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When discussing the potential workings of cross-border trade on the island of Ireland post-Brexit, a huge amount of the focus has been on the practicalities of trade itself – the completion and format of paperwork, the requirement or otherwise of checks, the nature and location of physical infrastructure – and the supposed or disbelieved potential of technical solutions to fulfil them

For example, following the fall-out over the Prime Minister’s draft withdrawal agreement last week, it is now reported that she hopes to quell opposition among Conservative MPs and the (small-r) remaining members of the Cabinet by holding out the possibility that “technological solutions” will make the backstop unnecessary.

Those are important considerations, and it’s an important debate to have. Certainly, the idea that it is somehow impossible to establish a working system across that border should be rejected – if only the Government had done so rather than concede the backstop in the first place.

But it is also striking that the physical and procedural aspects of how the UK’s only land border with the EU would work so utterly dominate the discussion of that border. Meanwhile, the question of how regulation and regulatory divergence would function across the border tends to be neglected, even though that would be an underlying reason for the existence of the border in the first place.

The EU already has other land borders with non-EU states. There are a variety of such regulatory borders. There’s Norway, where ‘fax democracy’ means EU regulations are implemented as they are introduced, effectively a conveyor belt of regulation. Or, by contrast, Switzerland, which opts to implement EU regulations on a case-by-case basis, in return for freer market access – a bit-by-bit decision to converge where they believe it to be desirable.

On the day after Brexit, of course, the UK would be in a unique position – EU regulations would be fully in place in our law. Maximum mutual recognition of one another’s regulation, and the attendant smooth-running of cross-border trade in a regulatory sense, should be relatively uncontroversial at that point, at least in a practical and legal sense, if perhaps not politically. That means the question for the future wouldn’t primarily where to converge and how to manage convergence, as is the common question in the modern age, but where to diverge, and how to manage divergence.

How the EU would like to manage such a relationship in future is pretty obvious – it would like the UK to follow EU regulations, the “common rulebook” in Chequers parlance, in full. Of course it would – that way it retains power, eliminates the risk of ‘unfair’ competition and thereby awkward internal pressures, and gets a relatively quiet life. Not for the first time, what the EU would like is not necessarily the same as the UK’s interests.

Sometimes that approach is presented as the only way such a border could work freely and smoothly, and therefore that there can be no choice other than to promise never to diverge in our regulation. That would mean not just keeping all the EU law we currently have, but continuing to apply new law in the UK in order to remain fully compliant.

However, that argument is mistaken. As the IEA’s Plan A+ argued, it’s a perfectly viable principle to pursue mutual recognition rather than to require identical rulebooks. The twin tests ought to be that the regulations of both sides share the same goals, and can objectively and reasonably be judged to be achieving them. Both sides would transparently share information on how their regulations function and their impact.

On day one, the situation would be the same as under a common rulebook – having literally identical regulations would pass those tests. The difference would be that mutual recognition provides for the freedom to regulate differently where we choose on day two, or day 2000, or not to adopt new EU laws where we disagree with them. That might well be in quite modest and limited ways, at least to begin with, but rights are still worthwhile even when not constantly exercised to their fullest limits.

As Plan A+ puts it:

‘Domestic regulatory autonomy does not mean divergence in all areas, immediately, because capacity to diverge does not mean either side will; however, the mandatory harmonisation of regulation via alignment of regulations themselves (as opposed to alignment of their goals) would fail to deliver the benefits of leaving. The UK may choose to retain EU regulations at times in some sectors, but must be able to choose not to.’

Such an arrangement would rest on a lot of communication, and a formal route of arbitration, to guard against one side unreasonably withdrawing recognition from the other, for example, or simply lying about the effects of regulation that it claims wrongly to fulfil the requirements for recognition. The IEA’s plan includes a draft Regulatory Coherence chapter, which presents a possible basis for this type of agreement and the mechanisms for monitoring and adjudicating divergence it would require. A Joint Committee between the UK and EU would be established to oversee regulatory coherence, and to rule on questions of how regulatory divergence is being managed.

Such a system certainly could be used to ensure smooth trade across a border with minimal regulatory obstructions. The political question, of course, is whether the EU would agree to such a system when it would prefer the UK simply to copy and paste EU law forever.

The principle of the approach is well-established, but the key to securing what Brussels would see as a concession is one of alliances. If several other would-be EU trade partners – the US, New Zealand, Australia, for example – were also asking for the same basis to a Free Trade Agreement as the UK, then the EU would have an even greater incentive to concede it. The bitter pill of the UK being allowed to diverge from EU law would perhaps be sweetened somewhat if it was part of a general principle that freed up a great deal of trade.

The spanner in the works of all this, of course, is the draft Withdrawal Agreement and the backstop.

What happens in a normal negotiation if one side is too dogmatic and insists that the other submit to an unreasonable condition, in this case regulatory obedience? Well, the negotiation fails, they get no liberalisation of trade and no regulatory convergence even in the areas where both sides might have otherwise agreed. That’s a reason to be pragmatic. Under the Prime Minister’s proposal, however, a failure to agree would simply pitch the UK into the Customs Union. It undermines the incentive for the EU to strike a reasonable deal, and offers a lose-lose outcome for the UK.

108 comments for: It’s possible to trade across the Northern Irish border without simply swallowing EU regulation whole

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