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11 April 2018 Insight

The EU rules that matter

If Britain moves away from EU rules, there will be more costs than opportunities, says CBI Director-General Carolyn Fairbairn

In an increasingly global world, regulations are the foundation for trade and integrated supply chains. But where will the future balance of EU-UK relationships be struck? Will the best outcome be based on alignment or divergence?

This is perhaps the most crucial question currently facing Brexit negotiators on both sides. The EU’s Single Market is one of the most sophisticated systems of economic rules in existence. And the job of untangling 40 years of economic and regulatory integration is fiendishly complex.

In total, there are around 19,000 EU legislative acts in force. The broad and revolutionary Services Directive governs all cross-border EU services trade. REACH, the 500-page long regulation on chemicals, keeps people and the environment safe and industry moving. The Balai Directive keeps our zoo animals breeding. The EU’s Community Design Regulations helps London stay centre stage in the fashion world. And the list goes on.

So if negotiators get it wrong on rules, the consequences will be far-reaching.

Firms voice concerns about court action, entire business models becoming illegal overnight, customer contracts in confusion, and a sudden drop off in access to our closest market for some of our leading industries.

The UK Government has committed to ensuring regulatory certainty and continuity in the short-term. This is the right approach.

Now attention needs to turn to the long term. And here, treading the right path on regulation will be the key, alongside the right customs arrangements, to keeping barriers between the UK the EU Single Market as low as possible. It will establish the basis for the UK’s competitiveness in the decades ahead.

Delivering the facts

To support negotiators in these tough talks, the CBI’s latest report, Smooth Operations, brings the facts to the table. Through consultation with hundreds of business of all sizes, it takes a sector-by-sector look into the EU rules that matter to the UK economy.

The views of business are clear. As the UK leaves the EU, there are opportunities for rule changes, for example in agriculture and tourism. And there are certainly ways of regulating better within current frameworks, such as in procurement for defence and construction. 

But these opportunities are limited and they will be vastly outweighed by the costs incurred if the UK’s rules change so much that it reduces smooth access to the EU’s market.

Business is 100% committed to making a success of Brexit. The experience of companies across the country will be essential in the months ahead. But they need negotiators to listen to the evidence.

Where rules are fundamental to the trade and transport of goods, firms need the negotiation of continued convergence. They need a deal that looks beyond goods to trade in services and digital products. And to ensure the relationship lasts for the long term, issues of trust and control need to be satisfied by mechanisms for influence and enforcement that benefit both sides.

When changes to rules for one sector will have knock on consequences for market access throughout an entire supply chain, it’s also vitally important that negotiators understand the complexity and the effects even small changes can have.

It’s hard to overstate the importance of the decisions that will be taken over the next six months.

Our report comes from the heart of British business. It provides evidence to inform good decisions that will protect jobs and living standards. We hope it proves useful. The CBI and our members look forward to continuing to work with government to secure the best possible outcome for our country.

This article was originally published in The Times

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