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Good on paper?

13 August 18

The Prime Minister’s Brexit white paper has provoked a political storm in the UK, but what issues does it raise for the EU? Our feature considers the main points of contention, at home and abroad

by Lynda Towers

As temperatures rose over the United Kingdom in an unaccustomed outbreak of summer, nowhere was the effect of this heat more evident than in the hot and steamy rooms of Whitehall and Westminster where outrage, conspiracy claims, distrust and bad temper have been evident across all sides of the Mother of Parliaments. Against this background and heading for the summer recess, which always focuses MPs’ minds, the white paper on The Future Relationship between the United Kingdom and the European Union landed on desks.

The white paper debate should have been something of a formality, since it was said to be a document agreed by the Cabinet, which met the concerns of Brexiters and Remainers alike and which should also be acceptable to the EU since reasonable concessions had been made by the UK Government. 

That may have been the intention, but in practice, this has been true only for the most optimistic of observers. 

Hard sell

July’s meeting at Chequers to allow the Cabinet to agree the white paper proposals was said to be a seminal event. After a “full and frank discussion”, the Cabinet rallied round and supported the Prime Minister on the Brexit way forward in a format which everyone could sign up to. The triumph of that weekend lasted only until David Davis, the Brexit Secretary, decided he could not sell this agreement around Europe, to be followed soon after by Foreign Secretary Boris Johnson. A steady stream of more junior ministers followed their lead, but the white paper survived as a slightly battered focus of agreement, albeit with growing concerns being expressed about the probable content up to the date of its publication.

The white paper itself comprises around 100 pages setting out the UK Government’s Brexit proposals. It is divided into four distinct sections covering the economic partnership, the security partnership, crosscutting and other cooperation, and the institutional arrangements. 

Many of the familiar mantras are there. The referendum result will be respected. There will be no hard border between Northern Ireland and Ireland as part of the EU. Frictionless access to cross-border markets will continue. UK sovereignty will be returned to UK lawmakers and UK courts. This paper now fully sets out the UK proposals and according to Andrea Leadsom, the Brexiter Leader of the House of Commons, it is “the final offer”. 

Common rules and red lines

The new matters in the white paper raise as many issues as they clarify. There is to be a free trade area for goods which will cross the borders with the EU tariff-free, a Facilitated Customs Arrangement, and an arrangement whereby the UK will collect EU tariffs, sort out what is due on the goods and then pay that sum to the EU. To enable this to work, there will be a “common rule book” for manufactured goods, including agri-food, although legislation to support the rule book will be made in the UK parliaments, and if they choose not to do so there will “be consequences”. Doubters suggest regulatory certainty may be difficult.

This approach makes a lot of assumptions on how it would all work. It has been suggested by those opposed to this arrangement that the technology for a Facilitated Customs Arrangement is far from ready and may take years to be viable. The EU has said before that it is not willing to allow someone else to collect its tariffs and then remit them to the EU. The common rule book is only to apply to goods and not services, and the white paper accepts that EU financial passporting regimes will not apply. It also does not look as if this will be an acceptable solution for those goods moving across the Irish border – in the absence of a hard border, as is everyone’s aim. 

The UK would also participate in certain EU agencies to secure authorisation for goods in highly regulated sectors such as chemicals, medicines and aviation, recognising that would come at a financial cost to the UK. Since all of these agencies are subject to the Court of Justice of the EU (CJEU), it is inevitable that the UK would require to make itself subject to the court for any disputes in these areas, one of its major red lines. So far the EU has said that remaining part of the agencies is unacceptable. 

A cooperative future?

The white paper recognises the need for regulatory compliance, equivalence, licensing regimes and accreditation. It also recognises the “just in time” approach to manufacturing, and that products currently cross EU national borders freely several times before finally becoming a final product for sale.

To assist this position, the white paper proposes that state aid and competition law rules will continue to apply in the UK to facilitate trade in goods. The same would apply to climate change standards, social and employment protections and consumer protection. 

