Britain leaving the EU paradigm

The new move that UK is contemplating is likely to complicate the scenario with regard to the EU’s established common commercial policy and external tariffs format

British Prime Minister Theresa May’s speech at Lancaster House on 17 January this year was similar in approach to many other speeches delivered by former British Prime Ministers.  She did not hesitate to target EU’s failings while dwelling on the connotations of the forthcoming Brexit negotiations. There were however ambiguities that left many wondering how the whole process would be implemented.
That speech and subsequent statements emanating from London have tried to underline that the BREXIT move might not be very popular within the EU paradigm but it was being expected that the process would eventually result in "a new and equal partnership between an independent, self-governing, Global Britain and our friends and allies in the EU". In this context May suggested that UK was looking forward towards a "new, comprehensive, bold and ambitious free trade agreement" with its previous partners within the EU. This premise was based on the axiom that what is good for Britain is also suitable for the EU – which might be a bit away from the truth.
Britain is apparently hoping according to the British Prime Minister for an eventual agreement that would allow British banks and businesses "the freest possible trade in goods and services", "the maximum freedom to trade and operate", and "the greatest possible access" to the EU's large market. Such market ambitions do not however appear to hold particular appeal for economists in Germany. Interestingly, Philip Hammond, British Chancellor of the Exchequer has also tried to explain similar views in front of audiences both in Berlin and Davos. He has tried to underline that what might be considered as potentially economically damaging to Britain by many in Europe could also be considered as being also politically necessary for Britain. This trend of thought has however not been well understood in the EU where BREXIT is being viewed as putting European solidarity at risk.
Consequently, there have been strong reactions to Theresa May's views, particularly within the German government- keen on preserving solidarity among the 27 EU Member States. Analysts from this country have expressed caution about UK moves and indicated that after BREXIT, Britain must understand that instead of special facilities it will have to enter into future deals on the basis of “joint interests”. One reason for this growth in German caution and displeasure appears to have resulted from the view that Britain instead of being truly interested in the single market access and its denotation of economic and political integration has gradually become preoccupied with its own national problems and moved away in the recent past from being an integral part within the spectrum of EU affairs. In this regard reference is being made to Britain not having expressed interest in either joining in the building of a European banking union or playing a more constructive role in solving the aggravating refugee problem that has seriously affected Germany and some other European countries in the recent past. Some have commented that German views on BREXIT also might have been accentuated through the advent of populist President Trump, his receiving the British Prime Minister on 27 January (the first foreign leader after his swearing –in as the new US President) and the presumed likelihood that the UK would give more attention to furthering its trading interests with the USA rather than helping to build the European pillar of Western security that would help to contain the evolving uncertainties arising out of the quagmire in the Middle East and North Africa.
Financial analysts are correctly pointing out that after BREXIT it is unlikely that Britain will have privileged access to the EU's internal market. Matters will also assume greater complexity because agreement will have to be reached between Britain and the EU over a new regulatory system that will be applicable with reference to regulatory terms pertaining to the equivalence of British and EU trading, health and safety standards and their rules of origin procedures. This would apply even to transactions with regard to trade in farm products including fish caught in the open sea and then being exported to the EU.  
It is clear that Britain is hinting at a new format- some sort of partial membership of the customs union. This will however complicate the scenario with regard to the EU’s established common commercial policy and external tariffs format. This approach will make matters quite difficult for EU’s 27 Members and will then result in re-examining their own competing interests’ structure with regard to the UK, formerly the EU’s second largest economy. EU institutions in Brussels have been evaluating very carefully the possible costs of BREXIT. They are also trying to asses if Britain will eventually propose any measure that might ease a future financial settlement equation pertaining to the EU annual budget. No such suggestion has been floated upto now. They are also worried that UK might also end up picking and choosing which of the EU's activities it will continue to participate in, and at what price. That would further complicate an already fluid situation, particularly with reference to sectors like security intelligence and science R&D where Britain has always played an important role. This is generating additional pressure on Germany who knows that in case of any shortfall in the EU budget, relatively less rich EU members will turn towards Germany to make up the shortfall.
Such a sensitive situation stands to be further exacerbated against the backdrop of Theresa May's use of the warning that, if the UK is thwarted because of the Article 50 process, then it might "change the basis of Britain's economic model" and even consider erecting protectionist barriers against mainland Europe, depriving mainland business of easy access to the financial pool in London, and also engage in tax alternatives and deregulation measures against the interests of its erstwhile partners. Such a unilateral change of direction by Britain might then result in cutting off EU businesses from the British market. Such an approach would then be in similar vein as that of “America first” as is being proclaimed by US President Trump.
Andrew Duff is a former Member of the European Parliament has made a significant observation in this context. He has pointed out that –“the immediate task of the heads of government will be to define the mandate they give to the European Commission for the negotiation of the Article 50 withdrawal agreement. The European Council will need much more time to agree on a second mandate for the Commission to open negotiations on a new free trade and customs agreement with the UK (under the provisions of Article 218 TFEU). So there will be no quick, simple or straightforward transition from full British membership of the single market to the new patchwork regime. All that has been agreed so far is that non-membership must be inferior to full membership”. From this perspective, members of May’s Cabinet will have to understand that reaching a new free trade agreement with the E27 would not be as simple as is being thought. In reality, it will mean addressing a complex issue from scratch.
There is also another issue that will require careful resolution- that of the role of the European Court of Justice (CJEU). It is true that after BREXIT the CJEU will cease to have direct jurisdiction in the UK but it would be simplistic to think that the UK could then ignore the Luxembourg judges altogether. The Court will continue to have the last word through its decisions on the rights of UK citizens resident in EU states, UK businesses established there. It will also be a party in the arbitration of any trade dispute between the UK and the EU27. The secondary shadow created through the legacy of EU citizenship over the past 45 years of integration under EU secondary law will not simply disappear overnight. It will continue as a factor for a few years till the BREXIT process is completed. There will have to be a transitional period where the business sectors both in Britain as well as in the EU will have to prepare themselves carefully for the new legal, trading and regulatory relationship. It will require reflection and strategic decisions on both sides.
It would be remiss at this point not to note that the British Prime Minister has been benefitting during this difficult period from a perceived lack of opposition from the British Labour Party. She has consequentially become one of the UK's most powerful Prime Ministers despite her sitting on a small majority. Nevertheless, it will not be an easy street for Theresa May. She still has the prospect of having to encounter demands for a second Scottish independence poll from Scotland's equally steely nationalist First Minister, Nicola Sturgeon who has used her 62-38 percent pro-EU vote in last year's referendum to continuously remind  that Scotland has the right to retain some kind of EU association.

