The Impact of No Deal on UK Sovereignty

The most commonly cited reason for people voting to leave the European Union was that they wanted to “take back control” – of our laws, borders and trade.

The same reasons are being given by those now arguing we should leave the EU without a deal.  The areas where EU states lack autonomy are often quoted, but there has been little scrutiny of the requirements of the new regime we would need to comply with.

Here is a piece of research, conducted by my office, which analyses the effects of a No Deal Brexit on the UK’s ability to act unilaterally on the international stage.

  1. Trade
  • It is true that leaving the EU will allow the UK to pursue our own independent trade policy. But the path to establishing the policy will be extremely difficult because we will have to adapt to a new regulatory regime from scratch.[1]
  • The UK has not been an independent member of the World Trade Organisation (WTO) since we joined the EEA (single market and customs union) in 1973. Before negotiating new Free Trade Agreements (FTAs), we will be obligated to negotiate our own WTO schedule, which sets the level of maximum/minimum tariffs and subsidies for different sectors. It also covers all the goods and services we export. These will then have to be unanimously ratified by other WTO members. The UK circulated a draft WTO schedule in July 2018, and this has received objections from 23 WTO members. This will delay FTA negotiations with these countries.[2]
  • EEA membership grants the UK 56 preferential FTAs with non-EU countries. Leaving the EU with No Deal will allow us to pursue independent FTAs with these countries. However, until we have negotiated these new FTAs, we will be trading on basic WTO terms. This will mean additional tariffs will be placed on imports and exports, causing prices to rise on goods that we import.[3]
  • These new FTAs will also have to be negotiated alongside the negotiations on the terms of our WTO membership, adding further complications to establishing an independent trade policy.[4]
  • The process of establishing our own independent trade policy with the EU is complicated because EU Rule of Origin requirements prevent the UK from automatically aligning its trading standards with EU standards. These regulations will have to be tailored to be specific to the goods and services which are being exported from the UK. Whilst this is possible, this will be extremely difficult because they will have to be completed alongside negotiations on the terms of our WTO membership and negotiating with new FTAs with trade partners.[5]
  • UK companies exporting to the EU will be obligated to conform with regulations and standards set by the EU commission in our post-Brexit trade arrangements. This is because there is a concern that frictionless trade without EU oversight would risk the Single Market being flooded with cheap unsafe goods and contaminated food. For example, EU Rules of Origin (RoO) mean that car manufactures will need to be investigated and receive certification from EU agencies to be able to export to the EU.[6]
  • WTO rules do not cover the service industry, the largest sector of the UK economy, as effectively as EU rules do. People who run flexible businesses with regular cross-border trading will therefore face disruption because they will lose their licences to trade internationally, which are granted under the EU Services Directive.[7]
  • The disruption to trade will incentivise the UK to conclude FTAs within a more-compressed time-period. This will place the UK at a disadvantage while negotiating with major partners (US, Japan, the EU, China), and leave the UK trading on worse terms than under EEA membership.[8]

 

  1. Borders
  • WTO rules will require the EU and UK to impose border controls in order to avoid charges of preferential treatment. These will include additional customs checks at major international ports on the British mainland, as well as on the land border between Northern Ireland and the Republic.[9]
  • The UK will be obliged to withdraw from EU agencies which harmonise standards and regulations and ensure the easy flow of goods across borders. A consequence of this is that the average number of decisions taken by border agents will jump by 230-360% due to administration and customs processing.[10]
  • This extra administration will affect the efficiency of key ports. The port of Dover processes 10,000 trucks a day, 99% of these originating from the EU. The average customs check at an international border takes 10-20 minutes. The Port of Dover announced that a delay of 2 minutes will cause a 17-mile queue.[11]
  • If the UK wishes to continue trading with the EU on WTO terms, the UK’s customs agents at borders will have to follow regulations which were produced by an EU authority without the UK’s input.[12]
  • Britain would no longer have to adhere to the rulings of the European Court of Justice, but it would continue to be bound by the European Court of Human Rights because it is a non-EU body.[13]
  • Free movement of people across the Ireland-Northern Ireland border will cease. This will affect the 35,000 people who regularly commute to work across the border every day, as they would have to wait at a border control checkpoint.[14]

 

  1. Immigration
  • Freedom of movement rules do not affect non-EU immigration, so immigration from other countries will be unaffected by the UK leaving the EU.[15]
  • Although the UK will be able to establish an independent immigration system for EU nationals, it will be difficult to get right first time. There is a danger that a shortage of essential labour, such as from the medical and agricultural sectors, will arise if the system prevents too many EU citizens from residing in the UK.[16]
  • Automatic recognition of professional qualifications will cease, meaning the 2.9 million EU nationals living in UK and the 1.3 million UK citizens living in the EU will find that they have no relevant qualifications in their places of residence.[17]
  • UK citizens’ rights in EU countries in the event of No Deal are uncertain and not guaranteed. For example, EU states will not be obliged to provide basic healthcare to UK citizens, because they will no longer be EU citizens and thus not covered by the EU Charter of Fundamental Rights.[18]
  • Residency rights for UK citizens in EU countries are uncertain in the event of a No Deal Brexit. The extent of their rights will vary across EU countries and depend upon member-states’ domestic legislation. [19]