However free movement of people would cease, although there would be a “framework for mobility”, with reciprocal movement rights for EU and UK citizens guaranteed up to 2020.

The importance of security arrangements and cooperation is highlighted in the white paper. This is probably the area of least negotiating concern, in that both the EU and the UK recognise the importance of effective reciprocal arrangements. Again, making it work will require concessions.

Crosscutting and other cooperation may be more difficult. The UK has recently implemented the General Data Protection Regulation, and is confident that data sharing will be possible. However the EU is very careful with data transfer, so a strong commitment by the UK will be necessary for this to work, and again it is difficult to see how any dispute could be dealt with if the CJEU does not have a role. The same applies to the cooperative scientific and educational programmes. 

The final issue in this section is of particular interest to parts of Scotland, and lies in the fishing arrangements on access to UK waters. This has internal UK political implications, never mind with the EU. Scottish fishermen want the UK to regain control over access to Scottish waters. The UK will be an independent coastal state under the UN Convention on the Sea, and the Common Fisheries Policy will be no more, with all that means on control of UK waters. Fishermen also want to sell their product back into the EU across the frictionless border. It seems unlikely the optimistic approach of the white paper will survive intact in the negotiations with the EU, with consequential difficulties on relations within the UK. The political implications outweigh the overall financial implications for the UK.

Finally, the white paper suggests a very complicated dispute resolution and governance arrangement to manage and resolve issues in dispute, but avoiding the CJEU. It suggests setting up what looks like a parallel framework, which does not look like a quick fix when considered in the timescales of the current negotiations.

Uncertain prospects

So where does the paper stand currently? The Brexiters say the white paper leaves the UK as a “vassal state of the EU”, adopting the EU rules and arrangements, paying the fees but having no input into the policy. They are correct to a degree. The Remainers are anxious to stay as close as possible to the Customs Union, on the basis that this would facilitate trade and have the best economic effects for the UK. The paper only partially delivers what they want but it is a step in the right direction. They too are correct, to a different degree.

Since the white paper debate there have been two further debates on the Trade Bill and the Customs Bill, with very close votes. Both bills head to the House of Lords in the autumn. The bills and the issues have not disappeared. It is also not clear yet how far the concessions made to the Brexiters have changed the tenor or acceptability of the white paper, or even whether those concessions are sufficient to satisfy them.

However, many of the proposals have already been rejected by the EU in earlier negotiations as impracticable, undeliverable or as still just “cherrypicking”. Recent utterances from Brussels have not been particularly positive on the proposals, although they seem to recognise the vulnerability of the Prime Minister and have not gone for the political jugular. Michel Barnier as the EU negotiator has now formally rejected the customs collection solution, which is at the heart of the white paper. Ministers have been sent out across Europe to persuade the EU27 individually that this is a reasonable way forward, so far with limited success. The EU27 are sticking with their own negotiating guidelines. This does not bode well for reaching agreed positions based on the white paper, and then discussions in the UK will be open and the gloves will be off.

Westminster has finished the ministerial merry-go-round for the summer, and many of the newbie ministers will be well advised to head to the beach with their advisory files of facts and policy. It now seems clear that the white paper is not going to be the final policy document around which everyone can happily gather in the UK. It has certainly not healed the rifts in the Conservative (or Labour) Party. For lawyers trying to advise our clients how to prepare for Brexit, we now have a paper setting out the UK Government policy, but it remains to be seen whether that is really going to deliver clarity eight months from Brexit day, and the possibility remains of the M20 outside Dover becoming a large lorry park if no agreement is reached. 

To end on a positive note, the white paper confirms, contrary to the Prime Minister’s long held views, that the European Convention on Human rights is here to stay, or at least it probably is here until after Brexit is “sorted”, and that is unlikely to be any time soon.   

Lynda Towers is director of Public Law with Morton Fraser LLP

 

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