22 Aug 2017
BPF Head of Insights and EU Engagement Patrick Brown analyses the latest position paper on the availability of goods after Brexit.
On Monday, the government published a further Brexit paper on ‘Continuity in the Availability of Goods for the EU and the UK’.
It’s a basic right taken for granted that any Brit has access to a Kir or Kir Royale (or an Uncle Vanya if you’re very flash) at a moment’s notice. Such a right is conveyed by virtue of a famous 1979 judgment of the European Court of Justice (ECJ), Cassis de Dijon, in which a German liquor importer was refused permission to import the eponymous fruit liqueur, since a German law required any fruit liqueur contain a minimum alcohol volume of 25%. This refusal was deemed by the ECJ to breach Article 34 of the Treaty on the Functioning of the European Union, which states that “Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.” The principle of mutual recognition, that a product lawfully marketable in one member state should be freely marketable in another, was given general application by this famous ruling.
In 2016, the EU exported €127.9bn of consumer goods to the UK and imported €62.3bn of UK consumer goods. Producers in the rest of the EU and in the UK have reciprocal reliance upon each other for their supply chains. UK content accounted for 1.9% of the total value of other EU member state exports and 6.4% of all foreign value-added in other EU member state exports. For some member states, the UK contributes a more significant share of the foreign value-added; around 17% for Malta and Ireland and around 12% for Cyprus. This represents the size of the prize for the existing trade in goods, and what the UK would like to maintain post-Brexit.
The government is therefore understandably keen to ensure that goods that are on sale at the date of withdrawal from the EU should continue to circulate freely within the UK and the EU, and that businesses should not have to perform additional compliance activities post-Brexit if they are in compliance at the date of withdrawal. However, the paper also calls for services provided with goods to be subject to similar protections. This may be an attempt by the UK to seek to open discussions on similar arrangements for trade in services, which are lucrative for the UK economy, as well as after-sales services relating to maintenance and repairs that commonly accompany goods themselves.
Further papers to be released later this week are expected to set out proposals for judicial cooperation, enforcement and dispute resolution post-Brexit. Among the options considered will be the idea of using the EFTA Court to adjudicate trade disputes, so that the UK is no longer subject to the jurisdiction of the European Court of Justice. The proposal has found some advance support among audiences such as veteran Eurosceptic Bill Cash and the Centre for European Reform. It is but one of a number of options preferred, however, with another possibility being something akin to the resolution panel set up via the EU-Canada trade deal.
Arbitration on trade disputes and rules is currently the role of the European Court of Justice and the European Commission. Cases such as Cassis de Dijon underscore the need to get matters such as this right - the Treaty is essentially an incomplete contract, with a need for interpretation of rules when gaps emerge. Get that wrong, and we might end up going thirsty.
The paper also presents a fresh attempt by the government to precipitate a progression of Article 50 negotiations to parallel talks on the terms of exit as well as the future relationship between the UK and the EU. So called ‘parallelism’ is considered taboo by lead negotiators for the EU institutions, and already the EU institutions have reiterated their abiding faith in the doctrine of ‘sequentialism’. What the UK sees as an aperitif, the EU institutions see as a digestif.