How the media failed again on sovereignty

A pro Brexit protest in 2019

The UK can already do what it wants. Free trade and complete freedom is more tricky.

It was not difficult this week to find criticism of the coverage by BBC Newsnight and others of the Prime Minister’s Brussels trip. What they got wrong, though, was not only their platforming of fact-free No Deal polemicists like Peter Bone, the Leave equivalent of the Parliament Square anti-Brexit Rejoiner protester Steve Bray. Their entire framing of the debate is wrong.

Rather than another debate between one extreme arguing that the EU wants to curtail the UK’s sovereignty and dictate to it out of spite and imperial ambition and another arguing that sovereignty is for old-fashioned nationalists, the entire debate this week should be about what the UK chooses now to do with the sovereignty that it is already guaranteed to acquire when transition ends in a few weeks.

This is where the media failed. And it’s not an isolated failure. As the media prioritises controversial personalities over informed discussion, it fails to ask the relevant probing questions that would produce informed discussion leading to the balance it ultimately seeks.

Evolution mechanism

An interesting idea picked up this week from the UK-EU negotiations on a Free Trade Agreement (FTA) is that of an “evolution mechanism (£)” – also described as a retaliation mechanism – by which the EU would have the right to levy correcting tariffs if the UK were not to follow any future EU tightening of its regulatory standards. The Prime Minister describes this as an affront to sovereignty. In fact, it is a reflection of the fact that the UK might do things differently.

A cause-and-response mechanism exists because the UK might diverge. Rather than restrict sovereignty, it assumes sovereignty. It recognises sovereignty. What it does not do is allow the UK to keep all the same benefits regardless what it does with its sovereignty. It asks the question: “Sovereignty? OK: and what if you misuse it? What if you use it to undercut us? To give your firms an advantage? Should we keep our market open to your firms in that case?” That’s a massive distinction.

Obligations <> Benefits

A country that does not care about the benefits of collaboration and trade can eschew international agreements and their pesky obligations. North Korea does. Even now, the UK could choose to walk away from the talks and change all its regulations on 1st January.

Any form of voluntary agreement to obtain mutual benefits, though, is an agreement to restrain oneself in exchange. Even in the old-fashioned type of FTA that concerned itself only with tariffs and quotas, the parties restrained themselves to not levying tariffs or imposing quotas. Modern FTAs always contain some provisions on regulation. It is pointless to deny this.

A decision not to follow new EU standards is as much a decision to diverge as is a dilution of existing standards. Hence, the EU focuses on what happens if the UK fails to follow its regulatory moves.

So is this reasonable? Are tariffs a reasonable response to a potential decision that the UK might freely take not to replicate EU regulations? Is tariff-free trade enough of a benefit for the UK to freely decide to restrict itself on regulations?

Precedents

If there are always obligations involved in FTAs, then there is one relevant question here. What kind of obligations – and for what benefits – does the EU place on other FTA partners? Again, this is a question that the media have singularly failed to ask interviewees from either side.

To answer the question, you have to distinguish neighbouring countries from distant countries. Neighbouring countries like Norway do indeed have to follow the EU’s regulatory moves. In exchange, they obtain enhanced access to the EU market. Apart from the EFTA countries, every non-EU country in Europe that has an FTA with the EU is at some stage of the – potentially long – process of joining the EU. Hence, they are all committed to adopting the entire body of EU law.

Distant dreams

More distant countries – like Japan and Canada – have FTAs with the EU with fewer obligations and fewer benefits. They contain provisions on regulation. However, these amount to a prohibition of a tactical decision not to enforce existing standards. This is even less than “non-regression”: the commitment not to reduce existing standards. Indeed, some experts say that, because of weak enforcement, those provisions can effectively be “put in the bin” anyway.

In return, exporters from Canada face a battery of paperwork and bureaucracy when exporting to the EU. This is true even though there are no tariffs on the overwhelming majority of goods. Plus, their goods in non-controlled (low risk) sectors benefit only from mutual certification rather than mutual recognition. Canadian certifying bodies can certify them as meeting EU standards. However, they are not simply assumed to meet EU standards as goods from Single Market countries are when they are placed without checks on the market in other Single Market countries.

Certification is a process for which it is possible to prepare, but it is an extra process – at the factory and potentially at the border, through document checks – and hence an extra cost, that Canadian firms have to bear that UK firms currently do not. That’s just one example of a non-tariff barrier (NTB).

So near and yet pretending to be so far

Imagining that the media had bothered to ask any of these questions, which precedent is the right one? The “Canada” precedent has two problems: the UK and the EU.

The UK describes “Canada” as its goal. Indeed, it does seek those Canadian-style – lower – obligations. but its negotiating objectives are littered with requests for benefits that Canada does not have on issues such as mutual recognition, facilitations for Roll-On-Roll-Off (RoRo) trade to “reflect the nature” of UK-EU trade – which grew up through the absence of regulatory checks because of regulatory alignment in the Single Market – and International Road Transport.

The EU, meanwhile, dismisses the notion that it can treat the UK like Canada. The UK is next-door. Without safeguards on regulatory standards, an FTA risks opening the EU market up to competition from a deregulatory haven from which firms would serve that market thanks to geographical proximity.

In all fairness

But is it fair to punish the UK with tariffs if it were not to align to future changes in EU legislation? Assuming that the UK would – through sovereign choice – prioritise tariff-free trade and choose to align, what would it get in return, other than the absence of tariffs? Neighbouring countries like Norway that do this get many benefits including mutual recognition, absence of regulatory borders, and even customs facilitations and membership of Rules of Origin conventions despite being outside the Customs Union (CU). Taken together, these benefits, if the UK were to have them after the end of transition, mean that UK-EU trade would more or less continue as before. Are we getting these?

So the question is…

We will see what comes out of the talks. But that would be a question to ask.

It would require the media to drop their go-to model, a relic of the 2016-19 era of Remainers and Leavers. If, instead of pitting No Deal demagogues against Revokers and Rejoiners for entertainment value, the media were interested in a debate about the models that the sovereign UK could freely choose to adopt and the trade-offs involved in each, here are some pertinent questions they could ask:

Why should the UK be treated like Canada when it is next door rather than 4,000 miles away?

Why should the UK have only Canada’s obligations when it wants to keep many of the existing benefits it had as an EU member and that are reserved for neighbouring countries that follow EU laws?

What do other neighbouring countries get in exchange for following the EU’s regulatory moves?

Is that a better trade-off than the extra regulatory autonomy but huge economic costs of No Deal?

If the EU won’t treat us like Canada – and we don’t really want to be treated like Canada anyway – rather than the costs of No Deal, why not get the benefits that come with these obligations – while retaining real sovereignty by staying outside of the EU’s political union – and go for “Norway”?

Especially as that’s what the British people – most of whom are sick of the polemicists – seem to prefer.

Now that would be an interview.

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Martin is a management consultant, former think tank researcher and lobbyist (appearing on national TV) for small business organisations and successful campaigns featured in Public Affairs Magazine. He has provided research and articles on trade issues for the Conservative Group for Europe.

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