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EU Referendum: a matter of regulation

2016-05-19 06:12:10

One of the strongest arguments we have for leaving the EU is that doing so gives us greater access to the "top tables" where much of our trading and other regulation is made. Instead of waiting for it to be handed down to us from Brussels, we will regain (or retain) the power to propose and shape standards and controls, which then form the basis of EU and national regulations.

Around this, then, are four entirely separate themes. The first is whether the regulation is necessary in the first place, the second is the quality of that regulation, the third is who gets to propose and then approve the regulation and the fourth is at what level the regulation is made, and its scope to whom (or what) it applies.

Looking at these themes in the round, it is quite possible to favour regulation on a specific subject, but to be opposed to a particular regulation because of its poor drafting. We could on the other hand agree a regulation in principle but object to its source arguing, say, that it should be of national in origin rather than international, or vice versa. And then we could argue that it should apply to some nations only (or more), or some enterprises but not others, or to all rather than some.

Such matters illustrate something of the complexity of the debate over regulation, a debate which is of more than academic interest as the EU referendum campaign progresses.

In this context, it is really not helpful having Alexander (aka Boris) Johnson bleating about banana regulations. It is all very well using this to get an easy laugh, but the man really needs to grow up and take such things more seriously.

Banana production, after all, serves a huge market comprising in 2011, 107 million metric tons, produced in more than 130 countries on 0.1 percent of the world's agricultural area. According to the FAO, total trade value was US$9 billion in 2013 with a retail value of approximately US$25 billion.

Once again, though, instead of making a useful contribution to the debate, all Johnson has managed to do is parade his own ignorance, and thereby muddy the waters. Doubtless unwittingly, he has also exposed the paucity of the knowledge base and research capability of the official Vote Leave campaign.

Such was the outcome of Mr Johnson's intervention when he arrived in his little red bus in Stafford on the campaign trail, urging supporters to help Britain get rid of "pointless regulations". That meant, in Johnson's dim little brain: "you cannot sell bananas in bunches of more than two or three bananas".

"It is absurd", he said: "that we are told you cannot sell bananas in bunches of more than two or three bananas", then adding: "You cannot sell bananas with abnormal curvature of the fingers". "Why should they [the EU] tell us?", he asked, declaring that: "This is not a matter for an international supranational body to dictate to the British people".

The question was later augmented by a direct challenge from Vote Leave to the "remain" campaign, on their Twitter account, demanding: "So do you agree with this EU regulation which sets out how shops should sell bananas?"

Therein does Vote Leave demonstrate its ignorance, for it was actually referring to this regulation, No 1333/2011 of 19 December 2011, "laying down marketing standards for bananas, rules on the verification of compliance with those marketing standards and requirements for notifications in the banana sector".

Had they actually read the thing instead of pontificating about it, they would have seen from Article 1 that this is an import standard, applying primarily to bananas originating in third countries "at the stage of release for free circulation". It applies at the dockside, once the bananas have arrived on the territory of an EU Member State. It does not apply to the retail product sold to the final consumer.

Therefore, Mr Johnson's question, "Why should they [the EU] tell us?", is very easily answered. They [the EU] don't tell us at all.

However, it doesn't stop there. Even had the regulation applied to the retail product, Johnson was complaining that "you cannot sell bananas in bunches of more than two or three bananas". No such restriction exists in the Regulation, an error which required Vote Leave staff to issue a corrective. Mr Johnson had got it wrong, they admitted. The Regulations required that: "bananas must be presented in hands or clusters (parts of hands) of at least four fingers". And, by the by, they could also be presented as single fingers.

Notwithstanding Johnson's own error, though, Vote Leave themselves neglected to state that the standard did not apply to the retail market. Had they pointed that out, it would have left them showing up Johnson as wrong on all counts.

Ironically, that leaves the situation where the sale of bananas on the retail market relies entirely on national control, a situation permitted by Article 2 of the Regulation. This actually states that the import standard "shall not affect the application, at later stages of marketing, of national rules".

The relevant national rules in this case can be found in the 1990 Food Safety Act, Section 14. This provision goes back to the 1955 Food & Drugs Act (and before that to the 1875 Sale of Food & Drugs Act), which creates an offence if food sold is not of the nature, substance or quality demanded. British bananas, sold in British shops are controlled by British law ... which is supposedly what Mr Johnson wants.

And now the plot thickens, so to speak. The government itself confirms that there is no specific retail marketing standard for bananas, so the definition of quality lies outside any statutory provision. Nevertheless, if a reference point is needed, there are a number of bodies which provide marketing standards for fresh fruits and vegetables. These can be (and often are) used formally as the basis for quality assessment and enforcement action.

The most prominent standard-making bodies are the United Nations Economic Commission Europe (UNECE), the Codex Alimentarius Commission (Codex) also a United Nations body and the OECD, which provides interpretive codes to assist in the implementation of UNECE standards.

The two primary standard-makers are, however, UNECE and Codex. Both are parties to an inter-institutional agreement, the "Geneva Understanding" to avoid duplication so that, where one body produces a specific standard, it is adopted by the other (sometimes with small variations).

In the instance of bananas, this is a globally traded product so the global body, Codex, has produced the standard rather than the regional (European) UNECE. The current standard is CODEX STAN 205-1997, AMD. 1-2005, originally produced in 1997. Interestingly, the European Community standard pre-dates this by about three years, as Regulation EC 2257/94 of 16 September 1994.

Information is difficult to find, but doubtless work in Codex and the European proceeded simultaneously the end result being near identical texts. The Codex text was then revised and re-issued in 2005, which becomes the definitive text, now adopted in the 2011 Community Regulation, under the remit of the WTO TBT Agreement.

Whatever their origin, technically there are no longer any "European" banana standards. The Community Regulation implements the Codex/UNECE standard, which was approved by its members (including the UK) before being adopted by the EU.

At so many levels, therefore, Mr Johnson gets it wrong. But he also misses the point. For a start, the banana regulation is not "pointless". It is not a prescriptive standard. Only about three percent of global banana production and 14 percent of exports in 2012 were standard compliant.

Conformity actually brings important benefits to the growers. Firstly, the higher quality standard-compliant product has access to the European and US markets and attracts the higher price. Losses are reduced on transport, as the quality standard is primarily designed to ensure the product can withstand the rigours of long-distance distribution and still be marketable at the end.

But above all else, the standard brings transparency and predictability. Provided the product is compliant, it cannot be refused access to the market on technical grounds, while the same standard applies throughout the marketing area.

Then, as far as such regulations go, the UK has been fully involved in their making, at international level, where the standards are finally decided. But this will not necessarily continue to be the case. In 1991, the EU became a full member of the FAO the parent body of Codex - and has been working ever since to take over the powers and responsibilities of its member states, including the all-important right of proposal.

With its additional powers conferred by the Lisbon Treaty, and with the support of the ECJ, the European Commission is gradually eroding the power of its Member States at international level, seeking to enforce a subordinate status where we no longer have a voice at any of the real "top tables".

If Mr Johnson was on top of his game, and had been properly briefed by the lacklustre Vote Leave, that is the point he could have made and to great effect. Instead, his return to what is now being dubbed his "blunder bus" marked the end of another train-wreck session, with the man accused of "making it up as he goes along".

It surely cannot be a coincidence that Ipsos MORI is giving the "remains" an 18-point lead, with 55 percent in favour of staying and only 37 percent wanting to leave the EU. Much more of Boris and his blunder-bus and we'll be matching the 1975 result.