Today, the Government published two new Brexit position papers, starting a week in which further papers are expected to be released on Tuesday, Wednesday and Thursday. The first paper published today was on the status of goods on the market post-Brexit titled ‘Continuity in the availability of goods for the EU and the UK’ which can be found here and the second was on document confidentiality, titled “Confidentiality and access to documents”, which can be found here.
These negotiating papers were in response to negotiating position papers on these issues published by the European Commission on 30 June. Open Britain undertook an assessment of the European Commission’s position papers at the time and this assessment can be found here.
‘Continuity in the availability of goods for the EU and the UK’
Open Britain’s assessment of this paper identifies the following three key points:
- The Government openly accepts that the EU and UK have benefited from a close and long-standing trading relationship, yet nevertheless remain intent on taking the UK out of the Customs Union and Single Market, undermining that very trading relationship.
- The Government claims to be keen to hear the views of businesses and consumers, yet the CBI is calling for the UK to stay in the Customs Union and the Single Market at least for a transitional period.
- While the Government’s aim of seeking to avoid market disruption are welcome, its views on surveillance of goods placed on the market prior to withdrawal essentially amount to oversight by bodies operating under EU laws and rules, and thus is in direct conflict with its red line on ending the jurisdiction of the European Court of Justice.
“Investors, businesses and citizens in the UK and across the EU need to be able to plan ahead with certainty. The UK wants to ensure a smooth and orderly exit that minimises disruption to citizens, consumers and businesses across Europe in terms of the availability of goods.
“Both the UK and the rest of the EU benefit from the close and longstanding trading relationship for goods. The EU is the UK’s largest market for goods, and in 2016 other EU Member States, taken as a whole, exported more goods to the UK than any third country. Citizens across the EU also benefit from this close relationship and the integrated regulatory systems, which enable the supply of safe products across the EU and the UK, as well as reduced costs, increased variety, flexibility for supply chains, benefits for patients, and higher quality and innovative products.”
“It is in the interests of both the EU and the UK for our deeply integrated trade and economic relationship to be maintained after the UK’s exit from the EU. EU statistics indicate that EU goods exports to the UK amounted to €314 billion in 2016; more than EU goods exports to Brazil, Russia, India and China combined.“
“Both consumers and producers would benefit from maintaining close trading ties after the UK’s exit to ensure the reliable supply of products and reduced costs. In 2016, the EU exported €127.9 billion of consumer goods to the UK and imported €62.3 billion of UK consumer goods. Producers in the rest of the EU rely on UK firms in their supply chains, and vice versa. In addition, the UK is an important contributor to many European value chains, and in 2011 the UK content accounted for 1.9 per cent of the total value of other EU member state exports, and 6.4 per cent of all foreign value added in other EU member state exports. For some Member States the UK contributes a more significant share of the foreign value-added; around 17 per cent for Malta and Ireland, and around 12 per cent for Cyprus.”
“Deep integration of our economies and regulatory systems has been achieved through membership of the EU, while businesses across Europe develop and use common standards, enabled through National Standards Bodies’ membership of European and International Standards Organisations.”
- Open Britain agrees with the Government’s assessment of the benefits and value of UK-EU trade, which begs the questions as to why the Government is insisting on withdrawing the UK from both the Single Market & the Customs Union, which provide the freest possible trade between the UK and its biggest commercial partner.
- These figures demonstrate how crucial UK-EU trade is to the economies of both the UK and the EU. The UK exported £240 billion to the EU in 2016 and the only way to definitively secure the future of this trade is by remaining in the Single Market and the Customs Union.
- While the Government rightly notes that trade with the UK is important for the EU27, what the Government fails to highlight is that the UK is much more reliant on trade with the EU27 than the EU27 is on trade with the UK.
“As part of the UK’s preparations for a smooth and orderly withdrawal, the UK’s objective is to provide legal certainty and avoid disruption for business and consumers with respect to the continued availability of goods in the EU and the UK.
