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Getting to 'yes' on a post-Brexit deal

Getting to 'yes' on a post-Brexit deal
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It’s called “cakeism.” It’s UK Prime Minister Boris Johnson’s hope that, after Brexit, the UK can enjoy all the benefits of European Union (EU) membership while going it alone. Johnson quipped that, when it comes to cake, he is “pro having it and pro eating it too.” If only. The problem is that so many other Brexitisms are putting the lie to cakeism, like “non-regression” and “dynamic alignment,” terms Brussels sees as crucial to securing a “level playing field.” That’s why, this week, the only Brexitism making headlines is “no deal.”

December 13, the deadline for a post-transition Brexit deal, came and went. The UK and EU then promised to “go the extra mile” to figure things out. The goal will be to come up with a narrative that lets both sides declare victory.

The task is daunting. London wants to ensure its sovereign independence from Brussels, while Brussels wants a “level playing field” with respect to standards that can be enforced. The standards in question include everything from subsidies and competition policy to employment and climate change, all under EU law. Since the Court of Justice for the European Union (CJEU) gets the last word on EU law, Brussels wants it involved in settling disputes over standards. But this doesn’t square with Johnson’s narrative about the UK’s need for regulatory sovereignty. Is there a path to “yes”?        

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The EU wants a “level playing field” to avoid a “race to the bottom.” The logic is that if Brussels were to have higher standards than London, UK businesses would have a sizable cost advantage over their EU competitors. That’s where terms like “non-regression” and “dynamic alignment” come in. The EU wants assurances that the UK will keep up on standards, or incur penalties. None of this sits well with London.

Few believe the UK will slash its standards to gain a commercial edge. But will London keep up? If not, this would complicate UK-EU trade, as well as trade with third countries. The EU likes to “race to the top” over standards. It also likes standards that work a particular way. Imagine that the UK keeps up, but its standards, while achieving the same outcome, get there differently than Europe’s. To get to “yes,” the UK and EU should focus on the performance of standards, rather than their provenance. On salient commercial issues, this would allow both sides to claim victory.   

Then there’s the question of enforcement. If the UK fights the CJEU’s lead role, what’s Plan B? Many options have been proposed, but all have political liabilities, as much for the EU as the UK. The Withdrawal Agreement (WA) sees the CJEU playing on ongoing role on matters of EU law, but less direct than now. The UK wants something more like what Canada got from Europe in the Comprehensive Economic and Trade Agreement (CETA), but Brussels says no. It might be promising, however, to build on something in CETA: namely, its relationship with the World Trade Organization (WTO).

The WTO only gets mentioned in the context of a “no deal” outcome. Johnson said last weekend, for example, that the UK should “get ready to trade on WTO terms.” But what if the WTO could help deliver a deal? Like CETA, what if UK-EU required that disputes over some key standards go to the WTO?

True, the WTO can’t touch the non-trade issues that would be covered by a UK-EU deal. And true, the WA claims exclusive jurisdiction over all UK-EU disputes. But both sides belong to the WTO, and it’s impossible to enforce a prohibition on “forum shopping.” CETA says that key standards, called technical barriers to trade, should be litigated at the WTO, where the dispute is strictly over “incorporated” text. A UK-EU deal could do the same thing. London could spin it as a salient and economically important win, and the EU could sell it as ensuring consistency in case law across overlapping institutions.

The new deadline for a UK-EU deal is Sunday. It’s time for both sides to eat some cake. 

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service at Georgetown University, a nonresident senior fellow at the Atlantic Council and host of the podcast TradeCraft.