Red Tape Bonfire Smoulders

By: DailyForex.com

On the face of it, one of the more credible aspects of leaving the EU would be that the UK would no longer be bound to follow all EU directives. Brexiters talked of a “bonfire of the red tape” that they claimed held back UK business, burdening it with vast swathes of unnecessary administrative barriers. When challenged about which EU regulations they were referring to, Brexiters suddenly became reticent and unable to be specific – the Leave side of the referendum argument was never that strong on detail.

If indeed the UK leaves the EU on 29/3/19, it hopes to be bound to the EU for a further 20-month transitional period where it must comply with all EU legislation but will no longer have any say in drafting it or blocking new regulations that it objects to. After transition, the nation is faced with a choice. If it wants to maintain trade with the EU at current levels and as near “frictionless” as possible, it will need to comply with EU regulations. This would mean that it must follow EU standards on a range of issues from electrical standards to veterinary standards. This may preclude it from what Boris Johnson claimed would be “buccaneering” global free-trade deals since many of these putative partners want the EU to abandon EU standards in favour of the ones they comply to. An example of this is that the USA would want expanded access to the UK meat market and would want it to accept the import of hormone treated beef and poultry washed in bleach (chlorinated chickens) post slaughter. These standards fall short of European norms, so were the UK to agree to them, it would badly compromise the chances for UK farmers to sell poultry or beef to the EU market (for fear of tainting the food chain with US products).

The Confederation of British Industry (CBI) has just published a report “Smooth Operations” which consulted 23 sectors of industry and involved thousands of UK businesses and was drawn up over a 6-month period asking respondents about the extent of divergence they want to see with EU regulations post Brexit. The report states that the “vast majority” want continued close alignment with EU regulations. The exceptions were in agriculture, shipping and tourism which saw some benefit from divergence, but this would be “vastly outweighed” by the impact of divergence in the rest of British industry.

The CBI’s director-general, Carolyn Fairburn said: "It's vitally important that negotiators understand the complexity of rules and the effects that even the smallest of changes can have.

Deviation from rules in one sector will have a knock-on effect on businesses in others, and divergence from rules in one part of a production process will have consequences for market access throughout entire supply chains. Put simply, for the majority of businesses, diverging from EU rules and regulations will make them less globally competitive, and so should only be done where the evidence is clear that the benefits outweigh the costs."

Dr. Mike Campbell is a British scientist and freelance writer. Mike got his doctorate in Ghent, Belgium and has worked in Belgium, France, Monaco and Austria since leaving the UK. As a writer, he specialises in business, science, medicine and environmental subjects.