Business

Brexit deal leaves much unchanged, institutionally


The writer is an FT contributing editor

The shapes of the institutional arrangements that will govern relations between the UK and the EU after Brexit are now becoming more apparent, and in some ways those shapes are rather familiar. Take the framework of the trade and co-operation agreement. There is a substantial amount of continuity.

The entity that will govern the agreement will be a “partnership council” supervised jointly by a UK minister and a European commissioner. This council can make decisions that will bind both the UK and EU. Its deliberations can be confidential, if the parties choose.

The council will spend half its time in London and half in Brussels. There will also be a secretariat, based in London and Brussels.

If one of the complaints that led to Brexit was that decisions that bind the UK could be made behind closed doors in Brussels, then this is still possible, and may be possible 50 per cent of the time. In one way, this is a half Brexit, not a full one.

And in respect of these legally binding decisions, there is even less of a role for the UK parliament than there was with EU legislation. Before departure, legislation implementing EU directives had to go through the UK parliament, either as statutes or statutory instruments. 

Now, the UK parliament only has the right to be “informed” of the decisions. This is no doubt partly because the UK wants the same limited role for the European parliament, and one legislature could not be included without the other. But the agreement provides no substance for the claim that the UK parliament is “taking back control”.

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As before, what binds the UK will be the subject of often-confidential discussions in London and Brussels between UK ministers and the European Commission. Only the labels on various actual and metaphorical doors will be changed — and sometimes those doors can be closed.

On dispute resolution, there is also scope for less openness than before. The resolution of disputes and the arbitration process is subject to absolute and discretionary rules of confidentiality. At least with the Luxembourg court, one could usually see cases in open court. But now, as with the decision-making process, dispute resolution can take place behind closed doors too.

There are, of course, substantial changes on the institutional and legal planes. The decisions of the Partnership Council will only bind the UK and EU as a matter of international law, and will not apply to any other persons. The special legal regime of the EU, with its direct effect on rights enforceable by citizens and the direct applicability of certain laws, comes to an end in the UK.

But, as I have set out elsewhere, the agreement is expressly not a once-and-for-all settlement of Britain’s Brexit future. It is designed to be dynamic, and new supplementary agreements and specialist oversight committees are expressly envisaged. There will also be substantial reviews every five years.

Over time, therefore, the agreement could lead to a relationship with a permanent staff providing ongoing discussions. Even policy areas that are not currently covered, such as financial services, are only a “supplementary” agreement away from being covered. A Martian looking down on people in Whitehall and Brussels may not notice a lot of difference from pre-Brexit.

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Taken together with the withdrawal agreement — which provides for financial contributions, the Irish border and the rights of UK and EU citizens — the new deal means the UK has swapped the two treaties of the European Union for two new agreements that govern many of the same things. This is now subject to a potential five-year cycle of review and amendment that neatly matches the five-year terms of the European Commission and the European parliament, and the usual five-year term of the presidency of the European Council.

Even the substantial changes may not have much effect. EU law may not apply directly but it will still shape what the EU can agree and not agree to. So every decision and measure made by the partnership council will still be limited by EU law, but at one remove.

In terms of policy coverage, much has been lost. Manufacturers of German cars and others will welcome the tariff-free regime, while UK service providers face new barriers. The ongoing free movement of goods is not matched by other freedoms integral to the single market, such as freedom of movement.

And in terms of frictionless trade, the UK has not secured a free-trade area 10 times the size of the EU, as promised by a former Brexit minister, but somehow ended up with a free-trade area smaller than the UK, with trade frictions down the Irish Sea.

The new relationship between the EU and the UK is significantly different from what went before — this is certainly not Brexit in name only. 

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But nor is it an entirely fresh start for the country. The new executive institution looks like the old executive institutions. Many policy areas remain aligned, and there can easily be alignments in other areas. The UK may have escaped “ever-closer union” but it now is within a framework designed to allow for an ever-closer relationship.



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