Richard North, 10/01/2021  

As provisions of the TCA begin to bite, with potentially catastrophic effects on Britain's exports, the question inevitably arises as to whether prime minister Johnson actually read the treaty he signed or, if he did, whether he understood any of it.

That question takes on additional force with the publication in The Sunday Telegraph of an article headed: "'Operation Bleach' to scrub EU from the statute book" which reports on how officials "have been tasked with leafing through regulations and statutory instruments covering the UK's 40 year membership of the EU".

The idea of officials "leafing" through the statute book strikes one as being a tad casual, not really conveying the thrust of article which tells us that Johnson "has secretly ordered civil servants to strip references to the European Union from tens of thousands of laws".

The intention is to stop Labour reversing Brexit after the next general election in a plan known by some in Whitehall as "Operation Bleach", ensuring that Brexit is cemented in UK law and cannot be easily unwound by a future government.

With this, if there was any doubt about Johnson's degree of comprehension of what he has signed, I think we can be reasonably confident that he really doesn't have the first idea of what he has put his name to.

One only has to explore the inner reaches of the TCA to find, as I did, that the Agreement locks the UK into conformity with a wide range of international standards, shared by the European Union.

Thus, although we will no longer be adopting EU regulation by name, these international agreements will keep us in lockstep with the EU, to the extent that the bulk of our laws will continue to mirror the EU's acquis.

On this basis, it hardly makes sense to expend the resource excising the EU's name from our law books, if the content essentially remains the same, with very little discretion afforded to us, as to the substantive changes we can make.

And yet, there still remains within the realms of the Brexiteer orthodoxy that the end of the transition period, TCA notwithstanding, now gives the UK a licence to forge our own, independent statute book, all on the premise on "taking back control".

Prominent in promoting this fallacy is Daniel Hannan, who recently graced the site Conservative Home with the idea that the government could "stimulate growth" by reducing regulatory barriers, a process achieved in part by disapplying EU laws.

One of the instruments he singled out for destruction was the EU's Alternative Investment Fund Managers Directive (AIFMD), introduced in the wake of the 2009 financial crisis in the form of Directive 2011/61/EU on 8 June 2011.

When we look in detail at this Directive though, we see that it originated from the April 2009 G20 summit in London, where national leaders agreed that the "wild west" of hedge funds should be regulated, with fund managers registered and required to disclose appropriate information on an ongoing basis to supervisors or regulators.

This was reaffirmed in June 2010 at the G20 summit in Toronto when the national leaders committed to accelerate the implementation of strong measures to improve transparency and regulatory oversight of hedge funds "in an internationally consistent and non-discriminatory way".

The basis of the regulatory scheme was provided in June 2009 in a report by the International Organization of Securities Commissions (OICU-IOSCO). Based in Madrid, Spain and founded in 1983, this is the international body that brings together the world's securities regulators and is recognised as the global standard setter for the securities sector.

Working to a Memorandum of Understanding produced in May 2002, it brings together the regulatory authorities of its 129 members, including the UK's Financial Conduct Authority. The European Commission is an associate member, although its European Securities and Markets Authority is a member of the IOSCO Board, as is the UK's FCA.

It has to be said, therefore, that the AIFMD is the product of an international endeavour, incorporated into UK law as the Alternative Investment Fund Managers Regulations 2013, implementing Directive 2011/61/EU, and Regulation (EU) No 231/2013 supplementing AIFMD, as well as other EU Regulations.

Post-Brexit, the law has been given the status of "Retained Law", amended to bring it into conformity with UK independence by the European Union (Withdrawal) Act 2018, to emerge with a modified title as: The Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019.

The new format keeps the essence of the original laws, but enables it to operate effectively in the new regulatory environment "arising from the withdrawal of the United Kingdom from the European Union", removing the requirement of the FCA to report to the European Securities and Markets Authority.

With that, there is absolutely no question of the law being removed from the statute book. But, since the revised Regulations make the EU links very clear, one presumes that these – together with other financial regulations – will be candidates for Johnson's "Operation Bleach".

However, no amount of cosmetic manipulation will change the fact that this law is a permanent feature of the UK's statute book and, doubtless, it will be updated in accordance with IOSCO recommendations, to keep the UK in line with international norms – alongside the EU which will be doing the same thing.

What the likes of Hannan clearly don't realise is that, with or without the EU, we would have adopted a version of this law anyway. As the House of Lords European Union Committee reported in February 2015:
… it is likely that the UK would have implemented the vast bulk of the financial sector regulatory framework had it acted unilaterally, not least because it was closely engaged in the development of the international standards from which much EU legislation derives.
It maybe the case, though, that there is the case for divergences on other laws. Hannan also mentions the Temporary Workers’ Directive, the REACH Directive, the End of Life Vehicles Directive, the droit de suite rules and other regulations that hurt London’s fine arts market, chunks of MiFID II, GDPR, and the bans on GM.

Financial regulation apart, which is here to stay, the UK has already committed to a "UK REACH", which is likely to cause serious damage to the UK's chemical industry, requiring it to adopt parallel regulatory regimes so that it can continue its lucrative exports to the EU.

There may be a case for changes to the Temporary Workers’ Directive, although that might get us into trouble with the EU's LPF requirements, but it is unlikely that the End of Life Vehicles Directive will be significantly changed. The latter remains on the statute book.

Interestingly, the Artists Resale Right regulations of 2006, implementing the EU's droit de suite rules, also remain, and the indications are that they will not be changed, as they implement (in part) the Berne Convention for the Protection of Literary and Artistic Works, as amended in 1979.

Ironically, under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement), even those not party to the Berne Convention must comply with its substantive law provisions, so the "double coffin lid" lives to haunt the British government.

One way or the other, we are a long way from seeing the last of EU legal influences. Airbrushing the label out of existence is something of a forlorn endeavour.

Also published on Turbulent Times.

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