Brexit white paper and commute to European Union

The UK government has published its long-awaited Brexit white paper, the longest and most detailed explanation yet of its proposals for the UK’s future relationship with the EU. The 104-page document lays out many of the same plans detailed after the cabinet’s meeting at Chequers, but goes into much more detail. The white paper says the government seeks “a principled and practical Brexit”. It says its proposals follow on from Theresa May’s set-piece speeches at Lancaster House, in Florence, at Mansion House and in Munich, “and in doing address questions raised by the EU in the intervening months”.

It says the hope is that its publication will lead to “a redoubling of efforts in the negotiations”. The main purpose is “respecting the result of the referendum and the decision of the UK public to take back control of the UK’s laws, borders and money.” The U.K. will formally ask the EU for a post-Brexit “association agreement” including a “free-trade area” for goods, a looser arrangement for financial services, alongside a security partnership and continued membership of many EU agencies, according to a long-awaited white paper. The white paper proposes that the U.K. abide by the EU’s common rule book for regulation and product standards for goods, to protect “just-in-time” supply chains. Under the proposal, a joint EU-U.K. committee would judge whether an EU rule change applies to the association agreement, and then the U.K. parliament would have the right to decide to continue to abide by EU rules “recognizing there could be proportionate implications” for trade between the two if MPs decided not to. The proposed relationship would require continued close cooperation with the EU, including “regular dialogue between U.K. and EU leaders.” The white paper acknowledges that as the arbiter of the EU’s regulations, U.K. courts must make reference to the European Court of Justice, but stipulates that an independent arbiter should settle any disputes between the U.K. and EU. While remaining close to the EU on goods, the white paper envisions “regulatory freedom” for the U.K. in the digital and services sectors. On customs, the white paper confirms the U.K.’s plan for a “facilitated customs arrangement,” (FCA) collecting EU tariffs at its border for goods destined for the EU market, while applying U.K. tariffs to goods destined for the U.K. market. The system will be subject to a “phased” implementation, with both the U.K. and EU having to make preparations, but the white paper gives no timeframe for the FCA to be up and running. U.K. proposals for a post-Brexit immigration regime will be set out in more detail in another white paper in the fall but this white paper indicates that new rules should be tailored to the workforce needs of businesses.

The White Paper confirms that the UK will seek active participation in (if not full membership of) the European Aviation Safety Agency, the European Chemicals Agency and the European Medicines Agency. The government is keen to address business demands that they only need to go through one approval mechanism to access both markets, in highly regulated parts of the economy. The EU has previously ruled out full UK membership of these agencies, and noted that it would have to accept the jurisdiction of the European Court of Justice if it were to sign up to their rules and regulations.

The White Paper accepts that the UK would not have any voting rights in the way the agencies go about their business, and that it would have to make appropriate financial contributions to them.

This is part of the pragmatic Brexit the government is now advocating, but it is not the resumption of full UK sovereignty that some leading leave campaigners had promised.

The EU side will be glad that the UK has finally put something on the table and that it is moving to a more credible position in some areas, such as services and possibly migration. But there remain huge differences. On customs, a key issue is how duties and controls will be imposed on products coming into the UK from third countries and destined for the EU market. In relation to single market rules and regulations, the EU side has consistently said the UK cannot choose to be in one part of the single market but not in the whole thing. In broad terms, the EU will fear that the UK side is trying to keep some of the benefits of membership while still being free to negotiate its own trade deals with countries such as the United States.

Business leaders have said that the government’s Brexit white paper is a “massive step forward” for the UK and have called on the EU to be pragmatic in its response. However, the financial services industry attacked the UK government, describing the white paper as a “real blow” for the sector. While the document was hailed for its clarity on the UK’s negotiating position, many said there were still gaps in the proposals for businesses.

“It is a make-or-break summer,” said the Confederation of British Industry’s director general, Carolyn Fairbairn. “This is a race against time and we need to see pragmatism and flexibility from the EU. This is a massive step forward and a chance for the EU to really engage with it, but in parallel more work needs to be done here; we need to use the summer to get round the table with the EU.

London was the only region in England that voted to remain in the EU referendum, but the British public as a whole voted to leave.

The Brexit group at the European Parliament, coordinated by Belgian MEP Verhofstadt, “accepts the British Chequers statement and White Paper as a step forward in establishing new relations between the UK and the EU, when Great Britain will no longer be a member state”. This can be read in a notice issued after a meeting of the MEPs in charge of supervising the Brexit process, which reviewed the paper submitted by the British Government at the Chequers meeting on July 6th, in the run-up to final Brexit talks. In this case, the Brexit group accepts the option that future relations between the EU and the UK “will come in the form of a partnership”, something that Parliament had already proposed a long time ago, as it provides “sound foundations within a consistent governance organisation”. As well as insisting that “the negotiation of a new after-Brexit relationship with the United kingdom shall be conditional on the United Kingdom’s tidy withdrawal from the EU based on a withdrawal agreement”, the Brexit group asked the UK to explain “as soon as possible” the British position on the “back stop” for the Northern Ireland/Ireland border, which “must not erect a physical border and must protect the wholeness of the single market”. The UK was also asked to explain the “dispute settlement” and EU citizen registration systems, which shall abide by “the indivisible principles of the four freedoms” (free movement of capital, goods, services and people) and the wholeness of the single market.

A giant, pendulous question mark hangs over this.

Will the EU be happy to waive through the vastly complicated and entirely hypothetical Downing Street customs proposal, even though it risks compromising the EU customs union if it fails? Will they accept the end of free movement of labour into the UK? Or will they regard this as a cherry-picking exercise, the UK attempting to get the benefits of the regulatory single market without the responsibilities? The EU might very well refuse and demand a commitment closer to EEA membership terms for the UK and a bog-standard customs union agreement in return for smoothing the Brexit economic impact. Theresa May, already destabilised by resignations and backbench Conservative Party dissent, could easily find herself unable to deliver that. With the clock rapidly ticking down to Brexit in March 2019, that could bring the prospect of an economically disastrous “no deal” scenario surging back into play

“The UK and the EU would notify each other through the joint committee of any proposed and adopted legislative proposals,” the paper insists. But in truth this relationship will be one-way, as it is for countries like Switzerland or Norway, which also take on EU rules. Sure, they can wriggle around a bit on a technical level at the point of implementation. But no-one pretends this is an equal relationship. Another section of this joint committee structure would deal with issues on equivalency. In both cases it sets up a complex process for what to do if a rule goes against the agreement, although it pretends this is also equal, and that there would be “a decision between the UK and the EU about whether the relevant rule change should be added to the agreement”.

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