House of Commons Exiting the European Union Committee The future UK- EU relationship: Government Response to the Committee s Fourth Report Fourth Special Report of Session 2017 19 Ordered by the House of Commons to be printed 6 June 2018 HC 1150 Published on 7 June 2018 by authority of the House of Commons
Exiting the European Union Committee The Exiting the European Union Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Exiting the European Union and related matters falling within the responsibilities of associated public bodies. Current membership Hilary Benn MP (Labour, Leeds Central) (Chair) Mr Peter Bone MP (Conservative, Wellingborough) Joanna Cherry MP (Scottish National Party, Edinburgh South West) Sir Christopher Chope MP (Conservative, Christchurch) Stephen Crabb MP (Conservative, Preseli Pembrokeshire) Mr Jonathan Djanogly MP (Conservative, Huntingdon) Richard Graham MP (Conservative, Gloucester) Peter Grant MP (Scottish National Party, Glenrothes) Wera Hobhouse MP (Liberal Democrat, Bath) Andrea Jenkyns MP (Conservative, Morley and Outwood) Stephen Kinnock MP (Labour, Aberavon) Jeremy Lefroy MP (Conservative, Stafford) Mr Pat McFadden MP (Labour, Wolverhampton South East) Craig Mackinlay MP (Conservative, South Thanet) Seema Malhotra MP (Labour (Co-op), Feltham and Heston) Mr Jacob Rees-Mogg MP (Conservative, North East Somerset) Emma Reynolds MP (Labour, Wolverhampton North East) Stephen Timms MP (Labour, East Ham) Mr John Whittingdale MP (Conservative, Maldon) Hywel Williams MP (Plaid Cymru, Arfon) Sammy Wilson MP (Democratic Unionist Party, East Antrim) Powers The Committee is one of the departmental select committees; its powers are set out under a Temporary Standing Order of 4 July 2017. Publication Committee reports are published on the Committee s website at www.parliament.uk/exeucom and in print by Order of the House. Evidence relating to this report is published on the inquiry publications page of the Committee s website.
Committee staff The current staff of the Committee are James Rhys (Committee Clerk), Claire Cozens (Second Clerk), Dr Ariella Huff (Senior Committee Specialist), Shakera Ali (Committee Specialist), Duma Langton (Committee Specialist), Judy Goodall (Committee Specialist), Adrian Hitchins (Committee Specialist), Julian Mazowiecki (Committee Specialist), Eoin Martin (Committee Specialist), Leo Oliveira (Senior Committee Assistant), Pansy Barrett (Senior Committee Assistant), Henry Ayi-Hyde (Committee Assistant), Estelle Currie (Senior Media Officer) and Ben Shave (Media and Communications Officer). Contacts All correspondence should be addressed to the Clerk of the Exiting the European Union Committee, House of Commons, London SW1A 0AA. The telephone number for general enquiries is 020 7219 7568; the Committee s email address is exeucom@parliament.uk.
The future UK-EU relationship: Government Response to the Committee s Fourth Report 1 Fourth Special Report The Committee on Exiting the European Union published its Fourth Report of Session 2017 18, The future UK-EU relationship (HC 935), on 4 April 2018. On 4 June 2018, the Committee received the Government response to the Report. It is appended below. Appendix: Government Response The EU s existing relationship with Third Countries We welcome the Committee s helpful analysis of the variety of EU relationships with Third Countries. These relationships take a variety of forms, from the comprehensive free trade agreement with Canada, to the Swiss model featuring a large suite of bilateral agreements, and also the Association Agreements of Ukraine, Georgia and Moldova. We agree that, as the report sets out, there is no precedent for EU exit and any deal reached between the UK and the EU on the UK s future relationship will, by its nature, be bespoke. We both want good access to each other s markets; competition to be fair and open; and reliable, transparent means of verifying commitments and resolving disputes. The Government agrees with the Committee s assessment that a CETA arrangement would not be sufficient for the UK, as this would mean a significant reduction in our access to each other s markets compared to that which we currently enjoy. Staying party to the EEA agreement, where we would effectively stay in the single market, would mean having to implement new EU legislation automatically and in its entirety and would also mean continued free movement. This would not deliver control of borders and laws, and ultimately would not pass the first test for the future economic partnership the Prime Minister set out at Mansion House. Furthermore, we have no plans to join EFTA and its Free Trade Agreements. Joining EFTA would not necessarily be a straightforward or quick process, and we would not have immediate or automatic access to their 27 FTAs, which were not negotiated with the size and type of Britain s economy in mind. Our entry into each one would need to be negotiated individually with the third countries involved a process that would take time and with no guarantee of success. Leaving the EU offers us an opportunity to forge a new role for ourselves in the world: to negotiate our own trade agreements and to be a positive and powerful force for free trade. The report also mentions Turkey s Customs Union with the EU. Those arrangements, if applied to the UK, would mean the EU setting the UK s external tariffs and being able to let other countries sell more into the UK without necessarily making it any easier for us to sell more to them. That would not be compatible with a meaningful independent trade policy. It would mean we had less control than we do now over our trade in the world. Finally, not reaching an agreement with the EU and subsequently trading on World Trade Organisation terms would mean a significant reduction in our access to each other s markets compared to that which we currently enjoy.
