Friday 3 August 2018

Problems with a "Pure" WTO Brexit.

Okay, I voted Leave. As I have stated infinite times. But what sort of Brexit did I vote for?

Well, I didn't vote for a "pure" WTO Brexit. I had assumed that the government would be able to extricate the majority of us from EU regulation and agree with the EU that businesses that wish to trade directly with the EU would pay a fee to be opart of an independent standards compliance verification system that would ensure that any goods sent to the EU would comply with EU standards.

Essentially they pay a tariff to trade with the EU, but at the border the trade is frictionless as the goods have essentially been guaranteed as EU compliant.

Whatever form that regulatory body takes and the hoops the companies would have to jump through would be down to the negotiations with the EU after article 50 was enacted. But the negotiations would just detail the complaince structure and implementation only.

The negotiations have been complicated by a desire to keep the whole country aligned with the EU when there was no need for it.

In fact it shows the level to which EU legislation has pervaded all levels of society, industry and business: The government thought it from the perspective of staying in the EU and getting away with as little de-regulation as possible that could be described as Brexit.

Instead of working from the fully-out perspective and working out how little regulation was required to allow frictionless trade.

Just as an example of how the negotiations might go:

UK: I want to deliver goods to the EU.

EU: Those goods need to comply with EU standards.

UK: Ok, any goods supplied by businesses will comply to EU standards, but we reserve the right to produce goods to our own specs within the UK.

EU: but how would you guarantee compliance for goods you export to the EU? We would require ALL goods imported and sold into the UK top be EU compliant.

UK: There is no need for the whole country to be EU compliant: we set up a regulatory body whose job it is to investigate companies who wish to trade with the EU from top to bottom and certify compliance with EU standards.

EU: but who will pay for this regulatory body?

UK: the UK government will set it up in partnership with the EU. We envision that the EU would share some of the cost of setting up.

EU: we won't pay.

UK: Okay, we concede the UK government will pay to set up the regulatory body but the EU has to agree to provide the body with any and all tools to deliver compliance.

EU: Who will make judgements in disputes?

UK: the ECJ will rule on disputes but their judgements will be limited to the regulatory body only, it will not affect UK law.

EU & UK: OK, job done. On to the next issue.

Now EU law makers are very good at drilling into the detail and making a mountain out of a mole hill. For instance they could argue that the lorries hauling the goods would need to adhere to EU standards or come up with some other micro-management rule.

But that's where the UK team have to be savvy and resist that push from the EU team to micro-manage every single atom crossing the border. And if there is an impasse, leverage other areas of the negotiations to our advantage.

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