Theresa May sets out aspirations for Brexit deal

Posted in UK and EU legal framework WTO and international trade

Theresa May has delivered an important speech in relation to the ongoing Brexit negotiations.

In recent weeks there have been various calls from politicians within the EU and EU Member States for the UK to clarify its position in the negotiations. Building on her earlier Mansion House and Florence speeches, the Prime Minster aimed to expand on future economic relations between the UK and the EU. The Prime Minister also made clear that although the UK did not agree to the Commission’s first draft of the withdrawal treaty, it remained committed to what was agreed in December.

The main thrust of the speech was a plea to look beyond existing precedents and aim for a new bespoke deal, while acknowledging that, inevitably, neither side would get everything that it wanted. In doing so, she effectively sought to reject the option of an off-the-shelf agreement such as a ‘Norway’ or ‘Canada’ model. 

Before addressing the UK’s substantive aspirations, Theresa May set out a series of tests which any deal on Brexit must meet. The deal:

  • must respect the referendum result;
  • must not break down;
  • must protect jobs and security;
  • must be "consistent with the kind of country we want to be" - modern, outward-looking and tolerant; and
  • must bring the country together, which includes strengthening the union within the UK.

The Prime Minister was, however, less clear as to what would happen should the above tests come into conflict.

Turning to economic relations, the Prime Minister accepted that the UK’s access to the Single Market will be less than now, but nevertheless urged the parties to strive for the broadest and deepest possible partnership.

Further, she stressed that the new trading relationship must be underpinned by five principles:

  1. There must be “reciprocal and binding commitments to ensure fair and open competition”.
  2. There must be “an arbitration mechanism” that is completely independent.
  3. There will have to be an ongoing dialogue and means of consultation.
  4. There will have to be an agreement on data protection.
  5. The EU and the UK must maintain the links between their people.

With regard to goods, the Prime Minister proposed that in order to ensure the trade is as frictionless as possible, there should be no tariffs or quotas and regulatory standards should remain “substantially similar”. To achieve this, in her view, UK law need not be identical to EU law, but should achieve the same outcomes – a point on which EU agreement seems doubtful at this stage. Nevertheless the Prime Minister conceded that for that trade to be as frictionless as possible, this would inevitably constrain the UK’s ability to lower standards for industrial goods – although she stressed that this would not be something the UK would want to do in any event.

In addition, Theresa May stated a desire to explore if the UK can remain part of EU agencies relating to medicines, chemical and the aerospace industries, perhaps on the basis of associated membership – although this may be difficult to reconcile with the Prime Minister’s statement that the jurisdiction of the CJEU over the UK would end post-Brexit, her reasoning being that the “ultimate arbiter of disputes about our future partnership cannot be the court of either party”.

In relation to services, the Prime Minister acknowledged that market access might be different post-Brexit, but urged that new barriers should only arise where absolutely necessary. With regard to financial services in particular, the Prime Minister previewed a speech by the Chancellor which will set out how financial services should be part of a deep and comprehensive partnership.

Whether the Prime Minister’s objectives can be achieved, will only become apparent as negotiations progress.

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