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28th January 2020
External Relations & Trade Institutional law

Op-Ed: “Brexit and the future” by Jonathan Faull

Unions under stress 

Brexit should cause the EU to think again about what it is for, what policies it pursues, how it relates to a changing world and, above all, how it responds to the alienation of many of its own citizens which reached a climax in the British referendum. While the UK had a unique cocktail of objections and resentments, many of them are to be found in other European countries as well.

In a lecture in 2017,* I asked how exceptional the UK was in its attitudes to the EU. This is what I said then and I think it still holds true:

“It is perhaps for others to say how exceptional we are, but it is true that the EU has a significance in the politics, identity and self-esteem of other countries which it does not have in Britain. It is often said that the British interest in European integration, outside a small circle of true believers, is and always was transactional, commercial, perhaps geopolitical, but never emotional or passionate.

When one looks at other Member States, one sees that:

  • Former dictatorships of right and left see the EU as a democratic bulwark and a certificate of modernity.
  • Former Soviet or Warsaw Pact countries see the EU as part of their new international identity and protection against Russia.
  • Former colonies see the EU as a strong symbol of independence and international identity.
  • Former occupying or occupied countries see the EU as a peace and reconciliation project.
  • Countries tied to the German economy for a large part of their trade and prosperity want to be inside the meeting rooms where economic decisions are taken with Germany.
  • Countries which do not want the continent of Europe to be dominated by a single country see the EU as the best way to achieve that.
  • Countries sharing the euro as their currency or aspiring to do so will want to keep the euro and participate in the making of monetary policy in the ECB.

The UK fits into none of these categories. All the other 27 Member States fit into one or more of them. So there is some British exceptionalism, but it is also true that there are other Member States which agree with many British positions and have been happy to allow the UK to lead (and take flak) on them. They will miss us and the EU will change as the pack is reshuffled.”

Meanwhile, UK unity is under stress. With apparently scant attention being paid to wider constitutional implications, the UK has stumbled into asymmetrical devolution with different arrangements in Edinburgh, in Belfast and in Cardiff. And what about England, my continental friends ask me? Why does it not have a Parliament? Is Brexit a phenomenon of English nationalism? That’s too simple, I say, the component nations of the UK are different in many ways but there are still recognisably British politics, culture and tradition. However, electoral facts and cultural observation point to a divergence and Englishness has something to do with it.

It is useful to recall what the EU offered to the UK in the February 2016 Agreement before the referendum.**

Free movement of workers is an essential part of the EU’s single market. However, as the Agreement noted, that freedom is far from unconditional.  Ever closer union does not commit Member States to further integration. Member States not using the euro cannot expect equal treatment which those that do.

The 2016 Agreement is, on its own terms, lifeless as a result of the referendum result. Nevertheless, it states what all the 28 Member States and the EU institutions considered to be legally and politically appropriate not very long ago.

 

The tone and direction of British politics

A worrying feature of the British debate since the 2016 referendum has been the view espoused by Brexit supporters, mainly but not exclusively on the right, that the easy, successful Brexit they promised and were promised was being thwarted by elites, foreigners, civil servants, judges, the BBC, the establishment, cosmopolitans, Londoners, minorities, the Irish, the Scots, immigrants, Brussels bullies and other ‘enemies of the people’. The Labour Party was not immune from these populist attitudes and added its own poison to the mix, forgetting the old dictum that antisemitism is the socialism of fools.

Xenophobic conspiracy theories with cartoon-like explanations of complex issues have had tragic consequences in Europe before. The British were thought to be (and thought of themselves as) different, less ideological and more pragmatic than their neighbours whose politics were influenced for decades by which side they were on in civil wars, or whether they were dreyfusards or anti-dreyfusards.  It would be a tragic irony if the British turn out to be as European as all the others in this respect and to be infected with the same debilitating diseases, albeit in different degrees in the constituent nations of the United Kingdom, at the same time as other European countries are trying to cure them through their Union.

Let us not forget the extraordinary characteristics and achievements of EU law. It has brought together independent countries, initially six, now 27, in a system of laws. Thanks to direct effect and the preliminary ruling mechanism, every court in every Member State is a court of EU law, with the CJEU the supreme arbiter of the interpretation and validity of EU rules. One does not have to agree with every judgment or ignore the occasional frictions between national and EU courts to see the splendour of the system created in the last 60 years. British lawyers, scholars, publishers, civil servants, solicitors, barristers and advocates, référendaires, Advocates General and Judges have played their part to the full in this creation. The UK is itself a country with a single market and different legal systems coexisting within its jurisdiction. It is a country whose lawyers have contributed immensely to the development of international law. It is a country which made great British jurists out of a generation of exiled continental lawyers fleeing Nazi fury. It is not surprising, therefore, that Britain has contributed greatly to EU law.

Many aspects of today’s EU bear the imprint of British policy and people. I will focus on a few subjects I happen to know something about from my professional experience:

  • Successive enlargements of the EU, particularly the big bang of 2004, were pushed hard by the UK against those who wanted to ‘deepen’ before ‘widening’ and would have preferred more gradual enlargement or some sort of peripheral waiting-room status as the core got on with integration. The UK was not alone in its support for enlargement, while a complex set of geopolitical, economic, security and social factors shaping enlargement policy existed in every Member State in different combinations. The core versus periphery argument has raged for decades, as has the hope that the Franco-German engine is about to start firing again.
  • With regard to competition policy, try to imagine what might have happened but did not. The theory that any restraint on commercial conduct is caught by Article 101(1) might have prevailed. The law and economics movement, translated into Europe mainly by British academics, might have been rejected. The merger regulation might have been based on a general public interest test rather than a ‘pure’ competition analysis.
  • Trade policy, as implemented in successive GATT/WTO rounds and numerous bilateral relationships, rejected mercantilism and protectionism. Without the UK and its leadership of the ‘liberal’ countries of Northern Europe which supported its positions, this might not have been the case.
  • Financial regulation would not have been as sensitive to the interests of the City of London and more generally to those of the non-euro countries; we might not have the comprehensive set of detailed rules enacted since the financial crisis started in 2007, which went beyond  the original focus on creating a single market to focus on stability, liquidity and high quality common or coordinated supervision and regulation.

No one can say how irreversible these achievements will prove to be in a world in which Mr Trump is President of the US, the UK charts a new course outside the EU, the EU adjusts to the absence of the UK, we all seek to learn the lessons of these developments for globalisation as we currently understand it and other countries of the world assert their own preferences in domestic and international settings. Britain may also come to rue some of the changes it engendered or promoted.

Financial regulation has created a formidable set of European rules for financial institutions and markets with self-confident regulators and supervisors, built on but not limited to the euro area and the European Central Bank. The UK will have to deal with all of that from outside. In the competition field, the UK has abandoned its pre-EU aversion to the effects doctrine, which has extended EU jurisdiction to many parties and transactions originating elsewhere. The UK is now part of that elsewhere. In the same way, the UK now applies its EU-influenced domestic competition law in ways which previous generations of British jurists would have considered extraterritorial. The risk of friction between two neighbouring systems of law applying the effects doctrine to intertwined transactions is considerable and a sustained effort to cooperate will be needed. Like so much else in this sad story, much will depend on goodwill and trust between those responsible for making and implementing law and policy.

 

*European Law in the United Kingdom, (2018) 43 European Law Review 780.

**Annex 1: Decision of the Heads of State or Government, meeting within the European Council, concerning a new settlement for the United kingdom within the European Union.

 

Sir Jonathan Faull is Chair of European Public Affairs at the Brunswick Group and was an official of the European Commission from 1978 to 2016.

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