Kenneth Armstrong / Jul 2017
The UK Government has taken its first important legislative steps towards the implementation of Brexit, with the introduction into Parliament of the European Union (Withdrawal) Bill. Previously trailed as a ‘Great Repeal Bill’, the aim of this legislative initiative is to preserve existing EU-derived law in national law and to convert other EU legal requirements into domestic law. It is a bold and complex piece of legislative drafting with the aim of ensuring that once the UK leaves the EU, its domestic rules will remain the same as when the UK was a Member State.
For both Leavers and Remainers this might seem like a curious outcome. For Remainers, if the UK wants to ensure that its rules are consistent with EU law then the better way to achieve that would surely be for the UK to remain a Member State. For Leavers, the point of taking back control of UK law was to allow the UK to chart its own course rather than be dictated to by Brussels. The explanation for this apparent paradox is temporal: the legislation is a placeholder designed to buy this and future government’s time to make adjustments to domestic regulation as and when they see fit. Taking back control is, therefore, a statement of intent; but not just yet.
Even as a statement of intent, the implications of this legislation are far-reaching, not least in the context of negotiations between the UK and the EU on a future relationship that are at an early stage, proceeding slowly, and under significant time constraints. Agreement and conclusion of a trade deal with the EU is some years off. And yet here is the UK taking domestic legal steps to ensure its rules are the same as those governing the EU27. Imagine if Canada – in advance of its trade agreement with the EU and without securing a deal on tariff-free access to the EU market – had legislated to align regulations across key industries with those of the EU. Wouldn’t that have seemed like a surprising turn of events?
The UK appears to be signalling that domestic law will be the same as EU law come what may. Taken with the claim that ‘no deal is better than a bad deal’, the UK government seems willing to contemplate British businesses incurring not just tariffs but also on-going non-tariff EU regulatory compliance costs. Or to put it more bluntly, is the UK really about to domesticate all that much complained-of Brussels ‘red tape’ even without a trade deal?
But let’s not overreact. And let’s assume that a deal to secure tariff-free market access is secured. The issue then becomes whether the promise of control over domestic regulation can and will be realised.
The concept of the ‘Brussels Effect’ – coined by the US academic Anu Bradford – is now a familiar one. At its simplest, it means that businesses based outside the EU but with global operations may choose to comply with stringent European standards even when also operating in markets with lower standards. It highlights the EU’s global regulatory power and its capacity to ‘Europeanise’ regulatory standards beyond its borders.
While British industries may have huffed and puffed about EU regulations during the UK’s membership, now that the UK is on the threshold of departing the EU, those businesses seem fairly keen on the idea of continuing to comply with EU norms and standards. So if British politicians think that maintaining the status quo of regulatory convergence is just a time-limited tactic to provide legal certainty, vested economic interests may want to limit the exercise of political control over domestic regulation in the UK for some time to come.
The Brexit Effect is an intensification of this tendency towards regulatory convergence with the EU. It is a product not just of the efforts of UK parliamentarians, but also the behaviour of key sectors of the British economy keen to ensure that regulatory requirements remain harmonised. In addition, the terms of any transitional arrangements as well as a future trade deal may also demand that UK rules remain either identical or equivalent to European norms in order to reduce the risks of regulatory competition. Indeed, when taken together it becomes hard to see what scope there will be to exercise the control which Brexiteers claim to be taking.
If the Brexit Effect suggests that regulatory standards will continue to be aligned with the EU for some time to come, then there may be a counter force. With President Trump suggesting in recent days that the UK and the EU will do a ‘big and exciting’ trade deal, then the UK might find itself caught between the ‘pull’ of regulatory convergence with the EU and the ‘push’ of competition from US imports that comply with different regulatory requirements. Indeed, will the UK be forced to choose between a trade deal with the EU that will see the UK continue to comply with EU norms and standards, or a deal with the US that could see a change in the UK’s regulatory environment?
Time will tell, whether or not chlorine-washed chickens will come home to roost. But either way, the Brexit Effect suggests that there is limited room for the exercise of control over rules and regulations which Brexit was intended to deliver. And in the process, billions of pounds will be spent to try and keep things the same. For Leavers who wanted the UK not just to be able to make its own laws but also to be able to spend more money on valued public services, there must surely be cause to pause and wonder just what sort of control Brexit really offers.
Kenneth Armstrong is author of Brexit Time: Leaving the EU: Why, How and When? published by Cambridge University Press in June.