The UK/EU Common Understanding: A big step forward

Anyone who has read a recent opinion poll, or spent any time canvassing voters, knows that the vast majority of voters – including strong supporters of Brexit – think that the UK’s current arrangements with the EU are a mess. The majority of voters are right.

The blame for the mess lies with three choices made by the Johnson government.

The first choice it made was to negotiate a set of arrangements, in the Ireland/Northern Ireland Protocol to the Withdrawal Agreement (confusingly re-badged in 2023 as the “Windsor Framework”, but I shall call it “the Protocol”). Articles 5 to 10 of the Protocol in effect mean that Northern Ireland remains within the EU for a whole range of purposes, including such matters as tariffs charged on goods imported into Northern Ireland from outside the EU, VAT rules applicable to sale of goods in Northern Ireland, and EU rules on the production and sale of goods, including, importantly, rules on food production and safety (“sanitary and phytosanitary”, or “SPS”, rules, in the jargon). Article 12 of the Protocol also makes it clear that the Court of Justice of the EU retains its role as the ultimate interpreter of EU law as applied to Northern Ireland, and that EU law as applied to Northern Ireland remains supreme (a provision that the Johnson government implemented into UK domestic law via section 7A of the EU Withdrawal Act 2018). One interesting effect of those concessions is that, in a fact not many people are aware of on the eastern side of the Irish Sea, while during the UK’s 48-year membership of the EU UK courts only disapplied one Act of Parliament, in the four years since Brexit UK courts have, under the Protocol, disapplied significant parts of two Acts of Parliament, one being the Illegal Migration Act 2023 and the other being the Northern Ireland Troubles (Legacy and Reconciliation) Act 2023.

The Johnson government’s choice to agree these provisions in relation to Northern Ireland was not a bad choice. Far from it: those provisions were necessary and inevitable to preserve the open border between Northern Ireland and Ireland and thus avoid serious and possibly fatal damage to the peace process.

The second choice that the Johnson government made was worse. It was to negotiate a Trade and Cooperation Agreement (TCA) governing other aspects of the relationship between the UK and the EU, and in particular trade, that determinedly sought to avoid any remaining application of any kind of EU law to the rest of the UK. In many areas, that meant adoption of what can accurately be called the miser’s approach to sovereignty: that it is to be jealously hoarded, and never used to enter into types of cooperation that actually enable the UK better to achieve security and prosperity at the price of giving up some, often theoretical, freedom of action.

That miser’s approach to the TCA has generated a number of serious problems for British exporters and British citizens, which I will come to in a moment. But one point worth noting straight away is that the good choice made by the Johnson government about the Protocol and the bad choice it made about the TCA pulled in different directions. In presentational terms, that problem became immediately clear: while the Johnson government was keen to explain to Northern Ireland voters the benefits of Northern Ireland’s ability to export goods, and in particular food products, to the EU without trading barriers, it was also having to explain in Great Britain why it was right not to have any comparable arrangements even at the price of large barriers to British exports to the EU. But the contradiction between the Protocol and the TCA approach is not just presentational: it led and still leads to serious problems of substance across the board. Despite the freedom from EU regulatory law theoretically offered by the TCA, the Protocol has generally meant that any serious departure from EU rules in the large areas of policy covered by that Protocol (a) could only apply in Great Britain and (b) would mean that there would be very different rules in Northern Ireland and in Great Britain, leading to major barriers to trade between the two. Since all UK governments (including the Johnson government and its successors) have rightly taken the view that barriers to trade, and serious tax and regulatory differences, between Great Britain and Northern Ireland are a bad idea, the effect has been to make it hard even for governments desperate to take advantage of “Brexit freedoms” to make major changes in the rules in areas such as food production and safety (and many others).

The third, and even worse, choice made by the Johnson government was to poison relationships with the EU, and to paralyse any progress on the numerous areas where the TCA provides for cooperation to be worked out over time, by threatening to break the promises it had made in the Protocol. Although the Sunak government in the end abandoned those threats in return for some minor concessions on the detailed implementation of the Protocol (as well as its re-badging with the name of a solidly British royal castle), trust has inevitably taken some time to restore.

That, then, is the mess that Labour inherited. Its approach has been to seek to improve the TCA. Though that approach is not popular with some passionate Remainers, it was and is the only realistic choice once the option of seeking to reverse Brexit and applying to rejoin is put on one side. (For what it is worth, my own view is that the majority that regards Brexit as a mistake is not a majority in favour of “rejoin”, given that a large part of that majority wants, at least for the moment, never to be bothered by the issue of EU membership again.)

