The Alleged Benefits of Brexit

Author Les Chatfield Licence CC BY-SA 2.0 Source Wikimedia Commons

 

Jane Lambert

On 31 Jan 2022, the Cabinet Office published a document entitled  The Benefits of Brexit: How the UK is taking advantage of leaving the EU.   It consists of 105 pages including the front cover and back page.  There is a "Foreword by the Prime Minister", an "Introduction", sections headed "Our Achievements so far", "The Best Regulated Economy in the World" and "A World of Future Opportunities", and a "Conclusion."

When governments enter a treaty each of them accepts restrictions. When the treaty comes to an end so do the restrictions.  Whether or not a release from restrictions confers a benefit will depend on how it is to be used.  Even if it does confer a benefit it will come at a cost because the benefits that had been conferred by the treaty will also be lost.  The ending of the treaty will be a net benefit only if the benefits resulting from the release outweighs those costs.

Anyone expecting the above document to quantify the benefits of leaving the EU and weighing them against the costs will be disappointed because it is a polemic and not an analysis.  Its authors are not identified but the "Introduction" states that "many of the benefits" and future work set out in that document build on the work and ideas of Sir Iain Duncan Smith MP, Theresa Villiers MP and George Freeman MP and their Taskforce on Innovation, Growth and Regulatory Reform.  It adds that there have been contributions from numerous business groups and representative organisations who have met the Prime Minister and other Ministers.  

This section headed "Our Achievements So Far" consists of 14 pages divided into the following subsections:

• Taking Back Control (page 5 to 7);
• Our Money and Levelling Up (pages 8 and 9);
• Backing our Business (page 10 to 12);
• Support for People and Families (pages 13 and 14);
• Protecting our Environment (page 15);
• Enhancing Animal Welfare Standards (page 16);  and
• Global Britain (page 17 to 19).

The alleged achievements of "Taking Back Control" include "ending free movement", "making it tougher for EU criminals to enter the UK", reintroducing blue passports and "reviewing the EU ban on imperial markings and sales".  The authors explain that that is because "imperial units like pounds and ounces are widely valued in the UK and are a core part of many people’s British identity." "Our Money and Levelling Up" includes stopping contributions to the EU, spending more money on the NHS, subsidizing British businesses, changing the rules on public procurement to make it easier for British businesses to win public sector contracts and setting up free ports.   "Support for People and Families" includes raising the limit for contactless payments to £100, removing the requirement for vehicle owners to insure against accidents on private land, replacing the Erasmus scheme with the Turing scheme and relaxing the rules on cannabis for medical use.   The rest of the section is in a similar vein. 

"The Best Regulated Economy in the World" section is 13 pages long divided as follows:

• "Our regulatory system is recognised globally. We want to raise the bar even higher as we embrace our new found freedoms outside of the EU and position ourselves as a global hub for innovation and a science and technology superpower" (page 20);
• Making the most of our regulatory freedoms (page 21);
• Our principles for regulation (pages 22 and 23);
• A sovereign approach (pages 24 and 25); 
• Leading from the front (page 26);
• Proportionality (page 27);
• Recognizing what works (page 28);
• Setting high standards at home and globally (page 29);
• Retained EU law (page 30);
• Accelerating and prioritizing refim (page 31); and 
• Amending retained EU law (pages 32 and 33),

Except for the passages on repealing or amending retained EU law for which it appears that primary legislation will be required there is very little detail on how UK regulation will improve on or even diverge from the EU's.

