The Chequers White Paper (‘The future relationship between the United Kingdom and the European Union’), of 12 July 2018, described the UK Government’s proposals for its future relationship with the EU. This was first time since the referendum vote in June 2016, that the government set out its proposals. The White Paper’s ninety pages laid out more detail about the UK’s future relationship with the EU than the subsequent November 2018 Political Declaration.
The Chequers proposals proved divisive in Parliament – leading to cabinet resignations and objections from Tory MPs.
Although this meant that the Chequers proposals were shelved, it is worth looking at them to appreciate the breadth and complexity of issues that the UK’s future relationship with the EU will need to embrace. We discuss the White Paper under its three sections:
- Economic partnership
- Security partnership
- Cross-cutting cooperation
We also consider its interaction with government legislation.
Economic partnership
The Chequers paper proposed that goods trade (manufactured and agri-food) should remain in the Single Market and the UK should follow a common rulebook with the EU covering regulatory and other standards for goods. This would mean the UK follows EU law and regulation for goods. In addition, the government wished to have the discretion to deviate from the rulebook but accepted that consequences for UK Single Market access would follow.
The UK would leave the EU Customs Union, which would be replaced by an EU-UK ‘Facilitated Customs Arrangement’ (FCA) which would permit tariff-free EU-UK trade in goods and would avoid new non-tariff barriers. The FCA would allow the UK to set its own tariffs which could be different to EU tariffs. The FCA would also allow the UK to pursue its own trade deals with other countries. The operation of the FCA is complicated and the details of how it would work in practice were not spelt out. The operation of the FCA would require the EU27 to introduce EU-wide changes for it to work.
The approach to goods aimed to avoid physical infrastructure at the border in Ireland. It also minimised frictions on goods trade, which would avoid many of the damaging consequences of Brexit for UK manufacturing and agri-food. Goods account for about 60% of the UK’s exports to the EU. As part of this approach, the UK proposed to remain a member of the European Chemicals Agency and the European Medicines Agency.
For services, which generate a significant trade surplus for the UK with the EU of £30 billion and account for 40% of UK exports to the EU, the White Paper laid out high-level aspirations rather than detailed proposals. The high-level proposals centred on the idea of regulatory autonomy for the UK (and the EU) with regulatory equivalence between the UK and the EU. On financial services, the paper proposed dialogue on new regulations and close supervisory cooperation supported by joint governance between the UK and the EU. (Normally the EU is the sole arbiter of whether equivalence is granted or withdrawn.)
The paper said very little new on immigration. The paper repeated the government’s objective that UK and EU citizens’ rights to Freedom of Movement will end. The economic partnership would contain reciprocal mobility arrangements for skilled workers and visa-free travel for business, leisure and educational purposes. The proposal did not cover permanent hires or family members.
The Irish-UK Common Travel Area would remain. The paper noted that the Migration Advisory Committee report, then expected in September 2018, would inform UK policy, but gave no deadline for agreeing the policy.
On VAT and Excise duties, the paper proposed common cross-border processes for goods to avoid new declarations and border checks. However, the paper provided no detail on what these processes and procedures would be, nor how they would work.
Security partnership
The Chequers White Paper proposed continued cooperation between the UK and the EU on security. The proposals went beyond normal third-country arrangements. The paper listed the important areas of cooperation that the UK enjoys as an EU member state and proposed they should continue.
For example, the paper proposed that the UK would remain a participant in several EU agencies, including Europol and Eurojust. The paper also proposed close cooperation on foreign policy, which is an EU national competence.
The White Paper noted that where the UK participates in an EU agency, the UK would respect the remit of the Court of Justice of the European Union (CJEU or ECJ).
Also, the paper proposed a mutual commitment to individuals’ rights, noting that the UK would remain a party to the separate European Court of Human Rights after it had left the EU.
Cross-cutting cooperation
The White Paper identified areas where the UK proposes ‘cooperative accords’, for example on science and innovation, culture and education, international development, defence research and space (with continued UK involvement in Galileo). In many of these areas, the UK would be willing to make a financial contribution.
On data protection, the UK proposed a new arrangement under which the EU could no longer arbitrarily end data sharing with the UK if the EU believed that the UK’s approach was no longer adequate. The paper proposed that the UK should influence future developments of the EU’s data protection laws.
To implement and govern all of this, the UK proposed an association agreement overseen by a joint institutional framework. The framework would consist of a political-level council supported by a joint committee, supported in turn by several technical committees. The UK and the EU could use the joint committee to notify each other in advance of proposed legislative and regulatory changes.
The White Paper also included proposals for the incorporation of future EU laws into UK law for the common rulebook, enforcement (principally through UK courts but with reference to ECJ case law) and dispute resolution, which would refer questions of interpretation of EU law to the ECJ.
Government legislation
Shortly after publication of the White Paper, the Government’s customs and trade bills underwent their First Readings in the Commons on 16 and 17 July 2018.
The customs bill created legal powers for the government to put in place its eventual customs policy on import duties. The trade bill covered the UK position on converting the EU’s existing trade deals with third countries into bilateral deals post-Brexit. (Conversion to a UK bilateral depends on the agreement of the other countries, which may be withheld: see the trade section for more details on these deals).
The Government accepted four amendments to its customs bill, which aimed to:
- Prevent the UK from collecting tariffs on behalf of the EU unless the EU reciprocated
- Prevent the UK agreeing to a border in the Irish Sea
- Prevent the UK from being part of the EU VAT area if it stayed in a customs union with the EU
- Require primary legislation if the UK wished to remain in the EU Customs Union
On the face of it, these amendments undermined key features of the White Paper. The amendments:
- required additional bureaucracy across the EU which the EU was likely to reject;
- would prevent the proposed backstop arrangements for the Irish border being implemented;
- could result in physical infrastructure being required at the Irish border in contravention of the Good Friday Agreement.
See the Brexit FactBase section on trade for more details on the role of a customs union and on the EU VAT area.
Despite the amendments, informed observers said that the Government might be able to find ways to achieve its intended objectives. The customs bill went to the Lords at on 4th September 2018. However, because it was a ‘supply bill’ the House of Lords could not amend it. The bill passed unamended.
On 24 July 2018, the UK government published another White Paper: Legislating for the Withdrawal Agreement between the United Kingdom and the European Union. This White Paper confirmed that the UK’s forthcoming European Union (Withdrawal Agreement) Bill would be the primary means to protect the rights of EU citizens in UK law, legislate for the transition period and create a financial authority to manage payments under the financial settlement between the UK and the EU.
For more details on the UK’s legislation in relation to Brexit, please visit Brexit : legislation on the Parliament website.