{"id":2600,"date":"2018-07-27T14:54:22","date_gmt":"2018-07-27T13:54:22","guid":{"rendered":"http:\/\/blogs.sussex.ac.uk\/uktpo\/?p=2600"},"modified":"2018-07-27T15:00:52","modified_gmt":"2018-07-27T14:00:52","slug":"asymmetry-in-the-uk-and-eus-regulatory-ask","status":"publish","type":"post","link":"https:\/\/blogs.sussex.ac.uk\/uktpo\/2018\/07\/27\/asymmetry-in-the-uk-and-eus-regulatory-ask\/","title":{"rendered":"Tilting the playing field? The asymmetry in the UK and EU’s regulatory ‘ask’"},"content":{"rendered":"Share this article: <\/em> \"Facebook\"<\/a>\"twitter\"<\/a>\"reddit\"<\/a>\"pinterest\"<\/a>\"linkedin\"<\/a>\"mail\"<\/a>

\"Photo27 July 2018<\/em><\/p>\n

Dr Emily Lydgate is a lecturer in Law at the University of Sussex and a fellow of the UK Trade Policy Observatory.<\/em><\/p>\n

The July UK White Paper on the future relationship with the EU calls for a \u2018common rule-book\u2019 for goods. This has sometimes been shorthanded as a proposal for a Single Market for goods (in contrast to services, which departs more dramatically from the status quo).[1]<\/a><\/p>\n

But the scope of regulation the UK proposes should fall within this \u2018common rulebook\u2019 is narrower than what would be covered in a Single Market for goods \u2013 as the EEA Agreement demonstrates. It\u2019s narrower even than that covered by the EU-Ukraine DCFTA Agreement.<\/a><\/p>\n

So what does the common rule-book cover – and how might this match up with the EU\u2019s regulatory \u2018ask\u2019 of the UK? Two distinct issues arise here: first, what is the minimum common rule-book necessary for frictionless trade? Second, what is the minimum common rule-book necessary to secure a \u2018level playing field<\/a>\u2019, an objective the EU has established, but not fully elucidated. This issue has received less attention in the press than the Irish border issue but will take on increasing importance in negotiations on our \u2018future relationship\u2019 with the EU.<\/p>\n

What does the UK propose?<\/h3>\n

\"\"The White Paper makes clear that the common rule-book will *not*<\/strong> include environment and labour rules and taxation.\u00a0 It does, however, include State Aid and continued close cooperation in Competition law.<\/p>\n

It also covers manufactured goods and agri-foods, but only applies to regulations \u2018necessary to provide for frictionless trade at the border\u2019. With respect to agri-food, the UK states that, alongside the \u2018common rule book\u2019 in animal and plant health (Sanitary and Phytosanitary \u2018SPS\u2019) regulation, it wants to maintain \u2018equivalence\u2019 (rather than harmonization) on \u2018wider food policy rules\u2019. Areas for \u2018equivalence\u2019 include marketing and labelling requirements (Section 1.2.4). \u00a0Areas for divergence include the Common Agricultural Policy and Common Fisheries Policy.<\/p>\n

Oddly, despite mentioning other EU agencies,[2]<\/a> the UK does not state that it will seek to participate in the European Food Safety Authority (EFSA), which plays a key role in developing EU SPS regulation. Barnier recently stated<\/a> that<\/p>\n

\u2018the United Kingdom \u2026 would not align itself to our agri-food standards, for example, on GMOs or pesticides, because these are not checked at the border. This was confirmed to us this week in the negotiations.\u2019<\/p><\/blockquote>\n

Barnier\u2019s comment, in combination with conspicuous silence on European Free Trade Association (EFTA), might suggest that the UK seeks to harmonize only selectively and in a way that would enable it to strike deep trade deals with third countries, like the US<\/a>, who have pressured the EU to move toward its approach in these areas. But even if we disregard this rather extreme interpretation of the UK\u2019s intent, the question of what regulation is necessary for frictionless trade at the border is an ambiguous \u2013 and existential \u2013 one.<\/p>\n

What regulation is border-relevant?<\/h3>\n

Interestingly, this question also arises in the context of the Northern Irish \u2018backstop\u2019. In the draft Withdrawal Agreement<\/a>,\u00a0the EU calls for a \u2018common regulatory area\u2019 to allow for \u2018free movement of goods\u2019. The UK and EU have yet to complete the Annex listing the actual contents of covered EU regulation. The EU\u2019s draft does, however, state that \u2018the provisions of Union law on the production and marketing of agricultural and fisheries products\u2019 shall apply (Article 5.2), revealing that it does not recognize the UK\u2019s proposed distinctions outlined above. But in a different context \u2013 the potential Irish sea border – Barnier has downplayed<\/a> what border checks between the EU and the UK as a third country would entail:<\/p>\n

\u2018\u2026ultimately these are only technical checks on goods. No more, no less.\u2019<\/p><\/blockquote>\n