The writer is a former Ambassador and Chief Information Commissioner of the Information Commission, is an analyst specialized in foreign affairs, right to information and good governance, can be reached at <[email protected]>

Britain leaving the EU paradigm

The new move that UK is contemplating is likely to complicate the scenario with regard to the EUs established common commercial policy and external tariffs format

British Prime Minister Theresa Mays speech at Lancaster House on 17 January this year was similar in approach to many other speeches delivered by former British Prime Ministers. She did not hesitate to target EUs failings while dwelling on the connotations of the forthcoming Brexit negotiations. There were however ambiguities that left many wondering how the whole process would be implemented. That speech and subsequent statements emanating from London have tried to underline that the BREXIT move might not be very popular within the EU paradigm but it was being expected that the process would eventually result in a new and equal partnership between an independent, self-governing, Global Britain and our friends and allies in the EU. In this context May suggested that UK was looking forward towards a new, comprehensive, bold and ambitious free trade agreement with its previous partners within the EU. This premise was based on the axiom that what is good for Britain is also suitable for the EU which might be a bit away from the truth. Britain is apparently hoping according to the British Prime Minister for an eventual agreement that would allow British banks and businesses the freest possible trade in goods and services, the maximum freedom to trade and operate, and the greatest possible access to the EUs large market. Such market ambitions do not however appear to hold particular appeal for economists in Germany. Interestingly, Philip Hammond, British Chancellor of the Exchequer has also tried to explain similar views in front of audiences both in Berlin and Davos. He has tried to underline that what might be considered as potentially economically damaging to Britain by many in Europe could also be considered as being also politically necessary for Britain. This trend of thought has however not been well understood in the EU where BREXIT is being viewed as putting European solidarity at risk. Consequently, there have been strong reactions to Theresa Mays views, particularly within the German government- keen on preserving solidarity among the 27 EU Member States. Analysts from this country have expressed caution about UK moves and indicated that after BREXIT, Britain must understand that instead of special facilities it will have to enter into future deals on the basis of joint interests. One reason for this growth in German caution and displeasure appears to have resulted from the view that Britain instead of being truly interested in the single market access and its denotation of economic and political integration has gradually become preoccupied with its own national problems and moved away in the recent past from being an integral part within the spectrum of EU affairs. In this regard reference is being made to Britain not having expressed interest in either joining in the building of a European banking union or playing a more constructive role in solving the aggravating refugee problem that has seriously affected Germany and some other European countries in the recent past. Some have commented that German views on BREXIT also might have been accentuated through the advent of populist President Trump, his receiving the British Prime Minister on 27 January (the first foreign leader after his swearing in as the new US President) and the presumed likelihood that the UK would give more attention to furthering its trading interests with the USA rather than helping to build the European pillar of Western security that would help to contain the evolving uncertainties arising out of the quagmire in the Middle East and North Africa. Financial analysts are correctly pointing out that after BREXIT it is unlikely that Britain will have privileged access to the EUs internal market. Matters will also assume greater complexity because agreement will have to be reached between Britain and the EU over a new regulatory system that will be applicable with reference to regulatory terms pertaining to the equivalence of British and EU trading, health and safety standards and their rules of origin procedures. This would apply even to transactions with regard to trade in farm products including fish caught in the open sea and then being exported to the EU. It is clear that Britain is hinting at a new format- some sort of partial membership of the customs union. This will however complicate the scenario with regard to the EUs established common