Brexit and issues of regulatory alignment and / or equivalence
The battle-lines are being drawn up for the up coming negotiations between the UK and the EU on a free trade agreement, which would take effect - all being well! - at the end of the implementation/transition period under the Withdrawal Agreement ie after 31st December 2020.
Sajid Javid, the UK Chancellor of the Exchequer, has recently talked about the need to aim for "outcomes- based equivalence" between the parties, as opposed to "regulatory alignment" (ie following the same rules) which appears to be the approach of the EU.
City AM, the free City newspaper in its edition of 23rd January 2020, has published an article by Shanker Singham, a former trade adviser to the UK Secretary of International Trade and a former adviser to the US Government, excoriating the perceived EU approach of regulatory alignment and saying of the UK - "We must not get stuck in an EU thicket".
Mr Singham singles out the allegedly universally rules - driven approach of the EU and contrasts the EU's approach with that of other major trading nations and groups around the World and cites by way of example "the EU's draconian and anti-scientific regulations on sanitary and phytosanitary products" , which were apparently condemned by nations from North and South America , Asia and Africa at a recent World Trade Organisation meeting. He also criticises other allegedly stultifying EU rules such as the EU REACH chemicals regulation and the General Data Protection Regulation (GDPR).
The EU is undoubtedly a cartel which is there to safeguard the interests of its members. From an international business perspective, the EU seeks to create certainty so that businesses can be clear as to the terms and legal framework upon which goods and services can be supplied - so that the dimensions of a plug do not have to be changed every time a national border is crossed! On the other hand, the health and safety standards and other internationally accepted codes of conduct promoted by the EU can be seen as some kind of guarantee against exploitation and corruption which should be of benefit to everybody and a safeguard against modern slavery and other heinous practices.
The difficulty, some would say, about "outcomes - based equivalence" is in identifying precisely what it means in practice. The British - and many other nations with a common law heritage such as the US, Canada, Australia and New Zealand - would no doubt argue that a pragmatic market - driven approach should apply and that regulating with a relatively light hand is best designed to achieve the international free trade objectives which should be in everybody's interests.
It remains to be seen whether the UK and the EU will be sufficiently pragmatic so as to take into account the other party's legitimate concerns about maintaining high standards and a level playing field for open and fair competition.
