3 May 2018

Britain has little to fear from an EU association agreement


With a dishonest and distracting debate over a customs union dominating the headlines, there was precious little attention given to a significant development in the Brexit process this week.

That was the first sign that Prime Minister Theresa May and Brexit Secretary David Davis are willing to consider an association agreement to frame their aspiration for a new “deep and comprehensive” partnership with the EU.

Both were reported by the Daily Telegraph to be open to the idea after senior civil servant Oliver Robbins proposed it last week. While the concept brings howls of opposition from dedicated Brexiteers, there is much to be said for the move, and, even for Jacob Rees-Mogg, not that much to fear.

Entering into an association agreement does not indicate anything about the trading relationship, so suggestions that it would inevitably make the UK a “rule-taker” are misguided. The benefits of it are that it will create the governance structures needed for a durable, comprehensive, dynamic relationship, and will demonstrate definitively to the EU — and hopefully also distraught Remainers — that the Government is sincere about its desire for an ongoing close partnership after separation.

An association agreement is a common legal format for the EU’s various types of economic and political cooperation. Examples range from the highly integrated European Economic Area Agreement for Norway, Iceland and Liechtenstein; to the close partnerships with Balkan nations, North African states, Ukraine, Georgia, Moldova and Turkey; and looser arrangements for Israel, Chile, and Lebanon.

The reason it is suitable for the UK and the EU is that both parties desire a deep free trade agreement and close cooperation on political and security affairs. An association agreement will also facilitate continued UK participation in EU agencies and programs. The EU is said to favour such a comprehensive arrangement rather than the complicated alternative of multiple accords.

The reason it is problematic for some Brexiteers appears to be conflation with the unrealised concept of EU “associate membership”, a belief it will lock the UK into EU rules, and suspicion because the framework is promoted by Guy Verhofstadt, the Brexit coordinator for the European Parliament, and a dedicated federalist.

This sort of wariness appears to also be prevalent within the Government. When asked about the prospects for an association agreement yesterday, a spokesperson at the Department for Exiting the European Union said: “We are not looking for an off-the-shelf arrangement. We are seeking a bespoke deal that is of greater scope and ambition than any such existing agreement.”

But while it is reasonable for the UK to pursue a unique relationship as the first former member of the Union, it can hardly expect the EU to invent legal categories just for the occasion.

Far better for May to request an association agreement governing all pillars of the relationship so talks can move to the delicate business of negotiating trade and security partnerships.

A point that appears to be overlooked amid concern that this option is a Brussels plot, is that federalists like Verhofstadt are now somewhat keen for the UK to go ahead and leave the EU, as, if it remains, it will still be an impediment to further integration.

While Eurozone states could agree to harmonise taxes and mutualise debts while the UK is in the EU, it would be more difficult to make the institutional reforms pushed by federalists, such as transforming the Commission into a powerful executive. Among those holding this view are Andrew Duff, a former Liberal Democrat MEP, ally of Verhofstadt, and President of the Spinelli Group.

Duff, who helped draft the rejected EU Constitution, has been pushing for an association agreement since the referendum, as he believes it is the best way to proceed. “Conversely, a settlement which does not work, and which leaves Britain in a sulk at its treatment, litigious and nationalistic 40 kilometres off Calais, would be in nobody’s interest. Resolving the British problem is a delicate business for the rest of Europe,” he wrote in evidence to a parliamentary committee on March 30.

While Duff thinks “associate membership” — in the EU but outside federal structures — might be a long-term solution for the UK, this is a matter for future British electorates and governments.

In the meantime, the most legitimate reason for Brexiteers to reject an association agreement is concern that it could keep the UK economically tied to the EU, but in a subservient position. That is because Duff’s model includes a Deep and Comprehensive Free Trade Area along the lines of Ukraine’s. That deal means Ukraine may eventually receive Internal Market treatment in areas where it has adopted relevant EU laws and implemented the necessary governance arrangements.

Given May’s mutual recognition aspirations and the Irish border conundrum, there are aspects of this that the UK may have to pursue, although obviously the UK will be broadly moving away from the EU, not towards it like Ukraine.

A key similarity with the DCFTA is likely to come in the form of an Agreement on Conformity Assessment and Acceptance of Industrial Products, a type of arrangement which is increasingly pushed by the EU in its relations with close partners. An ACAA means, essentially, that goods authorized for one market are automatically eligible for the other, as May has called for. There is also likely to be continued convergence in broader areas, such as environmental, competition, and social policy, where the UK has indicated it will not undermine EU standards.

“In some areas, such as state aid and competition, Britain should be ready to accept the EU’s single rule book in order to enjoy full internal market treatment. Conformity assessment agreements could be struck across a range of goods,” Duff wrote.

That type of alignment would be a bitter pill for some to swallow. But it would ease the Irish border problem, and the UK is already incorporating EU laws onto its statute book, which indicates the reality of continued alignment with the regulatory superpower next door.

Another factor for Brexit purists to consider is that currently there is still debate swirling around the UK establishment about whether there should be a new customs union. That shows how off-course the Brexit conversation is, as a new customs union will not keep the Irish border invisible, and it will torpedo the Government’s plans for an autonomous trade policy.

The reason the policy is being promoted is that it is part of efforts to stop Brexit, and because business lobby groups are advocating economic continuity without any apparent concern for political considerations. If a customs union is necessary to keep the Irish border invisible, then Single Market membership definitely is. But there is no logic in the UK leaving EU institutions and staying part of the economic building blocks of integration, as all it will have done is forfeit influence.

Instead, new institutions are needed, which will manage a new relationship, including adjusting the UK’s market access in the event of divergence. A new-style association agreement means “permanent joint institutions established at summit, ministerial, parliamentary and technical levels, a platform for civil society and a tripartite tribunal for the arbitration of disputes,” wrote Duff, who also advocates a new EU-UK Court that would seek interpretation of EU law from the European Court of Justice.

Brexiteers may once more howl in opposition at such prospects, but concessions from all sides are clearly needed to reach agreement and begin to heal the UK’s gaping wounds. Just as Remainers need to stop promoting unsustainable approaches as part of vague and divisive plans to prevent separation, Brexiteers should accept the need for some continuing alignment with EU rules, and for the entire future partnership to be governed by an association agreement.

William Davison is a freelance journalist.