Can government plans for regulatory independence be intended literally?by David Henig / February 21, 2020 / Leave a comment
Seven years ago, long before Brexit, the UK government prioritised a trade deal between the US and EU—TTIP, or the Transatlantic Trade and Investment Partnership. Its primary benefit was to come from the removal of regulatory differences. Launched at the UK-hosted G8 summit in 2013, the Cameron administration invested significant resource in working with negotiators to make the deal happen. We didn’t succeed, factors in that including some fundamental differences of trade policy between the EU and US, a noisy public campaign from activists, and later the UK’s loss of EU influence after the 2016 referendum and the election of President Trump. Yet there was some legacy from deepening cooperation between the two regulatory superpowers as a result of these efforts.
What remains of that EU-US regulatory cooperation no longer includes the UK. More than that, the UK has rejected the entire basis of our policy in 2013, not to mention the Thatcher government’s part in the creation of the European single market in the 1980s. There is a new creed, as expressed by Boris Johnson’s Chief EU Negotiator David Frost in his recent speech in Brussels, namely that “Sovereignty is about the ability to get your own rules right in a way that suits our own conditions.” This in turn plays into a government approach to trade talks that had already been visible, namely that instead of regulatory harmony, the main focus is to be less ambitious tariff reduction.
The problem with such a focus is the extent to which it is at variance with the modern world. Tariffs are now generally low, except for those in agriculture and any country with whom President Trump has recently picked a battle. By contrast regulatory barriers are high and difficult for businesses to navigate. Across the developed world and increasingly in emerging economies, nearly every product and service is regulated in some way. In order to trade with countries you need to be able to meet these regulations, and if these differ from your own, that means extra cost.
Until the UK’s declaration of regulatory sovereignty and even accounting for President Trump’s tariff fetish, most developed countries focused their trade policy attentions on reducing regulatory barriers. This starts with the World…