As Brexit negotiations continue, the question still stands, what will the relationship between the UK and EU look like? CCC Director, Michael Keating, discusses the different versions of Brexit held by the UK and EU, and what we might expect from negotiations going forward.
It is four years since the UK’s vote to leave the EU and five months since it left. The transition phase during which EU rules still applies runs out on 31 December. This can be extended only if both sides agree to do so before the end of June. Yet the fundamental question that was not resolved by the referendum remains unresolved. What will be the relationship between the UK and the EU from January?
There have always been two radically different visions of Brexit. One vision sees the UK as an independent sovereign state, making its own laws and regulations without hindrance. The other vision is of a UK linked closely to Europe and its internal market. Since Brexit formally occurred at the end of January and the negotiations on the future relationship started, this gap has not narrowed but widened.
The Withdrawal Agreement of last year was accompanied by a Political Declaration on the future relationship. This committed both sides to an ‘ambitious, broad, deep and flexible partnership across trade and economic cooperation with a comprehensive and balanced Free Trade Agreement at its core, law enforcement and criminal justice, foreign policy, security and defence and wider areas of cooperation.’ There would be an overarching institutional partnership, covering the various aspects of cooperation in different sectors. A Joint Committee would manage this and, where there were disputes, they could be put to binding arbitration. It was on this basis that the EU has conducted the negotiations under Article 217 of the Treaty, which provides for ‘an association involving reciprocal rights and obligations, common action and special procedure.’
Such an agreement would ensure ‘a level playing field for open and fair competition’. The EU interprets this as requiring rules to prevent either side using state aid to give its businesses an unfair advantage; respect for environmental standards; high standards in agriculture and food; and respect for labour standards. It should also ensure the integrity of the EU’s legal order, safeguarded by the Court of Justice of the EU.
The UK Government starts from a different place. It sees the future relationship as a mere trade deal and has combed the agreements the EU has made with other countries for examples favourable to its case. The commitment to an overarching framework has disappeared in favour of sectoral agreements on particular matters. It is seeking a agreement on fisheries outside the trade agreement, so allowing it to control access to its waters for EU boats while keeping open EU markets for its fish. It wants to separate cooperation on law enforcement and security from the economic issues. There will be dispute resolution mechanisms for each agreement. It will not accept any role for the EU Court of Justice in interpreting the agreement.
In the early days of the Brexit debate, a vision was presented of a UK liberated from burdensome regulations and so free to conquer global markets. This has almost entirely disappeared and the present Government insists that it will not lower environmental, food or labour standards. It will not, however, put these into binding commitments, since it sees these as violations of sovereignty. Instead, it refers to the agreements the EU has made with third countries, which typically commit the parties merely to respect international agreements such as those of the World Trade Organization, the International Labour Organization or the Paris Treaty on climate change. It will commit not to regress on present standards but not to remain aligned should the EU raise standards.
While the UK asks why it cannot have items already conceded in other EU trade agreements, the EU argues that this is cherry-picking. Each agreement comes as a package, with trade-offs among the different items so as to balance out the advantage of the two sides. In any case, the UK is geographically close to the European Union and cannot be compared with Canada or Japan. It is already tightly integrated into the EU single market and cannot expect to benefit from it without accepting the rules.
Some of the issues at stake can become very technical and the EU has always shown a degree of flexibility in negotiation. The issue here is altogether deeper and the two sides are approaching it from very different perspectives.