Alternatives to “rejoin” that are sometimes thrown around, such as “rejoin the single market” or “rejoin the customs union” are simply not realistic. In practice such arrangements would be even harder to negotiate than membership of the EU. As for the single market, there is no precedent for having a country of the size of the United Kingdom being part of the single market but not the EU, and the existing “membership of the single market only” arrangement (the European Economic Area) works only because the three countries covered by it are all small and have very specialised economies and only a limited range of important interests. Moreover, the United Kingdom could not let huge elements of its economic and social policy, on matters ranging from tax to immigration to planning to employment and discrimination law, be determined without it having any vote: and any attempt to persuade UK voters that “single market membership” would not affect those areas and was not in effect just a limp form of EU membership would suffer from the significant defect of being obviously untrue. As for a customs union, that would again be without precedent (leaving aside the obviously irrelevant example of Monaco and the dysfunctional and incomplete example of Turkey), and though it would not have the enormous ramifications for domestic policy that “single market membership” would have, it would nonetheless leave the UK without any vote in an area whose policy importance, in the age of Trump, has become startlingly obvious.

How, then, to improve the TCA? The obvious and correct focus of the incoming Labour government was on major gaps left by the Johnson government.

The first major gap is defence, security, and foreign policy cooperation. Almost unbelievably – in a decision that looks even more blinkered now than it did at the time – the Johnson government was so hostile to the EU’s role in foreign policy and defence role that it refused to contemplate including anything in the TCA that dealt with defence and foreign policy cooperation.

The Common Understanding is a major step towards clearing up that mess. It annexes a legally binding text, namely the new Security and Defence Partnership, which creates a framework for regular meetings and dialogue leading to cooperation on matters ranging from defence industries to common positions on major foreign policy to cooperation in dealing with the major threats to security that the EU and UK now face in matters ranging from cyberattacks to maritime piracy to foreign interference in European democracies. Regular meetings and dialogue are not themselves critical: but they at least ensure that each side is aware of what the other is doing, and create pressure to generate useful outcomes.

Energy cooperation is another area where the TCA was hopelessly inadequate. There is huge scope for the UK and EU to improve their energy efficiency and resilience by working together. But while the UK is outside common rules and frameworks dealing, for example, with the way in which electricity is traded between European countries, or infrastructure planning, and lies outside the EU emissions trading scheme and the EU carbon border adjustment mechanism, energy efficiency and resilience both suffer, with large impacts on British electricity prices and energy security. The Common Understanding sets out a framework for UK participation in EU energy rules and frameworks and the prospect of lower energy prices and greater security.

As already touched on, another area where the TCA left a huge gap, and has led to serious damage to British exporters, is in the area of rules of food and farming standards or SPS rules. As explained above, one side-effect of the Protocol has been that SPS rules in Great Britain have not changed much since Brexit (and, in any event, cutting back on such rules is generally very unpopular). The result has been that British exporters of quality food are still producing in accordance with (essentially) EU rules but that, despite that, British exporters, and in particular exporters of fresh food and fish products, find it difficult or impossible to export to the EU: the “not for sale in the EU” labels now familiar on packets of food across the UK are a daily reminder of this problem. On the other hand, successive UK governments have shied away from imposing checks and controls on food imports from the EU because of worries about increasing the cost and decreasing the availability of food imports from the EU.

Little about that situation is remotely satisfactory. In its place, the Common Understanding sets out a framework for removing the vast majority of checks and controls on British food exports to the EU.

A key feature of the frameworks for both energy and SPS cooperation is “dynamic alignment” between British and EU rules (Northern Ireland rules already being aligned). What “dynamic alignment” essentially means is that British rules will have to move with EU rules in those areas as EU rules change. The EU’s insistence on that reflects the reality that British producers can’t expect the same treatment in the EU as producers from EU countries if they don’t play by the same rules and – equally importantly – if those rules aren’t interpreted the same way and aren’t equally well-enforced.

There is no doubt that “dynamic alignment” involves giving up some theoretical sovereignty. But as I have already explained, this is a theoretical point rather than a real one. The reality is that British rules in those areas remain very similar to those of the EU, and, because high standards are popular, because British producers who do still manage to export to the EU have to meet those standards anyway, and because of Northern Ireland, are likely to remain very similar. The constraints that already bind rules in Great Britain to EU rules in this area may not be formal legal constraints, but they are strong and tight nonetheless. So it is hard to see much that is really lost by accepting the formal legal constraint, while the gains are obvious and important, particularly (in the area of SPS) for smaller food producers and (in the area of energy) for all electricity consumers.

