Regulatory Alignment: What Will It Take to Make It Work, And How Big Are the Risks of Failure?

COMMENT

Regulatory Alignment: What Will It Take to Make It Work, And How Big Are the Risks of Failure?

Katy Hayward and Paul McGrade | 14 December 2017

© 2017 European Union

The UK has a new starting point for its negotiations with the EU on the future relationship, with the phase 2 talks almost certainly unlocked following on last week’s EU-UK joint report. 

That starting point is the phrase ‘full alignment’. While the UK has only committed to this if it fails to secure the kind of comprehensive Free Trade Agreement (FTA) it wants, this position provides not just Ireland but the EU as a whole with a new back-stop position. If the gap between the UK’s ‘Canada plus’ (Canada plus services, but minus free movement of people) and the EU’s ‘Canada dry’ (the Canada FTA) can’t be closed, the UK is committed regardless to: “maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement.” [paragraph 49 of the joint report]

There is an alternative – possibly more likely scenario – is one in which ‘specific solutions’ are found that centre on Northern Ireland/Ireland in order to meet the commitments set out in the Joint Report (for more on the nature and consequences of that scenario, please see our piece on ‘Specific solutions and distinct arrangements’).

But the ‘full alignment’ backstop opens up a range of questions. How is this going to work? From what we can gather, the concept of ‘regulatory alignment’ was offered by the UK as the means for overcoming the obstacles to Northern Ireland/Ireland cross-border movement after Brexit. Let’s consider why this was offered and the implications of this approach.

Far more than future trade tariffs, regulatory divergence between the UK and the EU would pose a major obstacle to trade. It would also make cooperation across the Irish border almost impossible in several sectors vital to the interests of Northern Ireland.

If the UK guarantees to keep aligned with EU rules, then this lifts the most significant non-tariff barrier to trade of domestically-produced goods across the border. It also enables continued cooperation across the Irish border which – as the joint report notes – has security, societal, political and agricultural as well as economic ones, and much of it is enabled by the common context of the EU acquis communautaire. This is particularly vital for Northern Ireland and its particular needs as the only part of the UK to share a land border with the EU.

All things being equal, the short-term vision is that, by maintaining regulatory alignment, the UK withdraws from the EU and yet Northern Ireland manages to maintain quite a few of the benefits of membership, at least in terms of facilitating movement and cooperation across the border.

How big are the risks of failure? The UK maintains that alignment is not the same thing as harmonisation. So isn’t there a risk that this concept could unravel once the UK starts to regulate in ways which it sees as ‘aligned’, but Brussels does not?

There are four potential areas of friction. These are: i) The scope of arrangements; ii) The way that the areas are covered; iii) Automaticity, necessary for efficient dispute resolution; iv) Oversight and enforcement, which underpins and enables the whole deal.

If the UK does not remain ‘aligned’ in the sense that the content, as well as the enforcement of the rules are so close as to essentially mean the same thing, then this approach would quickly run aground. The analogy of EU Directives works well here: rules may look different, they may even say some different things from EU rules, but they will need, in practice, to be so close that they are achieving the same end.

The primary risk for the EU, above all else, is that the scope of UK ‘aligned’ rules will not be wide enough to guarantee ‘frictionless’ borders’. If there is not ‘full alignment’ of regulations for goods, then there is a risk that the single market could be considered to be under threat. 

Even if there is fully-secured alignment (even to the extent of EEA-membership), that still does not equate to ‘avoiding a hard border’.

If there is no customs union between the UK and EU, there will be a customs border at the Irish border. If Northern Ireland is in a customs union with the EU, then there would be no customs checks on the island, but they would instead occur in Northern Ireland entry/exit sea and airports. This is not merely a practical issue – it would mean that two different customs regimes would be operating within the United Kingdom. Moreover, if Northern Ireland had specific arrangements for customs that differ from the UK as a whole, there would have to be approval of this through the WTO.

Given all this enormous complexity, the Joint Report (paragraph 56) wisely allows for a special strand of the Phase 2 discussions to be dedicated to the ‘detailed arrangements’ necessary to give effect to the ambitious commitments to Northern Ireland/Ireland it contains.

Katy HaywardKaty Hayward | Twitter

Queen’s University Belfast

Dr Katy Hayward is Reader in Sociology at Queen’s University Belfast. Her research interests include political sociology, European integration, cross-border conflict and cooperation, peace and conflict processes, and Brexit and Ireland.

Paul McGradePaul McGrade | Twitter

Independent Consultant

Paul is a former diplomat and European Commission official. He works as a consultant and visiting academic on EU affairs.