Richard North, 22/02/2020  
 


It is five days since David Frost delivered his speech and the media interest has almost died away, but for an article in the fanboy gazette by Jeremy Warner.

He takes a downbeat view of the proceedings. Many of the business leaders he meets are preparing for a messy ending. "Even a year ago", he writes, "the idea of leaving the EU on World Trade Organisation terms would have been thought completely off the wall. Now there is a growing sense of resignation".

Taking a line which typifies the newspaper for which he works, he writes under the title, "Brussels seems determined to cut off its nose to spite its face in trade talks with the UK", asserting that, in the controversy surrounding the Frost speech, the "UK has had a much better week of it than the Europeans".

Supporting this argument, he claims that it is "nonsense" to argue that the UK's close proximity to Europe, and the magnitude of its trade with the EU, makes it a special case, precluding the market access Canada enjoys without much greater subservience to the European acquis. There is, he says, "no such exceptionalism in US/Canadian trading arrangements, where the scale of trade is proportionately even bigger".

And there, perhaps, lies the nub of the argument as between the UK and the EU. Simply, in demanding a "level playing field" in certain (but not all) aspects of the relationship, the EU is asking too much. The UK, Johnson says, "will maintain the highest standards", better, in many respects, than those of the EU but "without the compulsion of a treaty".

But in making his assertion, Warner – like so many of his breed – seems to have little idea of what the EU is actually demanding, and how that compares with the US-Canadian relationship.

As regards the EU and the UK, much is made of the need for regulatory alignment – hence Warner talking in terms of "subservience to the European acquis". But reference to the Political Declaration, the famous Paragraph 77 actually presents a different picture. The key part is here:
The Parties should in particular maintain a robust and comprehensive framework for competition and state aid control that prevents undue distortion of trade and competition; commit to the principles of good governance in the area of taxation and to the curbing of harmful tax practices; and maintain environmental, social and employment standards at the current high levels provided by the existing common standards. In so doing, they should rely on appropriate and relevant Union and international standards, and include appropriate mechanisms to ensure effective implementation domestically, enforcement and dispute settlement.
What we need to take from this is that, in committing to the "level playing field", the parties have agreed to build into their new treaty, a reliance "on appropriate and relevant Union and international standards". That is crucial. There is no automatic requirement that the UK should adopt the EU acquis in its entirety, as Warner implies.

Rather, we see a composite of Union and international standards. Bearing in mind that many of the Union standards depend or build on international standards, to which the UK also subscribes, a mutual commitment built into any new treaty will doubtless suffice to ensure that the level playing field provisions are satisfied.

Then, before we retire hurt, complaining about how terribly unreasonable the EU is, it might be a good idea to see how the current relationship between Canada and the US is constructed, now via the Canada-United States-Mexico Agreement (CUSMA). This was signed on 30 November 2018, and awaits ratification. When it is fully in force, it will replace NAFTA.

Interestingly, Warner claims for US/Canadian trading arrangements, that the scale of trade "is proportionately even bigger" than the EU-UK, but that is not the case. The CUSMA website puts the total US-Canada trade at $921.1 billion Canadian dollars which equates to about £537 billion. By contrast, EU-UK trade for the same period (2018) totals £648 billion.

As to there being no "exceptionalism" in US/Canadian trading arrangements – comparable to that agreed by the parties in the EU-UK Political Declaration, that might also be open to question – and certainly some serious examination. For instance, in CUSMA, there is a six-page agreement on Competition Policy, a longer (17-page) section on "Labor" and a massive 30 pages on Environment, augmented by an Environmental Cooperation Agreement running to a further ten pages.

And what is striking about some of the provisions is their similarities with the approach taken by the EU in its "new generation" treaties, of which CETA is one example.

Here, the "Labor" section provides a good illustration in that in Article 23.2 the Parties affirm their obligations as members of the ILO, including those stated in the ILO Declaration on Rights at Work and the ILO Declaration on Social Justice for a Fair Globalization (2008). Much the same references appear in CETA and, doubtless, this is what the EU will be asking of the UK.

Similarly, in terms of regulatory alignment, the US and Canada agree to be bound on Technical Barriers to Trade to the WTO agreement, including the "preparation, adoption and application of standards, technical regulations, and conformity assessment procedures, including any amendments, of central level of government bodies, which may affect trade in goods between the Parties". The same approach is taken in CETA.

There is even in CUSMA, a 15-page chapter on Good Regulatory Practices, where the Parties agree to "specific obligations with respect to good regulatory practices, including practices relating to the planning, design, issuance, implementation, and review of the Parties’ respective regulations".

The essence of this is to require consultation, coordination and review, with many shared commitments which are by no means academic. In today's febrile environment, were the exact text to be included in a draft EU-UK agreement, the fanboy gazette would be shrieking in dismay at the "arrogance" of the EU.

Not to put too fine a point on it, I would suggest that if the EU was to adopt the CUSMA text, altered only to refer to the different parties, it would fulfil most of the declared needs of the Political Declaration in respect of trade. In context, the Political Declaration is merely mirroring the type of agreement which prevails between mature trading partners.

Of course there are differences, but it seems to me that there are more similarities between this agreement than there are differences between CUSMA and the EU's "new generation" treaties.

And therein lies the rub. Some time ago, I asked at a seminar of the high-level City delegates, so voluble on matters of trade, whether any had actually read a trade treaty. None had. So, before the likes of Warner – and many more like him – continue pontificating, they perhaps need to settle down to do some reading.

None will, of course. Ignorance is bliss in this game. Ignore the facts and you can win any argument.






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