 2018