Why is the government so keen to diverge from the EU?
In Saturday’s Financial Times the chancellor, Sajid Javid, made it clear that the UK is going to diverge from EU rules: “There will not be alignment, we will not be a ruletaker, we will not be in the single market and we will not be in the customs union — and we will do this by the end of the year.”
This should not have come as a surprise. Last August, Boris Johnson described the ability to diverge as “the point of our exit” and “central to our future democracy”; the Conservative manifesto was clear (on p 48) that “the supremacy of European law” would be ended and that the UK would leave the single market and the customs union (p 5).
Nevertheless, the chancellor’s comments have caused a stir, with business and unions warning of potentially dire consequences. Everyone knew that the Johnson government wanted the ability to diverge from EU rules, but in “taking back control”, the UK also has the right to choose to align with EU rules. Many assumed that the government would exercise that right rather than risk jobs and wealth by diverging. It appears they were wrong.
What does it mean for the environment?
The government says that environmental standards are not at risk. Last September, Defra minister Zac Goldsmith promised “categorically” that “we will have the same or higher standards than the EU”. The Conservative manifesto (p 57) pledged that “in all our trade negotiations, we will not compromise on our high environmental protection, animal welfare and food standards”.
But the government has so far refused to put its promises into law, opposing an amendment to the Withdrawal Agreement Bill that would have given legal force to the principle of non-regression from current environmental standards.
I do not doubt the government’s good intentions, but if it insists on ditching the level playing field and the EU rulebook, it will find its promises hard to keep. The very act of stating that “there will be no alignment” makes regulatory barriers to trade with the EU inevitable. The EU has made that clear. And this is a particular worry to those concerned about environmental, food safety or animal welfare standards because, as Sam Lowe of the Centre for European Reform explains, “the additional trade costs associated with choosing to diverge are large; the relative costs of then actually diverging are smaller”.
To put it in more concrete terms, once the implementation period is over, UK businesses, including farmers, will face much greater costs in exporting to the EU, even if the UK decides unilaterally to hold to Zac Goldsmith’s words and keep “the same or higher standards than the EU”. This means, as Sam Lowe explains, that “decisions that currently look politically difficult”, such as giving in to US demands to weaken food standards, will become easier as “the initial cost of being able to diverge” will already have been paid.
Some smell a conspiracy
Having lost the ability to trade with the EU without friction, it would not make much difference to that trade if we adopted some US standards. Given that a free trade deal with the US is the big prize for some in the government, that would be a serious temptation. But it comes with high environmental risks.
Some people smell a conspiracy. The aim of Brexit, they believe, is to shrink the state and turn the UK into a dynamic, buccaneering, low regulation country that can win the global race, undercutting the sclerotic EU in the process. That is certainly the aim of some in the government, and the fear of the EU, but I think the truth is that the government still does not know what it wants.
Its trade policy is a mess, if it has one. And when it comes to individual trade deals, parliament, the devolved administrations and civil society will have much less input than is the case in almost any other democratic country. That is why a wide range of organisations from Greener UK to the CBI, are calling for much more transparency and democratic oversight.
We are in an odd political period. The government has just won an election with a strong mandate, but individual ministers do not have much of a mandate. Everyone is expecting a big reshuffle, possibly a shake-up of departments.
The reshuffle will provide an opportunity for a rethink. I hope whoever leads on trade will set out much more clearly, and without wishful thinking, their vision for Britain’s trading future, not dodging the question of whether a good deal with the EU or the US is the priority. I hope they will recognise that the UK’s future relationship with the EU is not only a question of economics or security: the global climate and ecological crisis calls for a close environmental partnership between the UK and EU.
And I hope they will explain quite why the government is so keen to diverge. Is it a case of “flexibility for flexibility’s sake” (not a disreputable aim) or are there specific rules they want to ditch? When it comes to the environment, as we know, the government has promised not to “compromise on our high environmental… standards”. But it is charting a course that could put irresistible pressure on those standards. For our environment, as well as for the economy, the price of divergence could be very high.