Brexit

Regulatory alignment would prevent Britain securing the benefits of Brexit

BY Peter Lyon   /  7 December 2017

Amid the negotiations with the DUP and the EU over the Irish border, there have been rumours the Government is considering agreeing to “regulatory alignment” with the EU. Permanently aligning our regulations with the EU would prevent Britain taking back control of our regulations and make it more difficult to sign extensive free trade agreements with non-EU countries like the US.

A leak of a draft text for the agreement on Phase 1 of the Brexit talks said “in the absence of agreed solutions, the UK will maintain full alignment with the internal market”. It is shocking the Government would have accepted this wording at this stage of the negotiations. Leave campaigners have continually argued leaving the Single Market is crucial to achieving the benefits of Brexit. And prior to the EU Referendum, both sides of the debate, including then Prime Minister David Cameron, frequently explained Brexit would mean both leaving the Customs Union and the Single Market, so the voters were in no doubt about this.

Since the Referendum, Remainers have pushed for Britain to stay closely tied to the “European model” of regulation, as does non-EU Norway via its membership of the European Economic Area. The Chancellor, Philip Hammond, is thought to be leading this bid for an “EEA minus” deal, along with senior civil servants Jeremy Heywood and Olly Robbins. This would consist of being outside the Single Market, but committed to aligning our regulations with the EU.

Meanwhile, former figureheads of the Vote Leave campaign, Michael Gove and Boris Johnson, are reportedly urging the rest of Cabinet to reject an end-state relationship with the EU which requires us to follow EU rules and regulations. They believe regulatory alignment would hamper our ability to agree free trade deals and loosen the regulatory burden on businesses. They have instead proposed a bespoke arrangement with the EU which does not tie us to EU regulations.

Despite the Cabinet apparently having not yet decided what future trading relationship it wants with the EU, the leaked draft text suggests the Prime Minister is leaning towards a trade deal involving regulatory alignment. Brexit campaigners such as Jacob Rees-Mogg MP are rightly concerned, as is Get Britain Out.

Signing trade deals with countries around the world has been called the great prize of Brexit. Trade negotiations at the European level are often blocked by protectionist interests on the Continent. For example, the EU-Canada agreement was held up by the Walloon Parliament in Belgium. Leaving the EU and its Common Commercial Policy allows Britain, with its proud history as a free-trading nation, to negotiate comprehensive free trade agreements quickly.

Many nations have already indicated keenness to negotiate free trade deals with the UK, such as the US (our largest individual trading partner), Australia, New Zealand, India and Switzerland. Signing these deals as soon as possible is necessary to fulfil Theresa May’s vision of a Global Britain. Becoming a global leader in free trade would not only make it easier for British businesses to export, therefore boosting our economy, but would also be of great assistance to developing countries which have been disadvantaged by the EU’s protectionist Customs Union.

However, as the US Commerce Secretary, Wilbur Ross recently pointed out, these trade negotiations will be impeded if Britain does not have regulatory freedom from anti-competitive EU regulations, many of which ignore scientific research and constrain businesses. In areas such as food safety, chemicals and data protection, EU rules restrict competition and economic growth.

Another downside of regulatory alignment means the UK would have to accept EU rules without representation in the EU Parliament, the Commission and the Council. This would go against what the majority of the public voted for in the Referendum – to “take back control”.

In a great number of regulatory areas, the current arrangements do not suit the UK. After Brexit, it is vital the Government is able to undertake regulatory reform to reduce costs on British firms, and to create the conditions for a substantive free trade agreement with the US and other important economies around the world.

The Government must commit to an end-state relationship with the EU in which we take back control of regulatory policy. We did not vote to Get Britain Out of the EU only to be tied to the European model of regulation and unable to become a global leader in free trade.

 Peter Lyon is a Research Executive at cross-party grassroots campaign Get Britain Out