The most sunstantial section is headed "A World of Opportunities".  That runs from page 34 to 100 and cosnsists of the following subsections:

• A world of opportunities (pages 34 and 35);
• Science Data & Technology (pages 36 and 37);
• Quantum Technologies (pages 38 and 39);
• Digital Economy (pages 40 and 41);
• Digital Technology in Trade (pages 42 and 43);
• Online Safety (page 44);
• Cyner Security & Product Safety (page 45);
• Life Sciences (pages 46 and 47);
• Business & Industry (pages 48 and 49);
• Professional Business Services (pages 50 and 51);
• Legal Services (pages 52 and 53);
• Automotive (pages 54 and 55);
• Aerospece (pages 56 and 57);
• Retail and Consumer Goods (pages 58 and 59);
• Hospitality (pages 60 and 61);
• Food & Drink (pages 62 and 63);
• Culture (page 64);
• Infrastructure & Levelling Up (pages 65 and 66);
• Aviation (pages 67 and 68);
• Space (pages 60 and 70);
• Rail (pages 71 and 72);
• Roads (pages 73 and 74);
• Maritime (page 75);
• Nuclear (pages 76 and 77);
• Housing & Construction (page 78);
• Local Government (page 79);
• Education (pages 80 and 81);
• Health (pages 82 and 83);
• Climate, the Environment & Agriculture (pages 84 and 85);
• The Environment (pages 86 and 87);
• Farming (pages 88 and 89);
• Fisheries & Marine Management (pages 90 and 91);
• Animal Welfare (pages 92 and 93);
• Glonal Britain (pages 94 and 95);
• Migration (pages 96 and 97);
• International Trade (page 98); and
• International Relations and Diplomacy (pages 99 and 100). 

Part of this programme would not have been possible without brexit. Changes to data protection law that may not be compatible with the General Data Protection Regulation. Subsidies and investments in various sectors of the economy might have been prohibited as state aid. Member states would not have been able to negotiate free trade agreements with third countries. There is not much else that would have been incompatible with EU membership.  Where there are changes such as the exclusion of English and Welsh lawyers from the Court of Justice, General Court and the Unified Patent Courts and the withdrawal of the UK from the Brussels and Lugano Conventions are hard to spin as benefits. Possible accession to the Singapore Convention on Mediation and the recognition of English legal qualifications in Australia and New Zealand will not begin to make up for the loss of the right to practise in the EU.

The "Conclusion" is made up exclusively of platitudes.   Anyone wishing to discuss this article or the issues arising in it may call me on 020 7404 5252 during office hours or send me a message through my contact form. 

Brexit Briefing - June 2021

White Cliffs of Dover

Photochrom Film Collection  Copyright expired

 

Jane Lambert

The transition or implementation period provided by art 126 of the agreement by which the UK left the EU expired on 31 Dec 2020 and commentators have been taking stock.   The British economy has not collapsed though some industries have reported difficulty,  On the other hand, the economy has not shown any signs of outperforming the economies of its continental neighbours.

Cabinet Office Policy Paper

The Cabinet Office has just updated a policy paper entitled Summary: The UK’s new relationship with the EU which it first published on 8 June 2021.  The policy paper purports to give an overview of what has changed, and what remains the same and refers to a special site at https://www.gov.uk/brexit for the detail.

Influence of EU Law

The first paragraph of that policy paper states that the UK has now left the EU Single Market and Customs Union which is entirely correct. It also claims that EU law no longer applies in the UK.  That is correct only in the sense that the British government no longer participates in EU legislation, courts in this country are not bound by decisions of the Court of Justice of the European Union and judges can no longer refer cases to the court under art 267 of the Treaty on the Functioning of the European Union. However, it ignores the incorporation of EU legislation and case law into the domestic laws of England, Wales, Scotland and Northern Ireland by the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020 and the continuing right of courts in this country to have regard to judgments of the Court of Justice that have been or may be delivered since the end of the transition period.  Moreover, anyone in the UK who wishes to invest in, trade with or even visit the EU must continue to comply with EU law. 

Travelling to the EU

The right of free movement which was ensured by art 3 (2) of the Treaty of European Union no longer applies to British nationals.  There are now new rules for visiting the EU which are set out in the Passports, Travel and Living Abroad pages of the government website. Travellers are advised to take out comprehensive travel insurance, check that their passports meet new validity rules, and get any documents they may need to take their vehicles with them.  