The UK’s position is that these should be discussed and resolved in a way that supports the move to a future relationship. The UK believes that the views of business and consumers must be at the heart of this discussion. The UK will continue to engage with businesses and consumer organisations to understand more about their concerns, and notes that there are issues in relation to services as well as in relation to goods. The UK is keen to use the current discussions to ensure that all the relevant issues are resolved – whether in the separation discussions related to goods or elsewhere – in a way that is consistent with the UK’s ambition for our future relationship.”
- It is right that the Government listens to the views of business and consumers. But in that case, Ministers must answer the question as to why they insist on taking the UK out of the Single Market and the Customs Union when businesses are calling for the UK to stay in both during a transition phase.
“The border between Northern Ireland and Ireland is the UK’s only land border. It is essential to avoid a return to a hard border, and trade and everyday movements across the land border must be protected as part of the UK-EU deal...”
- As discussed in a previous Open Britain background briefing (which can be read here), the only way to definitively prevent a return to a hard border between Northern Ireland and Ireland is for the UK to stay in both the Single Market and the Customs Union.
“To achieve these objectives, the UK proposes the following four principles. a. First, to ensure the continued availability of products on EU and UK markets at the date of withdrawal, goods placed on the Single Market before exit should continue to circulate freely in the UK and the EU, without additional requirements or restrictions. b. Second, to avoid unnecessary duplication of activities and provide legal certainty, where businesses have undertaken compliance activities prior to exit, they should not be required to duplicate these activities in order to place goods on the UK and the EU market after exit. This includes recognising the validity of type approvals, certificates and registrations issued prior to exit. c. Third, to ensure that goods in circulation continue to comply with product legislation, and market surveillance authorities can ensure the necessary action is taken with respect to non-compliant products, the agreement should facilitate the continued oversight of goods. d. Fourth, where goods are supplied with services, there should be no restriction to the provision of these services that could undermine the agreement on goods.“
“Once a product is placed on the UK and the EU markets, it is essential that both parties can trace products through the supply chain and market surveillance authorities can ensure action is taken with respect to non-compliant goods.”
“Failure to support oversight by market surveillance and enforcement authorities could cause significant disruption and uncertainty for consumers of goods. This encompasses a broad range of activity, for example the: a. traceability of products in the food chain; b. requirements on market authorisation holders to report adverse reactions to medicines; c. ability of Type Approval Authorities to audit vehicle manufacturers; and d. ability of market surveillance or enforcement authorities to exchange information about unsafe products.”
- While these commitments to continuity are welcome, market surveillance of products within the Single Market is conducted by bodies operating under EU law. The Government’s position paper raises questions about how market surveillance can continue if the Government is determined to end completely the jurisdiction of the European Court of Justice in the UK.
“Agri-food products: There is extensive trade in agricultural products and food between the UK and the EU, with the UK being a net importer of agricultural and food (agri-food) goods. While EU imports of agriculture, fisheries and food products from the UK were €16.6 billion in 2016, exports to the UK were €39.8 billion. Over 70 per cent of the UK’s annual agri-food imports come from the EU. A specific definition of “placing on the market” exists for these products because the food chain can involve long production cycles and certain goods are held in storage for long periods...Any deviation from the use of this sector-specific definition would introduce retrospective changes for goods across the UK and all Member States that had been placed on the market prior to the date of withdrawal. This is likely to cause significant legal uncertainty and potential disruption for businesses and consumers both in the UK and the EU. In addition, the agri-food sector is subject to extensive and stringent controls to maintain the safety of food, particularly in respect of food and feed products from third countries (for example documentary checks, physical inspection and certification). The impact of a narrow approach, therefore, would be particularly high.
- As the Government correctly acknowledges, agri-food trade is a vital element of UK-EU trade. It has a particular relevance to cross-border trade on the island of Ireland.
- The best way to ensure continuity in this area and to avoid a “narrow approach”, which the Government itself admits would be particularly damaging, is for the UK to stay in the Single Market and the Customs Union.
- The Government’s general Brexit approach in this area risks having serious consequences for the country’s food supply and food prices, as was highlighted by experts from the University of Sussex as recently as last month.
