The United Kingdom Cabinet is, at last, getting around to discussing the sort of trade agreement it wants to have with the EU after it has left.

It intends to make up its mind by mid January, according to the Sun newspaper.  

The UK Prime Minister has ruled out staying on in the EU Customs Union (like Turkey) or in the Single Market (like Norway).

Although she has ruled out these “soft Brexit” options, Mrs. May has gone much further.

She has committed, in the Joint Report of EU/UK negotiations to “the avoidance of a hard border, including any infrastructure or related checks and controls” at the border in Ireland, and also to protect Northern Ireland’s place in the UK internal market.

Customs checks exist at the EU border with both Turkey and Norway, so Mrs. May’s promise in the Joint Report goes beyond either the Turkish or Norwegian options.

It is noteworthy that the UK has not just said that it will not, itself, ever erect a hard border on its own side.  It has committed itself to the “avoidance” of such a border, presumably on either side. That would mean that the UK has bound itself not to adopt any UK policies that would require the EU, under its existing rules, to impose such border controls.

That would rule out devising new and distinctive UK product standards, which Boris Johnson suggested over the weekend. It would also rule out Philip Hammond’s idea of the UK diverging from EU rules on certain technologies.  

HOW WILL INTEGRITY OF EU MARKET BE PRESERVED WITHOUT BORDER CONTROLS?

After Brexit, Ireland will remain a member of the EU Customs Union.

There will be no customs controls between this state and the rest of the EU, at Zeebrugge or le Havre or anywhere else. So where will the customs controls be?

As a member of the Customs Union, Ireland will remain bound by the terms of the EU Customs Code.

The EU Customs Code was agreed in 1992, when the UK was a member of the EU, and the UK will have been fully aware, from the outset, of the obligations of EU member states under it.

Article 2(1) of the Customs Code says it shall “apply uniformly throughout the Community”.

This would seem to imply that it applies right up to the Irish border on this side, unless there is a derogation for Ireland, or the UK agrees, as a non member, to apply the EU Customs Code in its jurisdiction too.

It would be difficult for the UK to reconcile doing this, with the rhetoric used in the Referendum about the UK “taking back control”.

The Customs Code is quite strict. For example, it mandates  “customs offices of entry” at which documents may be lodged, opportunities for collecting information for risk management by the Customs, opportunities to check compliance with rules of origin, and provisions for the unloading of goods to check contents and take samples.

If the UK is to keep its promise not to do things, that would necessitate such controls at either side the Irish border, it will constrain itself in ways for which UK public opinion, and both Boris Johnson and Philip Hammond, are not yet be prepared.

In preparing its proposed framework for a new UK relationship with the EU, the UK will also need to take account of the constraints under which the EU operates, in its relations with third countries.

UK WILL HAVE TO TAKE ACCOUNT OF SWISS AND NORWEGIAN PRECEDENTS

The EU would have difficulty offering the UK better terms than it would offer another European country.

For example, Norway and Switzerland have access to the EU market.  They also make ongoing financial contributions every year to poorer regions within the EU.  Those agreements with Norway and Switzerland would be undermined, if UK got a similar deal, without similar contributions.

Furthermore, any EU/UK deal will have to comply with the Interlaken principles.

These principles govern all EU agreements with third countries and were formulated in 1978, with UK participation.  They have been followed ever since.

The first Interlaken principle is that, in developing relations with non-member states, the EU will always prioritise its own internal integration. The UK cannot expect the EU to agree to anything that would cause divisions within the EU.

The second Interlaken principle is that the EU must safeguard its own decision-making autonomy. For example, the European Court of Justice, and the legislative bodies of the EU, cannot be constrained in their decision making processes by any deal made with the UK.  The idea that a joint UK/EU court might have precedence over the ECJ would run counter to this principle.

The third Interlaken principle is that any relationship must be based on “a balance of benefits and obligations”. It is not for the non-member state to choose only those aspects of EU integration it likes.

WTO RULES WILL APPLY

There is another factor the UK will need to take into account. This is the “Most Favoured Nation Principle” of the WTO, which is the foundation stone for global trade.

It requires the extension, to ALL members of the WTO, of any “advantage, favour, privilege or immunity” that is offered to one.

Cherry picking in international trade could get the UK into trouble with all the countries with which it does business.

Formulating a UK proposal, which satisfies all these conflicting criteria, will be hugely demanding task, not only politically, but intellectually and legally.

“Taking back control” and  “no hard border” are hard to reconcile, to put it mildly.

The dilemma, in which the UK in which now finds itself, may be self created, but it is real.  Irish people should wish Teresa May well, in her immensely difficult task.

Her political weakness helps her move things forward, in the short term, but it makes it harder for her to make a permanent deal that will endure in face of the disappointed expectations of those who voted for Brexit.

 

 

 

 

 

 

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