Thread by @askquantum

A brexit supporter on Quora asked me to explain something I had written about trade law, with a question about a subject that I know confuses a lot of people and makes them think the EU is applying different rules to the UK than to its other trade partners.

Fair play, I thought. So I wrote this answer, which I thought was worth reproducing as a thread (with some further additions).

We have the status of a 3rd country to the EU exactly the same as the USA - except the USA has a large number of sector-specific trade agreements with the EU that we do not.

This is from the EU’s trade portal.
“The European Union and the United States have the largest bilateral trade and investment relationship and enjoy the most integrated economic relationship in the world.”

“Although overtaken by China in 2021 as the largest EU import source for goods, the US remains the EU’s largest trade and investment partner by far.”
policy.trade.ec.europa.eu/eu-trade-relat…

The issue isn't the nature of the goods, which haven't changed - it's the UK treaty membership and laws that determine what is recognised as equivalent or not that have changed.
en.m.wikipedia.org/wiki/Equivalen…

In the sectors where those trade agreements exist the EU and USA recognise each other’s standards as equivalent by law, meaning that no checks or limited checks are required. We don't have those sector trade deals.

The USA and EU essentially guarantee not to import goods which don't meet those standards so they can't be re-exported to the other. This doesn't apply to US food, which is not regarded as equivalent and the main reason there is no full FTA between the USA and EU.

The EU has taken the idea of equivalence even further to create the Single Market, removing all barriers to free movement because the law in each member state on food safety, chemical safety, consumer protection etc. is equivalent.
europarl.europa.eu/factsheets/en/…

The UK doesn't want legal equivalence because “sovereignty, innit". We can now choose to import shoddy goods from anywhere and there is no way apart from border inspection to make sure they don't enter the EU.

In particular, we currently have no import checks (because of economic damage), so we can't provide any guarantee to the EU that our exports are safe and meet our own standards if those goods are re-exported. ft.com/content/7a1745…

In some cases they never were up to EU standards - shellfish, for example. We previously shipped our shellfish, mostly destined for EU restaurants, to cleaning facilities in the EU. Now we can't because those shellfish don't pass the phytosanitary checks at our new border.

The EU is doing what it MUST do by international treaty and WTO law - applying exactly the same rules to everyone based on their legal treaty agreements with the EU. It's the same with services. Many services are regulated in each country.

They can be traded anywhere within the EU because each state has adopted the same regulations and any legal issues have a route for resolution under the same laws in each country.

The UK may now choose to no longer have equivalent laws to the EU, but the EU isn't going to check if we have if we're not prepared to legally guarantee equivalence.

The EU isn't going to treat us differently to other 3rd countries that don't have equivalent laws by agreement, so UK services businesses like banks and insurers can't sell those services without having a legal entity fulfilling all of the EU requirements based in the EU.

That accounts for the over £1.2Tn in financial assets that left the UK's financial sector to the EU since Brexit. So the problem with Brexit is what I've known it is from the beginning - the law and the principle of equivalence. europarl.europa.eu/thinktank/en/d…

If the UK seriously wants the ability to do its own thing without treaties that prove equivalence then its existing export trade that really only works with equivalence is going to rapidly decline, because that's how the more sophisticated trade agreements work.

What is that trade?

The UK's biggest goods exports - vehicles, aerospace/turbo jets and pharmaceuticals, as well as food - are all heavily regulated, safety critical industries across the world, and certainly in the countries that can afford to buy them.

To be sold in other markets these products must be produced to and approved to the standards used in those markets. Certification to a UK standard, even if identical, is useless if there is no trade treaty stating that the standards in both countries are legally equivalent.

This increases costs for UK manufacturers and makes foreign manufacturers less likely to get their products approved for the UK market. All goods must be shipped with the correct documentation to verify their provenance and quality, something the UK has never got used to.

This creates delays and risks of non-delivery. All of this is added cost that disadvantages UK exporters and makes them uncompetitive compared to EU businesses selling into the internal market.

It also makes them uncompetitive compared to EU exporters selling into other markets like the USA with sector-specific equivalence treaties. “Total sovereignty” has a REAL WORLD cost to the UK consumer. The end.