2 The future UK-EU relationship: Government Response to the Committee s Fourth Report The European Council s Guidelines aspire to a balanced, ambitious, and wide-ranging deal, with common rules in a number of areas to ensure fair and open competition. This would not be delivered by a Canada-style deal which would not give the EU the breadth or depth of market access that they want. And it is hard to see how it would be in the EU s interests for the UK s regulatory standards to be as different as those of Canada. There are numerous limitations and exceptions to the Most Favoured Nation clauses in Free Trade Agreements, and we are confident of negotiating a bold and ambitious economic partnership covering all sectors of the economy. We have made significant progress on negotiations so far, with the agreement reached at March European Council on the implementation period and much of the Withdrawal Agreement. We have continued to build on recent progress by jointly publishing the topics for discussion on the future framework. This incorporates the economic and security partnerships outlined by the Prime Minister, as well as the institutional framework that will underpin them and other cross-cutting issues. We want our future relationship with the EU to be a deep and special partnership, taking in both economic and security cooperation, and this publication reflects the determination of both sides to achieve a broad partnership that stands the test of time after the UK leaves the EU. We are confident that this is in the interests of both sides, so we approach these negotiations anticipating success. We do not want or expect a no deal outcome. The UK s future relationship with the EU A new Trading and Economic Partnership Taking these models into consideration, for us both to meet our objectives, it is clear we need to look beyond the existing precedents, and find a new balance. The Prime Minister s Mansion House Speech set out our specific proposals across a range of areas including goods, services, agri-food and fisheries. On goods, this is the area where the single market is most established and both the UK and the EU have a strong interest in preserving integrated supply chains that have built up over forty years of our membership. A fundamental principle of our future relationship should be that trade at the UK-EU border should be as frictionless as possible. This means we do not want to see the introduction of any tariffs or quotas. And as the Secretary of State for Exiting the European Union set out in his speech in Vienna in February we must ensure that, as now, products only need to undergo one series of approvals, in one country, to show that they meet the required regulatory standards. Just as our partnership in goods needs to be deeper than any other Free Trade Agreement, so in services we have the opportunity to break new ground with a broader agreement than ever before. Financial services is an important part of both the UK economy and the wider EU economy, and is crucial to our linked economies. London is a global centre of excellence in the provision of financial services; this benefits businesses and customers across Europe.
The future UK-EU relationship: Government Response to the Committee s Fourth Report 3 We are seeking a bold and ambitious free trade agreement between the United Kingdom and the European Union of greater scope and ambition than any such agreement before it so that it covers sectors crucial to our linked economies such as financial services. This will require detailed technical talks, but as the UK is an existing EU member state, both sides have regulatory frameworks and standards that already match. We recognise that certain aspects of trade in services are intrinsically linked to the single market and therefore our market access in these areas will need to be different. So we want to limit the number of barriers that could prevent UK firms from setting up in the EU and vice versa, and agree an appropriate labour mobility framework that enables UK businesses and self-employed professionals to travel to the EU to provide services to clients in person and that allows UK businesses to provide services to the EU over the phone or the internet. And we want to do the same for EU firms providing services to the UK. And given that UK qualifications are already recognised across the EU and vice versa it would make sense to continue to recognise each other s qualifications in the future. On agri-food and fisheries, the Prime Minister was also clear in that the UK will be leaving Common Agricultural Policy and Common Fisheries Policy. We will want to take the opportunity that brings to reform our agriculture and fisheries management and regain control over our domestic fisheries management rules and access to our waters. The UK has among the highest environmental and animal welfare standards of any nation on earth. As we leave the EU we will uphold environmental standards and go further to protect our shared natural heritage. And we fully expect that our standards will remain at least as high as the EU s. But it will be particularly important to secure flexibility here to ensure we can make the most of the opportunities presented by our withdrawal from the EU for our farmers and exporters. As part of our economic partnership we will want to continue to work together to manage shared stocks in a sustainable way and to agree reciprocal access to waters and a fairer allocation of fishing opportunities for the UK fishing industry. Building on this, we also want to work together with our European allies in ways that promote the long-term economic development of our continent, continuing to take part in those specific policies and programmes which are greatly to the UK and the EU s joint advantage, such as those that promote science, education and culture. The Government s vision for the future partnership, as set out by the Prime Minister in her Mansion House Speech, also contained five foundations that must underpin our trading relationship with the EU. First, our agreement will need reciprocal binding commitments to ensure fair and open competition. The level of integration between the UK and EU markets and our geographical proximity mean these reciprocal commitments will be particularly important in ensuring that UK business can compete fairly in EU markets and vice versa. A deep and comprehensive agreement with the EU will therefore need to include commitments reflecting the extent to which the UK and EU economies are entwined. Second, we will need an arbitration mechanism that is completely independent something which, again, is common to Free Trade Agreements.
