Signing up to the EU’s common rule book would harm British consumers

Signing up to the EU’s common rule book would harm British consumers

The so called ‘common rule book’ is shorthand for a vast body of EU technical regulations built up over a span of over 40 years.

These rules represent hundreds of thousands of hours of detailed and often tedious discussion between business groups and the EU Commission before they are formally adopted at political level. The rule book enables trade to take place within the Single European Market on a level playing field between commercial competitors without the added risk of technical – or non-tariff – barriers being introduced by an individual Member State as protectionist measures to safeguard domestic interests.

In theory, this arrangement has served the political elites in some Member States quite well because it appears to satisfy need and facilitate trade within the EU. But the system is driven by inputs from sectoral trade groups, and the EU Commission acts as unofficial interpreter of the intent behind legislation to clarify misunderstandings – and in cases of serious dispute, the referee is the European Court of Justice.

When expedient, politicians periodically promise a ‘bonfire of regulations’ to assuage demands for change, often from smaller businesses having to comply with bewildering rules, and business groups are asked for examples of regulations which should be removed from the rule book. This process generally yields scant results, mainly because trade bodies funded by big business backed adoption by the EU in the first place and have the means to comply.

More often than not, the ‘simplification’ process then grinds to a halt from lack of evidence; or at best a few minor changes take place when the time comes for revision by the EU’s committee system.

The process of serious reform tends to be glacially slow, particularly in the agricultural sector because the vested interests of growers inevitably conspire against anything approaching rapid change. Why would a small farmer want to modernise if tradition and tiny land holdings dictate otherwise ? Besides, the political fallout from anyone championing serious change would be suicidal.

In a nutshell, scope for reform is limited; and in any case, the EU’s common rule book for agriculture is often Byzantine in its complexity and many sub-sectors within it are skewed in favour of maintaining hidden subsidies to producers.

The EU’s insistence that the UK sign up to the common rule book is entirely political in essence and often ignores the benefits of market forces tending to drive inefficient producers from the market place.

If the UK signs up to the common rule book, it would mean that UK producers and traders would have to continue to abide by EU rules for goods put on the UK domestic market even though they had the means and know-how to provide consumers with greater value for money. In effect, the EU rule book would continue to be an imposed instrument for subsidising their less efficient EU competitors.

Although many Third Countries pursue similarly restrictive policies for sound political reasons, adherence to the EU’s common rule book – over which the UK would have no say, post-Brexit – would restrict the ability of UK negotiators from being able to pressurise potential Third Country suppliers to free up their markets for the benefit of UK exporters.

Take, for example, UK market demand for reduced alcohol wine. US producers make use of ‘spinning cone’ technology to remove alcohol from wine, which is then put up for sale on the domestic market. Although the use of this technology is permitted in the EU for experimental purposes only, sale of products made with it is effectively banned from the Single European Market because it would affect market share for small producers with no access to the technology – i.e. in this case, small EU producers have ensured that the common rule book works in their favour by not including spinning cone technology for mainstream production.

A further example involves the production of sparkling wine. Complex EU rules protect the interests of EU sparkling wine producers: they act as a hidden subsidy by banning the shipment of bulk still wine across external borders for sparkling in the EU.

If the UK were bound by the common rule book after Brexit, traders would continue to be banned from importing still wine from Australia and elsewhere for sparkling in the UK to the detriment of consumers who might want a cheaper alternative to Prosecco.

There are many other examples of this kind of hidden subsidy within the common rule book. Together, they are hugely beneficial to the European producer; but they help isolate inefficient producers from market forces which would otherwise drive greater efficiencies.

On a related matter, the full impact of EU environmental legislation has yet to be felt, but in all probability, by being bound to the common rule book, the UK will inevitably shackle businesses to a tranche of bureaucratic EU regulations despite equally effective, but cheaper, home-grown ways of doing things.

Although the common rule book governing agriculture is driven by consensus, in practice it is an elaborate mechanism for protecting the interests of producers and is a permanent brake on the entrepreneurial instincts of those who see new ways of giving consumers greater value for money.

But is the EU agricultural sector ever likely to undergo serious reform and remove all subsidy within a short time frame, like New Zealand did a few years ago? No, because of political constraints and the knock-on effects on unemployment in some Member States will cause upheaval.

If the UK Government opts to remain shackled to the rule book for a limited period of time, will the EU ever willingly let us off the hook? No, because to do so would open the flood gates to cheaper competing agricultural products from Third Countries with a more efficient or cheaper means of production.

Who are likely to be the biggest losers? Entrepreneurs, small and medium-sized enterprises… and the UK consumer.