What are the lessons from the EU for the UK’s own internal market?

This post is by Nigel Haigh, former director of the Institute for European Environmental Policy and chair of Green Alliance from 1989 to 1998.

There are two reasons why the government published a UK internal market bill and white paper dealing with products and some services. One is obvious, the other less so.

After nearly fifty years as part of the EU  ‘single or internal market’ (and the earlier ‘common market’), there has to be some new trade arrangement between the parts of the UK that have  legislative powers. As the EU’s single market rules ensured free trade between member states, they automatically also ensured free trade between England, Wales, Scotland and Northern Ireland. There was, therefore, no need for the UK to set its own rules. Now there is, and the bill shows how the government wants this done. Some in Scotland and Wales see this as a power grab by England.

The second reason for the bill is that the devolution of powers to the four parts of the UK was achieved by acts of parliament, in the absence of a written constitution. These acts were passed when the UK was firmly part of the EU and when there was no thought of leaving. There was no deep debate in environmental circles about what powers should be retained at the UK level and what could appropriately be devolved.  ‘Subsidiarity’, the principle that helps to decide how powers should be apportioned between different levels of government, which the UK promoted when in the EU, was not discussed in a UK internal context. There is nothing comparable to the German constitution which says, for example, that legislation for air pollution is a federal government responsibility, while that for water is shared between the Länder and the federal government.

‘Mutual recognition’ is incomplete as a guiding principle
One of the curiosities of the white paper is its elevation of ‘mutual recognition’ into one of two guiding principles of the UK internal market. This means that products legally sold in one jurisdiction cannot be denied entry to another. It provides an important support for the EU single market, but it was a late arrival, the result of a 1979 ruling by the European Court of Justice overturning the German ban on the import of the ‘Cassis de Dijon’ liqueur, which was legally sold in France. It is not the way the EU generally ensures that the single market functions. Instead, the EU adopts legislation to ‘approximate’ national laws (Article 114 TFEU). Only in the absence of EU rules does mutual recognition come into play.  

UK-wide laws inherited from the EU, will continue to be the main way the UK internal market is maintained, supplemented in due course by new UK-wide rules. Mutual recognition will only be needed where there are no UK-wide rules. Its elevation into a main principle conceals this fact.

Products are different
Under the devolution acts all legislative powers are devolved that are not ‘reserved’. The white paper lists ‘environment’ as one of the devolved subjects, but products are reserved. What the white paper fails to do is to state explicitly that many product standards are set for environmental reasons and that these are not devolved. It does not recognise that environmental policy has to be treated under two headings.

In the EU, the ability of member states to set higher environmental standards does not apply to products in the way it does for other standards. Environmental measures and single market measures fall under different articles of the treaties. The environment Articles 191/2 TFEU allow member states to set higher standards than are required by EU legislation. The single market Article 114 TFEU does not allow a member state to prohibit imports of products meeting EU standards, since to do so would disrupt trade. In principle, the same must apply within the UK, if trade is to be free. 

The voices of Scotland and Wales need to be heard
There are numerous EU environmental standards relating to products which the UK has inherited:  for vehicles, fuels, chemicals, pesticides, domestic boilers, light bulbs, construction equipment, packaging, recycled materials. And the list can be extended. This is not to mention foods such as genetically modified products. Product standards are a central part of environmental policy. Scotland and Wales will be able to set higher standards for many environmental matters, including air and water quality. But if they want higher product standards, they must engage in the Westminster legislative process. The voices of Scotland and Wales need to be heard when Westminster legislates for the whole of the UK just as, in the EU, member states play a key role in the making of EU legislation.

EU product standards will continue to be used in the UK. Any UK manufacturer who exports to the EU market – the largest and most successful in the world – will be bound by EU standards. In practice, it may be uneconomic to run two production lines, so it is very likely that EU standards will be followed anyway for the UK market.

Conflicts in the EU over higher standards
Just as Scotland and Wales may want higher product standards than the UK government may propose, so some EU member states have often wanted to go beyond  EU standards. Conflicts led to amendments to what is now Article 114, allowing member states to introduce higher standards in certain closely controlled circumstances. The European Commission may then propose that the higher standard be adopted as the EU standard, thus providing a mechanism for progressive countries to get their way. There are examples of this working.  A comparable mechanism should be adopted in the UK to allow for the raising of standards over time.

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