26 January 2018

LSE: The UK needs to clarify what ‘full regulatory alignment’ means before the next phase of the Brexit talks

Anthony Costello argues that it is still unclear how the UK can leave the EU’s customs union, pursue its own trading arrangements with other countries, and yet avoid the creation of a hard Irish border.

[...]The British government intends to take the UK (including Northern Ireland) out of the EU’s single market and customs union to fulfil their objective of establishing free trade relationships with other non-EU countries. Full regulatory alignment is their idea of a creative alternative. But any departure from the EU’s customs union simply must lead to the erection of a border on the island of Ireland to protect the EU’s internal market from negative economic externalities that could seep into the internal market via the UK’s trading practices with third countries. At least, this is the understanding to date. So, it is questionable in the absence of an explanation of full regulatory alignment how the UK can seek to depart from the EU’s customs union.

Yet at the same time, they will attempt to resist a border between Northern Ireland and the Irish Republic, as well as ensuring unfettered access for Northern Ireland to the UK’s own personal customs union. Equally as questionable is the enthusiasm of European Commission President Jean-Claude Junker and Irish Taoiseach Leo Varadkar toward the concept of full regulatory alignment, when its definition is still obscure and attempts at interpretation are mired by its very ambiguity. Neither of these two actors likely know what the concept fully means, nor are they likely to have been briefed on how this option will realistically work in the face of functional constraints. Yet, both actors profess to have observed the making of sufficient progress for talks to proceed to Phase 2. This likely profession of faith by Junker and Varadkar is unsettling to say the least.

Vaguely, regulatory alignment means the UK will adapt its post-Brexit trading principles in line with EU rules and standards on some social and economic issues. This is all well and good, but the extent to which this is workable if the UK leaves the EU’s customs union is still open to question. The policy is unlikely to easily rid the negotiations of the border issue. Again, any future free trade agreement between the UK and other non-EU countries automatically puts Ireland and the EU at economic risk. This risk is certain, if unrealistic notions of a borderless Ireland in the midst of UK departure from the EU’s single market/customs union continue to make their rounds.

The UK can speak in theory on the principle of full regulatory alignment, but to what extent can the UK influence its future external trading partners to economically operate in a manner that satisfies the EU’s internal market interests and secures it from potentially corrupt goods and services flowing through the market via UK-third country trade links? It can’t. So a border on the island of Ireland would likely still be necessary, especially if Northern Ireland is to maintain unfettered access to the UK’s own customs union. Thus, risk seems inevitable, even if full regulatory alignment is a creative step forward in theory for the UK-EU relationship.

It is important to point out that the intention here is not to completely dismiss the potential of full regulatory alignment, but the British government must provide clarity on its meaning. Until clarity is given we lack direction, and we must rely on independent interpretations to assess how this concept is to work under real world conditions. To date, it is difficult to recognise a reasonable compatibility between the idea of full regulatory alignment and a borderless Ireland in the absence of definitional clarity.

There are many questions left unanswered on this matter, and it is unwise for British and EU negotiators to approach Phase 2 of the negotiations without fully settling the border issue. After all, the border issue will come to be the defining variable that determines the future state of UK-EU relations and the nature of Brexit itself. Therefore, one urges Irish and EU negotiators to seek clarity on the meaning of full regulatory alignment from the British government and to establish how it will be compatible with the avoidance of an Irish border. This is imperative prior to entering Phase 2 of the negotiations.

Full article on EUROPP

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