Further, the EU has agreed in relation that the UK government should have a right to be consulted about new SPS rules and to be involved at an early stage in decisions about them: a right that it does not have now despite the fact that rules in Great Britain are already in reality tied to EU ones.

Some ideological Brexiters complain that there will be a role for the Court of Justice of the EU in interpreting these rules, and that that interpretation will bind the UK. That is a fair point, though it is important to note that the EU has agreed that disputes between the EU and UK about the enforcement of these rules will be a matter for independent arbitration, with the Court of Justice having only a referral role when questions of pure EU law come up. In an ideal world, a better mechanism for resolving disputes of this kind would be to use the EFTA Court (which already rules on disputes involving EEA members, and is regarded as an acceptable mechanism by the EU): but that mechanism would be complicated to implement, and the “arbitration + CJEU” mechanism is the one now found in several agreements between the EU and other European countries, including Switzerland. In the end the real question is whether the possibility of an unwelcome interpretation by the Court of Justice of the EU of the essentially technical rules in these areas is a good enough reason for not taking the considerable benefits of fuller participation in EU food and energy markets. My view, and I suspect that of most voters when the choice is explained to them, is that it is not.

On fisheries, there has been some criticism of the carry-over of existing arrangements for access to each others’ waters to 2038. But it is hard for supporters of the Johnson government to complain about the extension of arrangements which that government agreed: particularly as under the Common Understanding the UK fishing industry will now obtain, on a permanent basis, far better access to the EU market for its products.

On youth mobility, the Common Understanding commits both the EU and UK to work towards a common youth experience scheme and to the UK being associated with Erasmus+. The details of this – including such sensitive matters as whether EU students should pay international fees for study at UK universities need to be worked out, but the EU has, importantly, recognised that overall numbers have to be acceptable to both sides. There is also a commitment to support cultural exchange. For better or worse, none of this is close to free movement: visas will need to be obtained, the period of study, work, or travel will be time-limited, and it will bring no entitlement to benefits or housing.

Apart from the Security and Defence Partnership, and an agreement on cooperation in competition policy that was entered into at the same time, the Common Understanding does not itself create legally binding text. It is best understood as a “heads of terms” of the kind typically reached during a complex negotiation: once the parties have agreed the outlines of the deal that they want, they can then get down to the business of detailed drafting. In theory either side can still walk away. But the reality in both commercial and international negotiations is that “heads of terms” agreements embody a commitment to work in good faith to finalise the details. Business can therefore sensibly plan on the basis that agreements along the lines set out will be reached within a reasonable time frame.

What about the future? The first step will be to implement the Common Understanding. There is also considerable scope, now that the poison of the Johnson years has left the system, to use existing TCA mechanisms to achieve real improvements in such mundane but important matters as paperwork at the borders and recognition of professional qualifications. More widely, the EU has now accepted (as many of us were always clear that it would, in spite of occasional dogmatic statements to the contrary) that participation in some aspects of the single market can be offered to third countries such as the UK, as long as that is in EU interests. That is a precedent that may over time bear further fruit. Moreover, the United Kingdom has now abandoned the dream (or nightmare) that it can hope to avoid deep entanglement in the arrangements by which the rest of our continent chooses to govern itself: a vision that was always going to fail given the reality of close economic, business, and personal links, the commonality of economic and political strategic interests, and (not least) the deep, complex, and sensitive relationships between the islands of Great Britain and Ireland and the reality, grounded in both economics and history, of Ireland’s fundamental commitment to the EU.

None of this will be enough for those who believe that the UK should immediately rejoin the EU. Brexit has happened, and this deal does not reverse, or even begin to reverse, that. But it does provide a framework for addressing some of the serious gaps in the arrangements with the EU that Labour inherited from the Conservative governments that preceded it, as well as pointing the way to further cooperation as and when both sides are ready for it. The economic and security benefits it will bring are very real. Those Conservative and Reform politicians who denounce, and promise to reverse, the Common Understanding and the agreements to come will, by 2029, have to explain to UK businesses and voters why they should sacrifice those benefits on the altar of a dogmatic view of Brexit that bears little relationship to the arguments that Leave deployed during the 2016 referendum, appears pretty odd now, and by 2029 will appear very odd indeed.

George Peretz KC is Chair of the Society of Labour Lawyers, and a barrister specialising in public, regulatory, trade, and EU law.