EU TRADE DEAL – NOT JUST OVEN-READY?

by Sherbhert Editor

On fishing rights, the EU and the UK are not shoals apart. But, when it comes to levelling the economic playing field in the way the EU demands, the clash with the principle of the UK as an independent state seems to be the final hurdle. The EU particularly is concerned that the UK will lower regulatory standards in areas which affect the economic cost of trade in favour of the UK and so to the detriment of EU businesses. This in their view may create unfair competition.

The EU therefore argues that there should be adverse consequences under the trade deal for the UK if, through UK Government behaviour, it creates an unfair playing field. Presumably the same would apply the other way round. In addition, it seems that, if the EU decides to adopt tougher rules which increase the cost for its industries to do business, then it thinks the UK should adopt similar rules:  the UK regards that, as in effect it having to adopt law which is imposed on it by the EU and so destroying its state independence.

As a matter of factual behaviour in the past, the UK has no history of adopting lower standards than the EU, but often its standards are higher. In some areas such as maternity rights it has more generous terms for employees. The UK’s environmental standards are at least as high as nearly all EU states and higher than many. In terms of state subsidies France and Germany are far greater culprits. The UK is more free market oriented probably than most if not all EU states, and certainly less protectionist than the EU as a whole. But the EU says this might all change in the future and, if it does, there should be consequences. Also, perhaps it’s sensible to ignore state subsidy for a few years at least as all nations will be deep in that as will the EU as a whole to counter the economic effects of the pandemic.

This means that the sticking point, preventing a deal, is all about theory, and hypotheticals. This is not about any real current concern. Is it not absurd to scupper a deal because of a circumstance which may never arise in a substantial way in the foreseeable future? Should not an alternative fail-safe be considered?

For example, instead of trying to cover hypothetical circumstances in detail, why not build into a trade deal a regular review (e.g., every 3 years), when the parties can examine all regulatory changes and subsidies which might reasonably be regarded as capable of affecting competitiveness and which the EU or the UK have adopted or propose to adopt. That review would determine whether either party has behaved in a way which has created or is likely to create unfair competitive effects, and, if so, how. If there is no agreement, the position could be arbitrated by an independent body. Things could that way be looked at in the round as well as by particular sector. Presumably then, if unfair effects have been caused, they will relate to particular products, and a way of levelling such as via tariffs could be imposed or the products withdrawn from the treaty. If the unfair effects are severe across a wide range, then the offended party might have the right to end the treaty. The deterrent on behaviour designed to materially advantage unfairly one side or the other would be obvious.

If in fact nothing happens where either party wants a review, then it need not occur, saving time and money. Clearly, this does not enable one side to determine in its opinion what would be unfairly competitive, but it cannot be that the EU would expect to be judge and jury on that, under any solution.

As the politicians and commentators always say, the devil might be in the detail but that is what smart people sort out, and many such people are no doubt being paid lots of money to do just that. What seems so against the interests of the working people of the UK and the EU is that they might be denied a sensible trade deal due to theoretical politicking over hypotheticals. When a deal is not just oven-ready but, as the Irish Prime Minister is saying, is 97% cooked, why ruin the Christmas dinner for the sake of a Brussels sprout?

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