The view from the UK
Vacillating about becoming a vassal
In the UK, all had been relatively quiet on the Brexit front this year. But this week has seen Brexit return in a political agenda dominated by two debates within the Government and Conservative party. The first debate regards how closely the UK will mimic EU membership during any transition period. The second concerns the level of regulatory alignment the UK will seek in its future relationship with the EU.
The disagreement on transition was focused on Brexit Secretary David Davis’ clash with Jacob-Rees-Mogg during an evidence session of the Brexit Select Committee on Wednesday. During the session, Davis effectively confirmed that the UK’s objective for the transition period was to de facto abide by the rules of the Customs Union, Single Market and be bound by EU jurisdiction in exchange for the ability to negotiate trade deals with third party countries. When pressed as to whether this means the UK will effectively remain in the EU for the duration of the transition period, Davis replied “formally it will not, because we would not be a member of the EU at that point, but we would have arrangements that mimic it.” This caused a fiery exchange in which Rees-Mogg pointed out that if the UK continues to accept EU law, be bound by EU rules and cannot vote it will effectively be a vassal state – inside the EU but without any representation.
Then on Thursday in Davos, the debate moved on to regulatory alignment as Chancellor Philip Hammond gave a speech promoting what sounded very similar to the CBI’s call for membership of “a” customs union (rather than “the” Customs Union) in which the UK would seek “very modest” regulatory divergence. Suddenly Conservative MPs were all over the airwaves and twitter, accusing the Chancellor of breaching the Conservatives’ 2017 manifesto and the Prime Minister’s Lancaster House speech. No 10 and Hammond eventually both put out corrections, stating that the UK will leave the Customs Union and Single Market. However, both failed to properly address the issue of the level of regulatory alignment the UK will seek with the EU in the future.
On the same evening back in the UK, Rees-Mogg made an even more outspoken attack on the Government’s Brexit policy than he had during the Brexit Select Committee session on Wednesday. In a speech he called for the government’s tone on Brexit “to fundamentally change”, adding that the public “did not vote for the management of decline” and that close alignment with the EU is unacceptable.
This week’s debates on the transition period will only heighten existing concerns among businesses, who rely on the transition period to put in place contingency measures. However, Brexiteer Ministers do not seem to be fighting a battle on transition. The official objective of the UK government is perhaps best evidenced by Davis’ comments to the Brexit Committee: “I am relaxed about transition, because my primary concern is about the future relationship. That is what matters.”
However, some Conservative backbenchers are clearly not “relaxed” about a status-quo transition. Moving Suella Fernandes, former Chair of the European Reform Group, to the Brexit Department was supposed to appease Conservative Brexiteers. Instead it has opened the door for Rees-Mogg to take the Chairmanship and, although he couches his interventions in absolute loyalty to the Prime Minister, there can be no doubt that this week has seen him shine a bright light on the division and dissatisfaction with Government within Conservative ranks.
Despite this backbench activity, it is clear that the Cabinet’s energy is focussed on debating the future agreement and specifically the issue of regulatory alignment. The UK has long privately appealed to business for Brexit solutions and publicly called for ideas from business on where they would like to see regulatory divergence. When the Chancellor only foresees “very modest” divergence, and the Brexit Secretary simply replies “no” when questioned if there were any areas where the Government was keen to diverge, it would appear that the Government are short of ideas. Evidencing where regulatory divergence would be beneficial to the UK will be key to the debate in Cabinet regarding the UK’s future trading relationship. But perhaps both sides of the debate are simply holding their cards close to their chest. After all, for either side of this debate to successfully negotiate their objectives in Brussels, there is still much to negotiate in the UK.
The view from Brussels
This week the European Commission has published a raft of its Brexit preparedness notices to the business community.
The Directorate-General for Health and Food Safety’s (DG-SANTE) notice on rules in the field of plant protection protects/pesticides states that as of withdrawal EU law stipulates that the UK will cease to be able to act as a rapporteur/evaluation authority for maximum residue levels (MRLs). Businesses are advised to consider whether applications can be processed before 29 March 2019 before submitting them in the UK, and to consider changing the rapporteur and/or evaluating to an EU-27 Member State.
DG-SANTE, in conjunction, with the European Medicines Agency (EMA), also published a revised version of its notice in regard to medical and veterinary product authorisation, which also suggests that businesses take into account that EU law requires marketing authorisation holders to be established in the EU and stipulate that activities related to batch release and pharmacovigilance be performed in a Member State.
In another notice relating to substances of human origin – blood, tissues, cells and organs – DG-SANTE again makes it clear that authorisation activities would have to be conducted in the EU-27.
Elsewhere, the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG-GROW) and the European Intellectual Property Office (EUIPO) issued a notice indicating that pending applications will no longer have effect after withdrawal and that companies currently domiciled solely in the UK will have to represented before the EUIPO.
The Grayling View
The publication of preparedness notices is becoming a regular feature in the Brexit Bulletin, and it is noticeable that the volume of publications is increasing.
What the ever growing number of notices show is the extent to which the failure to reach a deal would impact the UK simply because they highlight the depth of regulatory integration that the EU has inculcated between its Member States.
The UK may have initiated the negotiating tactic that is a ‘no-deal’ but the European Commission and its shadowy Brexit Preparedness Group, with the Secretary-General, is turning it into an art from.
The highlights from the Member States
A renewed Europe?
German Chancellor, Angela Merkel and French President, Emmanuel Macron, both took to the stage to address delegates at the World Economic Forum in Davos on 24 January. Both used the opportunity to show that Europe is back, calling for multilateralism and greater integration.
Whilst Macron did not explicitly address the issue of Brexit, Merkel expressed her regret that the UK would not be a member of the EU for much longer. However she argued it has given Europe the “courage to move forwards”. In terms of Brexit talks, she stuck to the generic EU line, insisting that the UK must accept freedom of movement if it wants access to the single market. Germany was prepared to be open-minded, according to Merkel, who expressed a desire for a good partnership with Britain in the future.
The Grayling View
Merkel’s comments on Brexit at Davos are in no way groundbreaking. However, the reception of a renewed and dynamic Europe at the World Economic Forum speak for themselves. Merkel and Macron are using Britain’s exit from the EU to renew the strength of Europe and push for further integration. The strength of the Merkel-Macron double act had an impressive impact in creating a sense of momentum and hope, so much so that Europe took the centre stage at Davos, warning against national egotism, with references to the First and Second World Wars.
It is the Brexit paradox that Britain’s departure is creating such unity. However, this renewed European strength will only make negotiations harder for the UK.
Dates for your diary
29 January 2018 - General Affairs Council (Art. 50) - Adoption of transition mandate
27 February 2018 - General Affairs Council (Art. 50)
4 March 2018 - Italian General Election
20 March 2018 - General Affairs Council (Art. 50)
22-23 March 2018 - European Council Summit
1 July 2018 - Austrian Presidency of the Council
End of October 2018 - Negotiations expected to end
1 January 2019 - Romanian Presidency of the Council
29 March 2019 - UK expected to leave EU
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