Martin Donnelly was Permanent Secretary for the Department of International Trade until last year.
Can the UK find a coherent way to have its regulatory cake and eat it – to be outside the European Union while choosing to follow the EU standards needed for access to the internal market?
Suppose that on March 30 next year the UK is producing a pharmaceutical product, or a legal service, or transporting freight across the EU, while meeting all the EU regulatory standards in the relevant sectors. Until that date, there is a legal framework which determines what those standards are, and therefore a chance of legal redress if the goods or services are subsequently found not to meet these standards. This is through national courts in the first instance, applying relevant EU law, and with the chance of appeal to the European Court of Justice (ECJ) if needed to clarify what the law actually means in a specific case.
So if the UK is no longer prepared to accept ECJ jurisdiction, it is not in a position to provide the same clarity of legal redress to businesses or consumers in the rest of Europe. It could unilaterally offer to do so. But that offer could be withdrawn at any time so there would be less legal certainty about how to gain redress.
If providing the same level of redress and court access was made a condition of the market access, the UK would have to agree to follow all the most recent ECJ jurisprudence, to ensure that its legal framework incorporated developments in EU law as soon as they were published, with immediate judicial effect.
Over time the underlying EU regulatory framework for specific products will change as new product definitions are agreed. Environmental standards, healthcare safety regulations and data protection issues are all relevant to deciding whether a product or service is approved for the single market.
Would the UK be prepared to unilaterally promise to meet immediately all these changing standards for a particular sector? If not, then regulatory alignment would be lost.
It gets worse. Those producing the goods or services would at the point of UK exit still be entitled to EU standards of health and safety, of maternity, sickness and holiday pay, of clarity about the role of temporary or posted workers, and so forth. If these standards were not maintained, for example on drivers’ permitted hours, then others would certainly claim that the UK was seeking an unfair trading advantage within the single market.
A similar problem arises with customs duties. If the UK were outside the EU’s customs union and chose to reduce tariffs on some imported pharmaceutical materials which were then incorporated into products sold across the EU, it would have acquired a cost advantage which would again be seen elsewhere as inconsistent with single market access. Would the UK promise not to change tariffs on relevant products? Or be prepared to lose market access if it did so?
The single market is a coherent tapestry of economic and social regulation. Pulling out one strand is very hard to do without changing the whole picture. And so far the EU has been consistent in its commitment to keep the single market as it is, with a single set of rules for all.