commercial policy and external tariffs format. This approach will make matters quite difficult for EUs 27 Members and will then result in re-examining their own competing interests structure with regard to the UK, formerly the EUs second largest economy. EU institutions in Brussels have been evaluating very carefully the possible costs of BREXIT. They are also trying to asses if Britain will eventually propose any measure that might ease a future financial settlement equation pertaining to the EU annual budget. No such suggestion has been floated upto now. They are also worried that UK might also end up picking and choosing which of the EUs activities it will continue to participate in, and at what price. That would further complicate an already fluid situation, particularly with reference to sectors like security intelligence and science RD where Britain has always played an important role. This is generating additional pressure on Germany who knows that in case of any shortfall in the EU budget, relatively less rich EU members will turn towards Germany to make up the shortfall. Such a sensitive situation stands to be further exacerbated against the backdrop of Theresa Mays use of the warning that, if the UK is thwarted because of the Article 50 process, then it might change the basis of Britains economic model and even consider erecting protectionist barriers against mainland Europe, depriving mainland business of easy access to the financial pool in London, and also engage in tax alternatives and deregulation measures against the interests of its erstwhile partners. Such a unilateral change of direction by Britain might then result in cutting off EU businesses from the British market. Such an approach would then be in similar vein as that of America first as is being proclaimed by US President Trump. Andrew Duff is a former Member of the European Parliament has made a significant observation in this context. He has pointed out that the immediate task of the heads of government will be to define the mandate they give to the European Commission for the negotiation of the Article 50 withdrawal agreement. The European Council will need much more time to agree on a second mandate for the Commission to open negotiations on a new free trade and customs agreement with the UK (under the provisions of Article 218 TFEU). So there will be no quick, simple or straightforward transition from full British membership of the single market to the new patchwork regime. All that has been agreed so far is that non-membership must be inferior to full membership. From this perspective, members of Mays Cabinet will have to understand that reaching a new free trade agreement with the E27 would not be as simple as is being thought. In reality, it will mean addressing a complex issue from scratch. There is also another issue that will require careful resolution- that of the role of the European Court of Justice (CJEU). It is true that after BREXIT the CJEU will cease to have direct jurisdiction in the UK but it would be simplistic to think that the UK could then ignore the Luxembourg judges altogether. The Court will continue to have the last word through its decisions on the rights of UK citizens resident in EU states, UK businesses established there. It will also be a party in the arbitration of any trade dispute between the UK and the EU27. The secondary shadow created through the legacy of EU citizenship over the past 45 years of integration under EU secondary law will not simply disappear overnight. It will continue as a factor for a few years till the BREXIT process is completed. There will have to be a transitional period where the business sectors both in Britain as well as in the EU will have to prepare themselves carefully for the new legal, trading and regulatory relationship. It will require reflection and strategic decisions on both sides. It would be remiss at this point not to note that the British Prime Minister has been benefitting during this difficult period from a perceived lack of opposition from the British Labour Party. She has consequentially become one of the UKs most powerful Prime Ministers despite her sitting on a small majority. Nevertheless, it will not be an easy street for Theresa May. She still has the prospect of having to encounter demands for a second Scottish independence poll from Scotlands equally steely nationalist First Minister, Nicola Sturgeon who has used her 62-38 percent pro-EU vote in last years referendum to continuously remind that Scotland has the right to retain some kind of EU association. The writer is a former Ambassador and Chief Information Commissioner of the Information Commission, is an analyst specialized in foreign affairs, right to information and good governance, can be reached at [email protected]