It would seem that the European Commission is winning the briefing game. Or at least, that it hasn’t been caught out yet. But for the moment, the flow is such that the Retro-Remainers are avidly lapping up the syrupy froth.
None the less, the discrepancy between the Commission spin and the four sets of dynamics that are really at the heart of the Brexit negotiations is brutal to behold. But first, the mirage.
We hear the voice of Brussels when we encounter the bureaucratic parody that says that the Commission is “undertaking a process, not a negotiation.” And as for the idea that “the EU is a rules-based organisation”, and that there are only two options on the table – Norway or Canada – and that “there is no such thing as Canada Plus”: it’s a fable that has been mimeographed by the Commission for years.
The truth is this. The Commission has a preferred model for the continent of Europe. It is on in which everyone follows the same rules, and in which it drafts them. That is its job in the European treaties; that’s what its staff are recruited to do. It also makes life administratively tidier to have everything packaged away neatly. The democracy thing and that sovereignty concept are just so darned inconvenient.
The Commission is indeed the front man on the EU side but, happily, its role is not absolute, and its power is destined to shrink, the closer we move towards the deadline. An extract from the forthcoming interview with Michel Barnier in Prospect (the teaser only has been released) reports him saying that the Swiss model is “broken”. This will be news to the Swiss, and perhaps someone should tell them – except that the Commission normally does this behind their backs, in order to try discourage anyone else from being equally unhelpful in not surrendering their powers.
The most striking note in Barnier’s interview, as we have it so far, is perhaps the following element. Speaking of the UK, he says that
“they have to realise there won’t be any cherry picking. We won’t mix up the various scenarios to create a specific one and accommodate their wishes, mixing, for instance, the advantages of the Norwegian model, member of the Single Market, with the simple requirements of the Canadian one. No way. They have to face the consequences of their own decision.”
At the heart of this statement is a muddle, persistently propagated by the Commission itself. This fudges what it sees as benefits (i.e: absolutely anything centralised) with what anyone else might do (i.e: dependency on costs). It also raises a preposterous straw man by saying that it is impossible to mix two entirely different politico-regulatory models together. This is both self-evident and irrelevant. One might as helpfully suggest that you can’t have something that is both a set of curtains and a set of blinds, when the issue is in fact about functionality – how thick or long each is, and how much light gets through.
Let’s put the Commission mythology to one side, and swiftly set out the four sets of dynamics that really are in play in these negotiations.
Since the Norway model has been raised, let’s begin with the regulatory system. The EEA is a stepping stone for countries that are in the process of shifting towards an economy that is centrally regulated by and within the EU. For the avoidance of doubt, the downsides have been described in depth by Norwegian Eurosceptics, and in a new paper by Icelandic ones.
The alternative is to have a country that generates its own rules and standards. Often this is achieved through international organisations that aren’t the EU, such as the International Organization for Standards and the International Electrotechnical Commission. Where the state in question meets quality standards, and its testers are recognised as qualified to check, obstacles to international trade are removed. So the first question about Brexit is the extent to which EU countries (forget the intermediary Commission) are prepared to allow equivalence instead of replication.
We can expect major sectoral differences. Food will require a high level of convergence because of the heavy dependence on the Precautionary Principle, pushing standards controls onto the farm and away from the processor. But there will be a number of other areas in which the UK, with its trusted inspectors and high safety standards, often underwritten by global standards, may be able to reach an agreement that some sectors simply need to be of an equivalent standard. (A list of them of course is not in the public domain, because this would encourage flapping.)
This is, I suggest, the most globally important dynamic arising from the Brexit talks, as the wider this principle is acknowledged, the bigger the advance for global trade will be. Parts of the Commission are keen to expand the use of mutual recognition of standards to boost free trade, and the more this is pushed into the end Brexit deal, the weaker the protectionism-by-NTB (non-tarrif barrier) lobby within the Commission will become.
The second dynamic is the issue of divergence. Properly speaking, this is part of the transition talks, but accepting standards even for a set period allows for the principle of ‘standards drift’ – an element that already exists in EU thinking, thanks to the defaults that arise from any case of EEA non-compliance. This is not to encourage locking in disastrous policies such as the Common Fisheries Policy during transition, and it is important to note the vast amount of EU legislation which is superfluous even to EEA terms, and that can be speedily audited and dumped. But it does underscore how talk about the lack of any legal precedent for gradual divergence is laced with shallow rhetoric.
The Algeria example, lasting a decade and a half after independence, provides a remarkable example of the Nelsonian blind eye applied by Brussels when it was convenient. The WTO environment would probably see a legal challenge before a similar time scale today, but ‘divergence towards compliance’ as part of a transition deal towards an FTA is less far-fetched than some pretend.
The third element is the take-it or leave-it element, which is a fiction that is already being repudiated. Commission officials and national premiers are, even now, starting to publically commit to the viable prospect of a bespoke deal. As we have pointed out before, variable treaty geometry, for the EU, is as much a part of the furniture as are the sofa beds in MEPs’ offices. The Commission has been the guardian of no fewer than 42 different models of trade association.
No chance of a bespoke Brexit deal because the EU ‘doesn’t do bespoke’? The CETA deal itself is so bespoke it generated its own nomenclature: the EU-Canada Comprehensive Economic Trade Agreement. Others were crafted for a particular state, and then widened or modified – as is happening with the South Korean New Generation FTA, and the ACTEC model with the USSR of old. Many categories were designed for a small group of neighbouring countries sharing common characteristics, such as CEFTA for Central European pre-accession states; the EPA deal with the CARIFORUM bloc, or the EMAA covering ‘Club Med’. The Commission may be disingenuous, but it is not stupid. Bespoke is what the EU does.
The fourth aspect is about complete or partial coverage. A state acceding to the EU is tested against 35 accession chapters. Running a de-accession exercise is highly informative for two reasons. The first is the general irrelevance of a large chunk of the existing acquis for life after Brexit, revealing how much can simply be dumped without trade impact. The second is over the level of detail to be signed off with the transition.
A de-accession audit generates about 200 pages of listings of items that the UK will need to secure clarity over. I would suggest that four fifths of these are not controversial, and are intimidating in scale only: they are, for example, where the business of negotiators is about maintaining mutual recognition of veterinary qualifications; declining to take part in the European Solidarity Corps, making a call on whether EU nationals get the same discount rates for entering museums, and the like.
The remaining fifth is ‘where the action is’. Some of these will require considerable negotiation. Of the remainder, a significant number of items will be removed with Brexit, depending on how wide-ranging the deal is. However, not all of these losses would be bad; not all cannot be replicated; not all do not generate fresh opportunities; and not all cannot be mitigated by transition. That is the work of the negotiators. The less hassled they are by daft questions about the four-fifths in the interim, the better.
In short, we should ignore the Commission’s rhetoric, and focus instead on the four real variables that are linked to the trade talks: the need for equivalence; the pace of divergence; the opportunities of variable geometry; and the prospect of multi-speed divergence. Case history and the range of treaty models all show considerable precedent for the UK reaching a bespoke trade deal, based on a free trade model, and tailored to sectors of mutual advantage.
What remains now is to negotiate which bits of lego go into the deal to make Canada Plus. The farming lobbies of France, the manufacturing interests of Germany, and the starting point of compliance, should encourage us all to remain rational in the new year – to read, as ever, the small print, and continue to hold our nerve.