Friday, December 02, 2016

The government's approach to Brexit negotiation has been rather difficult to fathom - partly because the undertaking not to give a 'running commentary' has made pregnant every least significant ministerial utterance. But, insofar as one can make sense of the government's position at this stage, it is this: the government wishes to negotiate a relationship with the EU that is outside the EU and outside the EEA, but which is at least as advantageous to the UK as EEA membership would be. Specifically, it is looking to remove the UK from the plethora of regulations that essentially define the EEA - the non-tariff barriers that define standards for goods and services - and wants to replace this with a system of mutual regognition (MR). So, instead of accepting a single set of European standards, the UK would be allowed to define its own standards, but trade between the EU and UK would remain unhindered because each of the UK and EU would accept the other's standards. At the same time, being outside the EU and the EEA might unambiguously allow the UK to impose restrictions on the movement of labour. This adoption of MR might be what 'sovereignty' looks like.

For both sides to the negotiation to accept MR would require it to be understood that there are limits to the extent to which standards can diverge. The EU is unlikely to accept MR as a principle without restricting the UK's ability to define standards that, in effect, produce serious non-tariff barriers - and the same goes the other way. Sovereignty is diluted by this. Moreover, the definition of a whole bunch of new standards for the UK implies the creation of a huge bureaucracy. 'Leave' voters who were concerned by the Eurocracy would not likely be impressed. And both the UK and the EU will have red line conditions attached to any MR agreement - it is unlikely that the UK would manage to secure an agreement of this kind without both continued payments to the EU and conditions being met on the mobility of labour.

If this is indeed the way the government is thinking, it is not the worst of all possible worlds. But, once it has been negotiated through, the merits of such a proposal, relative to those of simply remaining within the EEA, are not at all clear.