Richard North, 30/12/2017  

It was in March 2007 that I started to get to grips with globalisation, then making one of my first references to UNECE and global vehicle standards. Most certainly, this was the first time I mentioned the concept of "dual international quasi-legislation" which became translated into the diqule by Lene Johansen then of the Competitive Enterprise Institute.

In my earlier piece, however, I had remarked on the "genius" of the European Union in being able to harness the essential administrative functions of global bodies to its own ambitions, creating structures and institutions to deal with them.

Through these, the EU has gradually transformed its role in trade standards from a rule-maker to a rule-taker, with well over 80 percent of its Single Market acquis coming from sources outside Brussels, with the proportion growing by the year.

For more than ten years, I have been watching this transformation, often through bodies few people realise exist. It enables the EU to maintain its own internal market and the EEA "Single Market" adjunct, with a greater economy of resource, allowing it to focus on developing "high" political areas such as foreign policy and defence.

What is fascinating about this transformation is the way it is going on under the noses of the political classes and the know-all pundits, yet it remains unrecognised almost to the point of invisibility.

But, before virtually anybody else, the EU had recognised that power and status does not come from making laws. In implementing laws in its own domain, their origin makes absolutely no difference, even to the point where they are attributed to the EU even when they come from elsewhere.

This applies to two of the infamous laws on the books, the "straight cucumber" and the "bendy banana" regulations. The first comes from UNECE – with a little help from the OECD – and the banana standards date from the 1950s.

It was in the period that commercial companies realised their value as a marketing tool and started promoting their products on the basis on conformity with stringent quality standards. The current global standard comes from Codex, which sits alongside the virtually identical EU regulation.

As we see the progression of globalisation, in some areas Asia will take a more proactive role in rule-making, and the EU will have to buy into even more standards that it didn't originate. Thus, the EU is ahead of the game, converting itself into a rule-taker at the global level while keeping its internal structures intact, all the while with no loss of authority.

Yet, every time I write about this subject - as with the latest post of yesterday - I get commentators who tell me the same things others were telling me ten years ago – that the EU will never tolerate the process of becoming a rule-taker and will retain full control of the Single Market.

From this, it does seem that many people are convinced that rule-making necessarily confers status or authority. Actually, it doesn't. Largely, making law is a tedious, mechanical process which can be performed by any vaguely competent technocratic body.

The roots of power do not lie in the process, but in the management of the structures that implement them, comprising amongst other things, surveillance, enforcement and dispute resolution. Who makes the laws is an irrelevance. In the final analysis, we will all end up with the same laws, the whole body of trade law comprising a disparate collection with multiple origins, most of them lost in the mists of time.

It was such thinking that inspired part of Flexcit, where I advanced the idea that the UK's best interests lay in promoting the already well-established process of legislative cooperation at a global level, working in particular with UNECE as the European arm of the globalisation process.

This organisation has a track record which demonstrates that it has the capacity and the capability to manage single market regulation covering the whole of continental Europe, further breaking the grip of the EU's already weakened Brussels-centric operation.

When it comes to assessing whether this is a realistic possibility, the essential point is that the process is already occurring. The UK, in taking part as an independent player, would be working with the flow, exploiting trends which are already evident.

Furthermore, any such strategy is about the most cost-effective way of liberalising trade, where the EU readily acknowledges that, while trade barriers can be easier to address in bilateral negotiations, regional and global solutions have a bigger impact. "Reinforced international regulatory cooperation", it says, "helps to facilitate trade, raises global standards, makes regulations more effective and helps regulators to make better use of limited resources".

Furthermore, at a global level, it is easier to secure small, incremental agreements, or make deals on technical issues that have limited scope but are nevertheless of considerable economic importance. While "big bang" trade agreements struggle, the US has therefore quietly implemented the Global Harmonised Standard (GHS).

Completely under the radar, we also saw in 2012 Obama's Executive Order on "Promoting International Regulatory Cooperation".

"In meeting shared challenges involving health, safety, labor, security, environmental, and other issues", the Order said, "international regulatory cooperation can identify approaches that are at least as protective as those that are or would be adopted in the absence of such cooperation. International regulatory cooperation can also reduce, eliminate, or prevent unnecessary differences in regulatory requirements".

Promoting regulatory cooperation characterises the Flexcit approach. While the chatterati obsess about free trade agreements, forever chasing after big deals, we are looking at a much broader perspective which is more likely to deliver success.

What is very often the case, in such arrangements is that the "diqule" is rarely binding but represent the much-under-rated "soft power" which can be more effective (and permanent) than binding treaties. Between international law and political declarations, the latter are often a more powerful tool.

However, over the years, we have been struggling with the "elephant in the room", where our own MPs and even ministers, have been unaware that supposedly domestic policies have originated in Brussels. But now, just as we are getting greater recognition of EU involvement, policy-making has moved into the global domain.

There, not only is this change largely unrecognised, commentators often have limited knowledge of how processes work, and tend to dismiss international forums which lack the ability to compel parties to conform. Accustomed to the EU's resort to compulsion, they have forgotten how powerful unforced cooperation can be.

Another thing people do not seem to understand – or wilfully ignore – is that international agreements take time. Worthwhile deals, where both parties benefit, rarely come quickly, and the more parties to the negotiations, the longer it is going to take before a deal can be concluded.

This is why the Efta/EEA option made such good sense, buying us time with a stable, long-lasting interim deal which gave us the freedom to cultivate relations at a global level, time to build alliances, and the security that allows us to take the long view.

The two, therefore, went hand-in-hand. The idea was to secure the short-to-medium-term to give us the flexibility to make the most advantageous long-term deals, without the time pressure that would have limited our choices.

Now that Mrs May has gone for a time-limited transition, she has simply deferred the leap over the cliff edge. She has not relieved the time pressure. There will be a pressing need to make some sort of a deal – far short of the optimal – just to avoid a catastrophe.

Since there looks to be no way of going back on this, our options are now very limited. We will most probably have to take the economic hit, and only when we have established a very poor free trade agreement will we be in a position to develop longer-term, more satisfactory arrangements.

What we can do, therefore, is inject a note of optimism. A bad deal is regrettable but does not have to be the end of the line. We may find ourselves on a rough section of track, but there are no buffers at the end of it. Getting there may take longer, it may be harder and more expensive, but this is a game that is never over.

comments powered by Disqus

Brexit - the first year - New e-book by Richard North
Brexit - the first year - New e-book by Richard North
Buy Now

Log in

Sign THA
Think Defence

The Many, Not the Few