UK-EU talks: the British proposal

We have a text. The British negotiators have published the draft free trade agreement submitted to the European Union. Having read it, I must conclude that the European Commission should be biting our hands to sign the thing while the offer is there.

The draft agreement is wholly different in its approach from the version the European Union proposed (and which was immediately rejected). It starts not from the idea of the European Union system continuing in essence, but from the norms of international trade agreed in the framework of the World Trade Organisation (the creation of which was one of John Major’s successes). It would be an arrangement worthy of Brexit, and it still gives the European Union what it most needs, namely tariff-free trade, fair, open procurement rules and protection of intellectual property.

There are things missing. The British text does not have a reliable provision against state aid; just a brief set of provisions in Article 21. Solid obligations are needed though for the occasions when the French government (in particular) subsidises its home industries. The EU text does have detailed provisions on state aid, though allowing the Commission to wink at it anyway, which is no good from the British perspective. In addition, the text does not have a provision for co-ordinating VAT, and specifically allow cross-border tax reclaims. (See ‘Where the Remainers were right‘). There may be a good reason for this though, which awaits a second stage, and the reasons are why the Commission should hurry to sign.

This is not to say that it is bare document – on the contrary, it is 292 pages long, and it contains detail on areas not covered by the European Commission’s proposal.

One could run through the Political Declaration and tick off points which are covered and those not yet here: it does not have the declaration about human rights commitments or data protection. They are not forgotten. Most of the points in the Political Declaration that go beyond actual trade could be handled in text no longer than that which appears in the Declaration already. (The European Commission’s draft takes such paragraphs, gold-plates them and wraps them in ermine until they betray the tight text agreed with Boris Johnson.) The omitted will be needed, in the original form, but at the next stage.

There could be a good reason for omitting provisions on VAT and state aid, as examples. That reason is found in the way the European Union is constituted. Its institutions have a broad remit of exclusive jurisdiction, which includes trade matters and standards, and in these areas of ‘exclusive competence’, the European Union can sign a treaty alone. However where a matter falls within the joint competence of the Union and of the member states, then any treaty requires the concurrence of each and every member state (and Belgium cannot sign without each of its three regions agreeing). The member states of the European Union are not currently feeling co-operative, not even with each other let alone with Britain. The chances of getting 26 + 3 signatures to a complex document in the time allowed are so low that they can be discounted. Therefore the first stage needs a treaty which is fully within the exclusive competence of the European Union. Therefore the Commission should be keen to get that under their belts.

This is only the first stage then: free trade is the main prize but both sides still want agreement on state aid and VAT, and fishing, amongst other areas. Those trespass into joint competence: to bind the hands of the French government from its tendency to ‘corporate welfare’, the signature of that government is needed, and to direct the tax authorities of the member states likewise. Therefore if a treaty such as that proposed is signed, it is only the first, necessary stage and does not conclude the trade talks.

The second stage intimately affects the interest of the member states, and it is in their interests to conclude additional agreements. If negotiators aim to have a single, vast document on all matters, then any single member state or Belgian region could hold the whole thing up like Horatius on the bridge, in order to force some unprincipled concession, with the pages of the calendar passing inexorably. However, if the main deal were done, then there is less blackmail value, and it will be easier to reach settlement on all other points.

This being the case, all sides should hasten to sign an agreement which is essentially the British text, and then move on to stage 2.

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Author: AlexanderTheHog

A humble scribbler who out of my lean and low ability will lend something to Master Hobbes

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