“One of the areas the UK would like to explore in more detail is that of services supplied together with goods…Goods and services trade flows have consistently moved in lockstep with each other. Services are essential for production of goods, for their sale, distribution and delivery, and for their operation and repair. For example, EU statistics suggest that in 2015 the EU imported €1.6 billion of maintenance and repair services from the UK, while exporting €2.2 billion. As our economies modernise and grow, the link between goods and services is becoming ever more important… the UK is aiming to ensure that the qualifications of professionals involved in delivering services linked to goods are recognised in both the UK and the EU as now and the UK is seeking certainty for citizens and businesses in relation to the laws that apply to their cross-border contracts…There may also be other issues affecting the continuity of service provision at the point of exit which would result in similar disruption, if left unresolved at the point of the UK’s exit from the EU. The UK’s position is that while it would be helpful to agree what these issues are, they should be discussed and resolved in a way that smooths the path to our future relationship…These key principles are aimed at providing legal certainty, while avoiding disruption to business and consumers in regard to the availability of goods. They represent a starting point for enabling a smooth and orderly withdrawal, and moving to a deep and special future partnership, which enables our close trading relationship to continue to flourish.”
- Open Britain firmly believes that if the Government wants to ensure continuity in goods trade between the UK and the EU, along with associated services, then the best way to achieve this is for the UK to remain in the Single Market and the Customs Union.
- If the Government wishes the “trading relationship to continue to flourish” then it has to ask itself why it is pursuing a path which ultimately fails in this aim.
“Confidentiality and access to documents”
While Open Britain notes that this paper is relatively non-contentious and the Government is pursuing a path of looking to uphold confidential information, which it would have had to have done anyway, regardless of Brexit, nevertheless, key questions from it do arise:
- The Government needs to spell out how its plan for Brexit will in any way amount to “taking back control” if it is looking to guarantee an equivalent level of document confidentiality to that which it already implements as an EU member state. It would appear that the UK would be turning from a rule maker into a rule taker.
- Given the Government’s desire to uphold existing agreements on document confidentiality that it already chosen to abide by as an EU member state, the Government needs to spell out precisely how any such agreement will be governed and by which body such an agreement would be monitored.
Open Britain’s position:
Whilst Open Britain believes that it is important to continue to respect the confidentiality of EU and UK documents related to our time as an EU member state, questions remain about how any deal of such nature can be squared with the Government’s red line on taking Britain out of the jurisdiction of the European Court of Justice.
“The UK considers that arrangements agreed with respect to confidentiality and the handling of information produced while it was a Member State should be reciprocal, affording an equivalent level of protection to the UK and the EU after the UK’s withdrawal.”
“These protections should be equivalent to those set out in the existing regimes.”
“The UK considers that both parties should agree how access to documents regimes will work after withdrawal. The aim would be for the UK and the EU to have equivalent protections and obligations after withdrawal to those in Regulation (EC) 1049/2001 and the related Union legal acts, in relation to documents received prior to the UK’s withdrawal.”
- The Government needs to spell out how its plan for Brexit will in any way amount to “taking back control” if it is looking to guarantee equivalent level of document confidentiality to that which it already implements as an EU member state. It would appear that the UK would be turning from a rule maker into a rule taker.
“Classified information exchanged in the interests of the EU is currently governed by an Agreement of 4 May 2011, between the Member States of the European Union meeting within the Council. The UK considers that there is a mutual interest in ensuring that information covered by this agreement, and in the possession of the relevant party prior to the UK’s withdrawal from the EU, continues to enjoy an equivalent level of protection after exit.”
- Given the Government’s desire to uphold existing agreements on document confidentiality that it has already chosen to comply with as an EU member state, the Government needs to spell out precisely how any such agreement will be governed and by which body such an agreement would be monitored. The Government needs to spell out how it intends to keep its red line of leaving the jurisdiction of the ECJ whilst at the same time looking to uphold an agreement made within one of the EU’s institutions.