4 The future UK-EU relationship: Government Response to the Committee s Fourth Report This will ensure that any disagreements about the purpose or scope of the agreement can be resolved fairly and promptly. Third, given the close relationship we envisage, we will need to have an ongoing dialogue with the EU to ensure that we have the means to consult each other regularly. In particular we will want to make sure our regulators continue to work together; as they do with regulators internationally. We start from the place where our regulators already have deep and long-standing relationships, so the task is maintaining that trust; not building it in the first place. Fourth, we will need an arrangement for data protection. The free flow of data is critical for both sides in any modern trading relationship. As part of our future relationship, we will therefore want to secure an agreement on data protection with the EU that provides stability and confidence for EU and UK business, public bodies and individuals to achieve our aims in maintaining and developing the UK s strong trading, economic and security links with the EU. The UK s new Data Protection Bill will further strengthen UK standards, ensuring they are up to date for the modern age, and it will implement the EU s new data protection framework in our domestic law; we will therefore be in an unprecedented position of alignment with the EU s data protection laws at the point of exit. And fifth, we must maintain the links between our people. EU citizens are an integral part of the economic, cultural and social fabric of the UK and UK nationals are viewed in entirely the same way by communities across the EU. This is why the Government has put the interests of EU citizens and UK nationals at the heart of it s approach at every stage of these negotiations. We have been clear that as we leave the EU, free movement of people will come to an end and we will take back control the number of people who come to live in our country. As the Prime Minister has said, we are leaving the European Union but not Europe. UK citizens will still want to work and study in EU countries just as EU citizens will want to do the same here, helping to shape and drive growth, innovation and enterprise. Businesses across the EU and the UK must be able to attract and employ the people they need, and we are open to discussing how to facilitate these valuable links. Security Cooperation The Prime Minister s Munich speech set out the UK s unconditional commitment to European security. We want to continue to cooperate with the EU on all aspects of our security relationship from foreign policy, defence and development, to security, law enforcement, and criminal justice. The UK and EU need to be able to work together to respond quickly and effectively to the changing threats we face from terrorism, serious and organised crime, and other new and developing threats such as cyber crime. The UK also remains committed to using our assets, capabilities and global influence alongside our European partners in support of our common goals and interests. It is important that we can do this as part of the future relationship.
The future UK-EU relationship: Government Response to the Committee s Fourth Report 5 Foreign Policy, Defence and Development The future UK-EU partnership must be one that underpins practical collaboration to tackle real world challenges, and should not impose a restrictive political construct that hinders cooperation. We want the EU to succeed in its foreign and security policy goals, which we share, as made clear in the Strategic Defence and Security Review 2015 and the 2016 EU Global Strategy. To facilitate effective cooperation, the UK is therefore considering a range of options, both informal and formal. In some areas we will likely require institutional or legal structures to allow us to achieve the objectives of the partnership, such as for potential future UK participation in Common Security and Defence Policy missions and operations. The depth of our partnership here would need to be commensurate with the scale of our contribution, and the operational risk of any deployment. The UK cannot be expected to commit our Armed Forces without adequate consultation and influence over decisions. In other areas, a more informal relationship could work for both parties. For instance, we will no longer be party to the Common Foreign and Security Policy, and will instead pursue an independent foreign policy. But we should maintain regular close consultations on foreign and security policy issues, including on sanctions, and align where in our mutual interest. The Prime Minister set out in Munich that we will look to carry over all EU sanctions at the time of our departure, as well as have the means to cooperate on future sanctions. An informal, political relationship would enable cooperation but retain the autonomy of both the UK and the EU. Security, Law Enforcement, and Criminal Justice Our Security, Law Enforcement and Criminal Justice Future Partnership Paper published in September 2017 sets out our ambition for our future relationship with the EU; one which provides for practical operational cooperation; facilitates data-driven law enforcement; and allows multilateral cooperation through EU agencies. We are clear that we remain unconditionally committed to maintaining Europe s security and that we must do whatever is most practical and pragmatic to provide security for our citizens. The Prime Minister s speech in Munich set out in further detail how we see this relationship working. We have proposed a new treaty with the EU on security, law enforcement and criminal justice; we consider that this is the best way of ensuring ongoing collaboration and cooperation on key legislative tools and instruments against shared and emerging threats. Although the EU has no single existing security agreement that captures the breadth of the relationship we want to have, the UK is in a unique starting point with a strong history of working closely with EU Member States as partners and allies. We make a key contribution to security and justice in Europe and globally, and will seek an agreement with the EU that recognises the unique position we hold.
6 The future UK-EU relationship: Government Response to the Committee s Fourth Report Leaving the EU does not mark an ending; it marks a new beginning for the UK and our relationship with our European allies. We have always been clear that we wish to develop a new partnership with the EU which builds on the breadth and depth of our shared interests and values, and goes beyond any existing third country arrangements. We are confident that this is in the interests of both sides, so we approach these negotiations anticipating success.