Alan Dukes, former Leader of Fine Gael, Leader of the opposition and Minister for Agriculture, Finance and Justice has responded to my letter to the editor criticising his original Irish Times article purporting to advise Theresa May on Brexit:
Sir, – Frank Schnittger(October 17th) raised some objections to my “tongue-in-cheek” advice to Theresa May about Brexit (“Whitehall’s Brexit advice to Theresa May”, Opinion & Analysis, October 14th).
He is, of course, right to point out that the EU regards the four freedoms as indivisible. I agree with that, but the EU cannot demand that a state which is no longer a member should continue to take the same view. The EU trades with many states that do not attach the same value to the combination of these freedoms. The purpose of the UK’s proposed “Great Repeal Bill” is clearly to lay the groundwork for an agreement with the EU on mutual recognition of standards post-Brexit unless and until the UK makes any specific change. It would be extremely difficult for the EU to argue that standards which it accepted up to the point of Brexit would no longer be recognised on the day after. Such recognition would not require the conclusion of a new trade agreement; all it needs is a bit of common sense.
Mr Schnittger casts doubt on the possibility of the UK simply taking over the terms of existing EU agreements with other trading partners. He does not explain why any other country would decide to treat the UK differently in trade matters simply because it had exited the EU. True, the situation in regard to new trade agreements with the UK would be more complex, but consider the CETA agreement with Canada. Conclusion of that agreement between the EU and Canada has (so far) been stymied as a result of its rejection by the regional parliament in Wallonia – EU ratification requires unanimity among the member states, and Belgium cannot now ratify because of the decision in Wallonia.
My guess is that the UK would signal its agreement to CETA post-Brexit. I hardly think that Canada would not welcome such a decision. Australia has signalled that a UK-Australia trade deal would happen post-Brexit. The UK is leading a group of northern European member states in an attempt to moderate the commission’s proposals for tough anti-dumping measures against China. That could facilitate a UK-China understanding post-Brexit.
Mr Schnittger correctly points out that I made no mention of passporting rights in the EU and euro zone for UK financial service providers. I did, however, suggest that the City of London might not be without leverage in a negotiation.
The purpose of my “tongue-in-cheek” piece was to point out that there are viable options for the UK, for which we should be prepared. – Yours, etc,
I have decided to respond while the iron is hot in the hope that the Irish Times will be more likely to publish a letter which forms part of a current discussion. The text of my response is as follows:
Sir – I am glad Alan Dukes (October 19th) has responded to my letter (October 17th) because the purpose of his original article (“Whitehall’s Brexit advice to Theresa May”, Opinion & Analysis, October 14th) was unclear and the content very one-sided, resulting in a risk that many readers might have gotten a very misleading view of the likely outcome of the Brexit negotiations.
There are however still some problems with his clarifications:
Firstly he states that “the EU trades with many states that do not attach the same value to the combination of these [four] freedoms”. Yes, but the EU doesn’t give them customs free access to the Single Market – the achievement of which is the point of his advice.
Secondly he states that purpose behind the “masterly” Great Repeal Bill – perhaps more accurately termed the Great Retention Bill because it seeks to incorporate the vast corpus of EU regulation into domestic UK law post Brexit – is “to lay the groundwork for an agreement with the EU on mutual recognition of standards post-Brexit”.
However that Bill does not provide for a situation where either the UK or the EU decides to change a regulation in the future or where either jurisdiction decides to take a very different approach to enforcement. Would the EU necessarily agree to (say) the UK adopting a “light touch regulation” (enforcement) approach to banking regulation or to transfer pricing which determines where global corporations choose to declare their profits?
I don’t think so.
Mr. Dukes suggests that it would only be “common sense” for both to agree to future mutual recognition, but that would be to give the UK a virtual blank cheque on how it chooses to interpret and enforce those regulations in the future. As any such enforcement in the UK would be subject to adjudication by the UK supreme Court rather than by the European Court of Justice, the risk of divergence over time is clear. This is partly why the negotiation of trade deals is so complicated and tends to take many years.
Thirdly he claims that I did not “explain why any other country would decide to treat the UK differently in trade matters simply because it had exited the EU.” Actually I did. I pointed out that a third country might not be willing to make the same concessions for access to the UK market of c. 60 Million people as it had been forced to make for access to an EU market of 500 million people.
Fourthly, Mr. Dukes claims that he “did, however, suggest that the City of London might not be without leverage in a negotiation.” There is no mention of the City or its leverage anywhere in his article.
There is, however, one point in Mr. Dukes’ clarifications with which I agree. It may very well be easier for the UK to conclude new trade agreements with third countries, because such agreements will not have to be ratified separately by the remaining 27 member states of the EU.
He suggests the UK could make rapid progress on ratifying the CETA agreement with Canada and that by moderating the commission’s proposals for tough anti-dumping measures against China the UK could reach an accommodation with China. He also suggests (in his original article) that the UK could be more accommodating to US interests in the TTIP negotiations.
But are these concessions on already controversial trade deals supposed to be a good thing? I think they rather reinforce my point that the UK, acting alone, will have considerably less bargaining leverage in negotiating trade deals than it had as part of the EU .