Brexit: UK negotiating position

Brexit Insights
David Wood.jpg By David Wood, Senior Policy Director

13 July 2018

David Wood summarises some of the key points and implications from the Government’s Brexit White Paper published on 12 July.

The Prime Minister has finally shown some decisiveness and leadership in taking a more specific and realistic stance on Brexit.

At a meeting at Chequers on 5/6 July, the Cabinet appears to have been cajoled into a compromise agreement on a new and more specific negotiating stance.

An initial Government statement was issued on 6 July and this has now been followed up by a White Paper ‘The future relationship between the United Kingdom and the European Union’ which provides more detail.

It was always going to be hard reconciling the conflicting views within the Cabinet, and the subsequent ministerial resignations were probably expected, but there are still many conflicting views within the Conservative Party, within the UK Parliament, and across the country.  None of this is easy.  And, as an opening position for negotiations, it is not clear how the EU will react to the new proposals.

You could argue that a logical and more realistic position should have been adopted over a year ago but, with time running out – for Government negotiators and for businesses planning for Brexit – you might say this is “better late than never”.

Certainly, recent calls from Airbus, BMW and Jaguar Land Rover have demanded a business-friendly approach to facilitate ongoing trade with the UK’s most important trading bloc and frictionless cross-border shipments within pan-European supply chains.

Conscious of the short negotiating time remaining, the Government has also announced that it will step up preparations for a range of potential negotiating outcomes, including a ‘no deal’ scenario.

Key elements of the UK proposals

1. Free Trade Area for Goods

A free trade area for goods within the UK and EU – to avoid cross-border frictions for business and meet commitments made to Northern Ireland and Ireland

A common rulebook for all goods including agri-food.  This involves the UK committing to ongoing harmonisation with EU rules on goods.  The UK would have no say in the formation of those EU rules, though it would continue to influence the international standards which underpin them.

The UK Parliament would oversee the adoption of the rules into UK law: it would have the ability to reject those rules if it chose to do so, but would have to face the consequences of such a departure for market access, security co-operation, frictionless borders etc.

A different arrangement for services will be adopted.  Regulatory flexibility is sought, recognising that the UK and EU will not have the levels of access to each other’s markets as at present.

2. Reciprocal Commitments to Open and Fair Trade

The UK and EU would adopt strong reciprocal commitments to open and fair trade within the agreement on the future relationship between the UK and EU.

The UK would commit to a common rulebook on state aid and would establish arrangements for co-operation between competition regulators.

The UK and EU would also agree to maintain high regulatory standards for the environment, climate change, social and employment matters, and consumer protection.  Standards should not be allowed to slip!

3. Consistent Interpretation and Application of UK-EU Agreements

The UK and EU would establish a joint institutional framework to ensure the consistent interpretation and application of UK-EU agreements by both parties.

This would be undertaken in the UK by UK courts – and in the EU by EU courts, but the UK would have regard to EU case law in areas where there is a common rulebook.

This would also involve a Joint Committee for the resolution of disputes, with a reference procedure to the Court of Justice of the EU as the interpreter of EU rules.

4. Facilitated Customs Arrangement

The UK and EU will work together on the phased development of a new facilitated customs arrangement which would remove the need for customs checks and controls between the UK and EU.

The UK would apply its own tariffs and trade policy for goods intended for the UK, and would apply the EU’s tariffs and trade policy for goods intended for the EU.

The UK will set its own tariffs for trade with the rest of the world.  There is recognition that these arrangements could take some time to establish.

Key benefits

  • The creation of an ambitious relationship which respects the UK’s sovereignty and the EU’s autonomy;
  • Frictionless access to each other’s markets for goods, and protecting integrated pan-European supply chains;
  • Regulatory flexibility for services – but not current access levels to each other’s markets;
  • Arrangements to preserve the mutual benefits of integrated markets and protect financial stability for financial services, though not replicating the EU’s passporting regime;
  • Avoiding the need for a hard border between Northern Ireland and Ireland;
  • UK departure from the Common Agricultural and Common Fisheries Policies, so the UK takes back control of their agricultural policy and UK fishing waters;
  • Ability to develop an independent UK trade policy with the rest of the world, and the UK’s own seat at the WTO;
  • Oversight of all UK laws by the UK Parliament and Devolved Administrations, with an ultimate ability to reject rules from the EU rulebook, subject to accepting the consequences;
  • Restoring the supremacy of UK courts, but committing that UK courts would pay ‘due regard’ to the CJEU’s interpretation in relation to common UK-EU rulebooks;
  • Ending free movement of people from the EU into the UK, subject to a new ‘mobility framework’ to allow for travel and to apply for study and work.

It is proposed that the new arrangements between the UK and EU could take the form of an ‘Association Agreement’ which is essentially an established form of Treaty between the EU and a non-EU country which provides a framework for co-operation.

Topics

  • Political landscape
  • Brexit

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