This is my second Brexit article in two weeks, the first being on why a ‘no deal’ Brexit is against EU principles (link). This article is my assessment of the reality of Brexit and the likely deal that will emanate from ridiculously long and protracted negotiations, the issues of which have mystified the public in the UK and the EU.
Firstly, I want to thank my cousin Kalypso Nicolaidis who is Professor of International Relations at the University of Oxford, and who has written a paper entitled ‘Brexit and the Compatibility Paradigm’ which can be reviewed in detail on the IBSA website (link). She has explained in detail the concept of ‘Mutual Recognition’ which forms the basis of this article.
We have heard about Michel Barnier repeatedly referring to the integrity of the single market which would be threatened if the UK enters into a free trade agreement with the EU. Generally, a free trade area, such as EFTA, is made up of countries (Iceland, Liechtenstein, Norway and Switzerland) in different locations without a common external border surrounding the member states. The EU is different in this respect, in that it has created a common external border (albeit that non-Schengen countries have border controls), and the single market therefore allows member states to disregard the ‘rules of origin’ of goods and allows those goods to pass freely between member states. The EU considers that if the UK is outside of the single market but within a customs union, the EU would have to rely on the UK applying the relevant customs tariffs and accounting to the EU for these tariffs. Would this indeed affect the integrity of the single market?
Let’s look at an example. Assuming goods arrive from Africa to say Spain and thence through France to Germany. Spain imposes the relevant EU/African tariff and allows those goods to travel to their destination. The EU relies on Spain to impose the appropriate tariff and there is no central body supervising the accountability of Spain to impose the correct tariff. The ultimate regulatory authority is the European Court of Justice, and this will only become involved in cases of disputes. In other words, the EU as a body recognises the rights of individual member states to apply the relevant tariffs for the purposes of the customs union, allowing free movement therefore of goods throughout the single market.
The issue is therefore why cannot the EU apply this mutual recognition procedure to the UK in respect of both tariffs and customs regulations if it is no longer part of the European Union? On the basis that there is a free trade agreement between the EU and the UK, which apparently all sides wish to have, the stumbling block appears to be only in respect of goods that arrive in the UK and are destined for the EU. It is in respect of these goods that the UK needs to impose the appropriate EU tariff and account to the EU for this tariff. Cannot the UK be trusted to do so? After all, it has been trusted to do so for the last forty years under the mutual recognition procedure and to apply different regulations according to the nature of goods, eg toys have a different regulation to agricultural products. These EU regulations only come into conflict with the mutual recognition procedure if the countries don’t apply the appropriate tariffs or provide the relevant certification, and these conflicts should be resolved by EU regulators and ultimately the European Court of Justice. The UK should therefore accept in the future that conflicts in respect of goods and services destined for EU countries should indeed by resolved by the ECJ.
Brexiteers should recognise that we have actually created many of the EU regulations that have been adopted by EU member states, such as in the areas of financial services and medicine. So, having created these regulations and procedures, why would the UK be unhappy to fall within the jurisdiction of the ECJ and regulatory authorities in respect of these goods and services? In other words, we are already one of the most EU compatible countries, so we should adopt compatibility rather than divergence when discussing pragmatic solutions with the EU.
As regards free movement of labour, again it seems in the interests of both the UK and the EU to accept migration of individuals throughout the EU and its partnership with the UK. This is provided that there is some degree of control that migrants should not be allowed to settle in a country merely to take advantage of the more beneficial social welfare in that country. This goes for the UK but also for Germany, Italy, Denmark and other EU countries that have experienced problems in assimilating unemployed migrants who are there merely to benefit from their social systems.
One of the reasons for voting ‘Remain’ in the June 2016 referendum was not to restrict immigration between EU countries but to attempt to impose some aspect of realism for EU countries haemorrhaging funds to support migrants without any benefit to the relevant economy. The partnership model with the EU may ultimately achieve this objective, but the UK should certainly accept free movement of labour if employment exists.
Will there be a deal before the EU council of ministers meet in October? It seems unlikely, although there are certainly more positive signs coming out of discussions between Dominic Raab and Michel Barnier. What is more likely is that the no-deal threats will continue until early March next year when, hey presto, a deal will be reached. And what will be the likely outcome of that deal? Probably a free trade agreement under the control of (ultimately) the ECJ with the continuation of the mutual recognition procedures which have been in place for the last forty years. However, because the deal will be a last minute one, the various regulations, certifications and other legislative agreements that need to be put in place will come within a so-called transition period which may not have a finite term. This seems to have been the position with regard to the Swiss and Norwegian agreement with the EU where there still exists a degree of inconclusiveness in certain areas.
So who will be the winners and who the losers? The ‘Remainers’ may feel that they have succeeded in maintaining the status quo, whilst the ‘Brexiteers’ would have claimed victory that we are now a Sovereign State again outside of the control of the EU (which will not, in fact, be the case if the above trading scenario is adopted). And the general public? They will wonder what the last two to three years has been all about, and count the cost of Brexit as the ultimate political blunder of this generation.
With kind regards