Existing European Health Insurance Cards ("EHIC") will continue to be recognized until they expire and similar benefits are promised under the Global Health Insurance Card ("GHIC").   Applications for new GHICs or replacements for the EHIC are directed to www.nhs.uk/GHIC but that link is broken.  The correct site is headed Applying for healthcare cover abroad (GHIC and EHIC).   As my EHIC expired on 21 June 2021 I applied for a GHIC through that website while carrying out research for this article.  I received confirmation that my application had been successful almost immediately.

Visitors from the UK are not allowed to bring a ham or cheese sandwich or indeed any other meat or dairy products with them when crossing the channel.  Almost all plants and plant products, including fruits, vegetables, flowers and seeds, require a phytosanitary certificate.  Pet passports can no longer be relied upon.  Although it is not mentioned in the policy paper, roaming charges are to be reintroduced from January 2022 (see Anthony Reuben EE to reintroduce Europe roaming charges in January 24 June 2021 BBC).  Regulation (EU) 2017/1128 on cross-border portability of online content no longer applies to the UK which means that British travellers can no longer access online content in the EU (see IPO Guidance Protecting Copyright in the UK and EU 30 Jan 2020).

Trade in Goods

Businesses now need to comply with new customs procedures, including UK export declarations and import requirements on entry to the EU.   Some industries have found it harder to adapt than others.   The Food and Drink Federation reported a 47% drop in exports in the first quarter of 2021 compared to the same quarter of 2020 (see Exports snapshot: Q1 2021).   On the other hand, sales to Australia, China, Hong Kong, Japan and Saudi Arabia actually increased slightly in that period.  

Difficulties had arisen in sales of certain foodstuffs to Northern Ireland which is now treated as part of the EU for some purposes but the Commission has agreed to extend a grace period for the export of chilled meats for the time being.  Lord Frost, who was one of the UK government's principal negotiators has admitted that he did not anticipate the difficulties that have arisen over Northern Ireland (see Government Didn't Expect Brexit To Be So Disruptive For Northern Ireland, David Frost Admits  Adam Payne 17 May 2021).  If that is really the case it is extraordinary because I warned of them in this blog as did many others in other publications (see Brexit Briefing March 2020 4 April 2020).  

One bit of good news in manufacturing was Nissan's announcement of a substantial investment in battery production in this country (see Nissan to create thousands of UK jobs in battery investment 29 June 2021 BBC website).  It is thought that the British government has invested or promised to invest a substantial sum in the project.  Even with this investment, battery production in the UK will be a fraction of that of Germany.

Trade in Services

The Trade and Cooperation Agreement did not make extensive provision for trade in services.   Talks did take place between Her Majesty's Government and the Commission on recognizing each other's standards as equivalent but these have ended without agreement (see Sunak: Financial services equivalence deal with EU 'has not happened 2 July 2021 The Guardian).   Happily, the Commission has recognized the UK's data protection legislation as broadly equivalent to its own which should ensure that the mutual exchange of personal data shall continue for the time being (see Jane Lambert Commission Adequacy Decisions 29 June 2021 NIPC Data Protection).

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There had been consternation earlier this year when Amsterdam appeared to overtake London in the trading of equities (see Philip Stafford Amsterdam ousts London as Europe’s top share trading hub 10 Feb 2021 FT).  London has recently recovered its position as the leading equity market (see Philip Stafford London reclaims top trading status from Amsterdam 2 July 29021 FT).  According to Stafford, London regained its lead through trading in Swiss stocks.