 

  1. Medicines
  • Leaving the EU without a deal will automatically end our membership of the European Medicines Agency (EMA). A separate regulatory system would cause delays in applications for licences because the UK represents a smaller market than the EEA.[20]
  • The delays in applications for licenses will have a knock-on effect that the UK will be temporarily unable to import certain medicines while the new licencing regime is being established.[21]
  • In addition, the new customs checks at UK and EU ports will delay the supply of medicines because they will have to wait in transit whilst the administrative paperwork is completed. This will have a larger negative effect on medicines with a shorter shelf-life, such as medical radioisotopes, because there is a danger that these will decay whilst in transit.[22]
  • The costs of imported drugs will increase due to tariffs and the new administrative costs associated with customs checks. A significant example is blood sugar monitoring systems and insulin manufactured in Germany.[23

 

  1. Security
  • Being in the EU means the UK is party to 1000 bilateral and multilateral agreements regarding security and crime. If we leave the EU without a deal, we would have to renegotiate most of these agreements.[24]
  • In some areas such as Intelligence-Sharing and International Policing there are existing fall-back options from previous international treaties. However, they are suboptimal in comparison with EU measures as they do not cover modern threats.[25]
  • We are members of 40 EU cross-border security agencies. These include Interpol, European Arrest Warrant, and access to multiple databases which store information on potential criminals and intelligence on criminal activities.[26]
  • According to a report by the home affairs select committee, leaving with No Deal will mean our security agencies will lose access to these databases and cause the UK to lose automatic membership of international law-enforcement agencies. This will “create immediate legal and operational uncertainty with the risk of operational disruption and potential security implications”.[27]
  • Losing our membership of these security agencies will see our influence in international security policy decrease. This is because we will lose our chairmanship of the Europol counter-terrorist programme board.[28]
  • We would be able to re-negotiate our access with additional bi-lateral agreements with individual agencies, but there would be a significant disruption in our security agencies operations while these are being negotiated.[29]
  • The Police Service of Northern Ireland are concerned that the re-introduction of a hard border on the island of Ireland will empower paramilitary groups, as cross-border smuggling to avoid customs checks will become more profitable.[30]

 

  1. Costs
  • The House of Commons Library Briefing paper on a No Deal exit states that: “There is a great deal of uncertainty about what happens to the outstanding UK-EU financial obligations if there is no deal. It is likely that politics and the appetite for an ongoing EU-UK relationship will largely dictate the extent to which the two parties honour the agreement reached over the financial settlement.”[31]
  • Article 50 does not establish any legal precedent for settling outstanding payments with the EU. However, EU negotiators have indicated that in the event of No Deal, the EU would take the UK to the International Court of Justice to pursue financial obligations that it sees as outstanding. However, a figure cannot be ascertained because the EU have not yet indicated which obligations it will intend to pursue. This will likely depend on the political goodwill between the parties at, and immediately after, the point of exit.[32]
  • However, what is certain is that the UK would lose all the subsidies it is entitled to under EU membership. The most significant of these is the £3billlion annual subsidy the UK agricultural sector receives as part of the Common Agricultural Policy[33]

 

Sources

[1] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 10)

[2] https://www.explaintrade.com/blogs/2018/8/11/why-there-are-objections-to-the-uks-wto-schedule-and-why-you-shouldnt-care

[3] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 62)

[4] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 63)

[5] https://www.theguardian.com/politics/2019/jan/27/uk-cannot-simply-trade-on-wto-terms-after-no-deal-brexit-say-experts

[6] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 63)

[7] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 61)

[8] https://www.theguardian.com/politics/2019/jan/27/uk-cannot-simply-trade-on-wto-terms-after-no-deal-brexit-say-experts

[9] https://www.bbc.co.uk/news/uk-northern-ireland-46961982

[10] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 87)

[11] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 86)

[12] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 48)

[13] https://inews.co.uk/news/brexit/no-deal-brexit-what-meaning-uk-leave-uk-consequences/

[14] https://www.bbc.co.uk/news/resources/idt-sh/The_hardest_border

[15] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 107)

[16] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 115)

[17] https://www.bbc.co.uk/news/uk-politics-uk-leaves-the-eu-36745584

[18] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 116)

[19] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 117)

[20] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 123)

[21] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 123)

[22] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 124)

[23] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 124)

[24] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 181)

[25] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 188/189)

[26] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 176)

[27] https://publications.parliament.uk/pa/cm201719/cmselect/cmhaff/1674/1674.pdf (page 8)

[28] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 187)

[29] https://publications.parliament.uk/pa/cm201719/cmselect/cmhaff/1674/1674.pdf (page 8)

[30] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 185/186)

[31] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 53)

[32] http://researchbriefings.files.parliament.uk/documents/CBP-8397/CBP-8397.pdf (page 54)

[33] https://inews.co.uk/news/brexit/no-deal-brexit-what-meaning-uk-leave-uk-consequences/

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