The level playing field<\/strong><\/p>\n

So how much harmonization is necessary to avoid border checks? Is it just a few regulations to avoid \u2018a handful of technical checks\u2019 \u2013 or does it effectively require EU Membership and acceptance of its sacred \u2018four freedoms<\/a>\u2019, as Barnier has suggested elsewhere?<\/p>\n

In some sense, the UK\u2019s proposal harkens back to a more instrumentalist understanding of regulatory integration as a means to achieve frictionless borders evident in the early days of the EU (see this entertaining account<\/a>). However, the EU has increasingly become concerned about the need to ensure that market opening does not create unequal conditions of competition for EU producers stemming from non-traded inputs, which include cheaper labour, worse environmental standards and tax breaks.<\/p>\n

This desire to create equal competitive conditions, or a \u2018level playing field\u2019, is a driving force for EU integration. The EU-Ukraine DCTFA<\/a>, for example, requires Ukraine to align not only with regulations that we might narrowly identify as affecting trade in goods \u2013 such as SPS rules \u2013 but also with regulations covering air quality, climate change and environmental impact assessment, among others. And even this does not eliminate the need for border checks.<\/p>\n

Even after concluding that the UK-EU trade relationship was likely to look more like CETA (a relatively basic Free Trade Agreement) than the EEA (which creates broad regulatory harmonization), the Commission still made clear it would push for a \u2018level playing field<\/a>\u2019 between the EU and the UK.<\/p>\n

The implication is that the EU also seems to be proposing a hybrid model that grafts some deeper regulatory integration onto the frame of a tariff-free FTA (one wonders how this squares with the indivisible four freedoms). Another implication is that there is likely to be quite a lot of asymmetry between what the UK proposes in the White Paper \u2013 which carves out environmental and labour standards and taxation – and what the EU seeks. The EU has not yet formulated its position on the future relationship, but Barnier also forecasts that this will likely be a major sticking point for Member States:<\/p>\n

The mechanics of divergence should not lead to unfair competition, because if we do not answer this question\u2026I can tell you that there will be major difficulties in obtaining ratification of any future agreement in all countries, because there will be campaigns against the negotiations. It will be said that Brussels is conducting negotiations with the UK to downgrade environmental and social standards, for example, which will lead to more tax competition. If that happens, everything is over. I do not want that. I want us to make progress.<\/em> (response to Q 8<\/a>).<\/p>\n

The Northern Irish question complicates things further still. But the UK\u2019s proposals on the common rulebook are clearly not going to fly with the EU. The EU for its part is making things more difficult by not clarifying what it would find acceptable. What degree of regulatory harmonization is necessary, and why, will be a central axis of disagreement in the next stage of negotiations.<\/p>\n

References<\/h3>\n

[1]<\/a> See eg J Blitz, \u2018Why is Britain leaving the single market for services?\u2019 Financial Times, 11 July 2018: \u201cThe central feature of the PM\u2019s \u2018Chequers\u2019 plan is to keep the UK in the single market for goods.\u201d<\/p>\n

[2]<\/a> For manufactured goods, the UK indicates it will seek to participate in: the European Medicines Agency (EMA), the European Chemicals Agency (ECHA) and the European Aviation Safety Agency (EASA).<\/p>\n

 <\/p>\n

Disclaimer:<\/em><\/p>\n

The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.<\/em><\/p>\n

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The UK Trade Policy Observatory\u00a0believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement.\u00a0For online use, this should be a link to the original resource on our website. We do not\u00a0 publish under a Creative Commons\u00a0license. This means you CANNOT republish our articles online or in print for free.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Share this article: 27 July 2018 Dr Emily Lydgate is a lecturer in Law at the University of Sussex and a fellow of the UK Trade Policy Observatory. The July UK White Paper on the future relationship with the EU calls for a \u2018common rule-book\u2019 for goods. This has sometimes been shorthanded as a proposal for a Single Market for goods (in contrast to services, which departs more dramatically from the status quo).[1] But the scope of regulation the UK proposes should fall within this \u2018common rulebook\u2019 is narrower than what would be covered in a Single Market for goods \u2013 as the EEA Agreement demonstrates. It\u2019s narrower even than that covered by the EU-Ukraine DCFTA Agreement. So what does the common rule-book cover – and how might this match up with the EU\u2019s regulatory \u2018ask\u2019 of the UK?<\/p>\n","protected":false},"author":213,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[130195],"tags":[147906,19509,147909,147907,147858,37253,147908,123563],"_links":{"self":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/2600"}],"collection":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/users\/213"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/comments?post=2600"}],"version-history":[{"count":4,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/2600\/revisions"}],"predecessor-version":[{"id":2605,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/2600\/revisions\/2605"}],"wp:attachment":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/media?parent=2600"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/categories?post=2600"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/tags?post=2600"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}