Free Trade Agreements

The rationale for Brexit is that the world's fastest-growing markets lie outside the EU and that any loss of trade with mainland Europe can be more than offset by increasing trade elsewhere. It is argued that commodity prices are lower ln world markets than in the EU because there are no external tariffs and that British negotiators can obtain more favourable trade deals for the British economy than EU negotiators because British interests no longer have to be weighed against those of other EU member states. So far, most of the agreements that the British government has concluded with countries outside the EU have been based on agreements between those countries and the EU. The agreement with Japan was slightly different (see Jane Lambert Agreement in Principle on a Comprehensive Economic Partnership with Japan of 12 Sept 2020 and An Introduction to and Overview of the Comprehensive Economic Partnership Agreement with Japan of 28 Oct 2020), The prospective agreement with Australia is the first bilateral trade agreement to be negotiated from scratch (see Jane Lambert The Proposed Australia-UK Free Trade Agreement of 17 June 2021).  HM Government also opened negotiations for British accession to The Comprehensive and Progressive Agreement for Trans-Pacific Partnership on 22 June 2021 (see the Department for International Trade's press release Britain launches negotiations with £9 trillion Pacific free trade area 21 June 2021 DfIT website).

Further Information

I shall be monitoring and reporting on those developments over the next few months.   Anyone wishing to discuss this article or the Brexit experiment generally may contact me on +44 (0)20 7404 5252 during normal business hours or by sending me a message through my contact form at all other times. 

Mrs May's Mansion House Speech: Some Home Truths At Last

Source Guardian,  Standard YouTube Licence

 Jane Lambert

The Prime Minister's speech at the Mansion House on Friday has received a mixed reception.  According to Toby Helm "most Conservative MPs and peers gave the prime minister a period of grace after Friday’s address."  However, Lord Heseltine dismissed it as "more detail on a set of demands that the European Union had made clear all along it would never agree to" (see Tories’ Brexit unity fades as Heseltine slams May’s speech 2 March 2018 The Guardian).

I hold no brief for the Prime Minister, but I think that is a little unfair.  She did speak some home truths though I fear she may have pulled her punches:

1. Brexit will be no bed of roses:  "We are leaving the single market. Life is going to be different. In certain ways, our access to each other's markets will be less than it is now. How could the EU's structure of rights and obligations be sustained, if the UK - or any country - were allowed to enjoy all the benefits without all of the obligations?"
2. "Even after we have left the jurisdiction of the ECJ, EU law and the decisions of the ECJ will continue to affect us." Aside from the niggle that the initials "ECJ" are no longer used as that tribunal is now known as the Court of Justice of the European Union ("CJEU") and has been for many years, I welcome that remark.  It will make it easier to reach agreement on the withdrawal treaty and it may just make it possible for the UK to remain a party to the Uniform Patent Court Agreement.  On the other hand, she omitted to say that the UK will lose its judge and advocate general on the Court who have hugely influenced its decisions since 1973. 
3. No State Aids or Featherbedding:  "If we want good access to each other's markets, it has to be on fair terms. As with any trade agreement, we must accept the need for binding commitments - for example, we may choose to commit some areas of our regulations like state aid and competition to remaining in step with the EU's."

The reason Mrs May had to say these things is that there has been a lot of wishful thinking about Brexit. Some have argued that the shock of the departure of its third largest member state would rip the EU apart. That could happen but there are no signs of its happening yet.  It is equally possible that the remaining member states could integrate more quickly and become stronger and more influential than ever. Another bit of wishful thinking is that German car manufacturers, Italian white goods makers and French farmers will force their governments to make concessions were we ever to play hardball. I have never understood that argument because we are not going to start making those goods in Britain or sourcing those goods from elsewhere. Tariffs might dent demand for EU goods and services but it won't destroy it and the business communities in those countries know it.  The fact is that the UK is not negotiating from a position of strength and will on many issues have to take what the remaining member states have to offer or leave it.

Finally, the Institute for Government has produced an excellent, tabulated analysis of the PM's speech with "Area" in come column, "What the Prime Minister said" in another and "What this means" in the third (see The Prime Minister's Mansion House Brexit speech 2 March 2018 The Guardian).  I was about to do my own analysis along similar lines but this is so much better.

Anyone wishing to discuss this article or Brexit in general should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.