
One of
the particularly prevalent myths in relation to the EU is the
wrong-headed belief that because we already have "regulatory
convergence" or "equivalence" with the EU (having adopted and
implemented its acquis), concluding a free trade agreement will be a simple matter.
This is precisely the error made by Liam Fox
who argues that: "The free trade agreement
that we will have to do with the European Union should be one of the
easiest in human history". "We are", he says, "already beginning with
zero tariffs, and we are already beginning at the point of maximal
regulatory equivalence, as it is called. In other words, our rules and
our laws are exactly the same".
Tariffs, as we have said many times, are not significant. But non-tariff
barriers, mainly (but not entirely) expressed in terms of regulatory
differences, are a major concern when concluding free trade agreements.
Under normal circumstances, "regulatory equivalence" goes a long way to
reducing them. But it does not eliminate them – especially in the
context of agreements with the EU.
Underlying the myth that regulatory convergence/equivalence gets you
through the door – as is so often the case with EU related issues – is a
fundamental misunderstanding of the way the EU works, and how it
organises its affairs.
The root is the failure to appreciate the difference in the control
regimes as between member states and external actors, such as third
countries seeking to export goods to the territories of EU Member
States.
The crucial difference is not so much in the controls applied, but in where
the controls are applied. For EU Member States, border controls have
been abolished, so control is exercised internally – often at the point
of production.
Looking at the meat industry gives as good an illustration as any of
this system in practice, not least because this sector has the best
developed example of Union controls and their enforcement.
For those wishing to market fresh meat, the system starts way back up
the food chain, with extensive controls over animal feed, on rearing
systems, on the pesticides that can be applied and the veterinary
medicines used.
But not only are the controls specified, the methods of enforcement are
set out, and the "competent authorities" are required to report
periodically to Commission, giving evident of their enforcement
activities.
And in the case of food products, the Commission has its own "police",
in the form of inspectors employed by its Food and Veterinary Office.
These officials can carry out inspections of any national systems, with
complete access to records, personnel and premises, following which they
produce reports setting out "recommendations" which national
authorities are more or less obliged to implement.
Once animals reach the slaughterhouse, a new raft of controls apply,
including prior approval and licensing of the premises and on-site
supervision by veterinary officials. There is 100 percent ante-mortem
inspection of animals and post-mortem inspection of all carcases,
together with a mandatory test schedule for pesticides and veterinary
medicine residues.
Temperatures of the meat are rigorously monitored and controlled
throughout transport and storage. Carcase meat can only be boned out and
jointed at approved cutting premises, again under veterinary
supervision, and cold storage plants must be licensed and approved.
Through the system, copious records are kept, and then held by the
national authorities, the details processed and routinely submitted to
the Commission in Brussels. All meat has to be marked and labelled so as
to identify its origins and the establishments in which it was
processed.
But, because of this phenomenally complex (and intrusive) internal
system of control, there is no requirement for border controls. These
have been abolished, allowing free movement of goods throughout the
Union.
And, as a final longstop, if any national authority fails in its duties
to enforce EU law, the Commission can intervene, issuing warning
letters, and taking infringement proceedings, up to and including taking
the Member State to the ECJ, which has the power to impose draconian
fines.
Now, when it comes to "third countries" exporting meat to the EU, in the
interests of a level playing field, the controls imposed must be at
least as rigorous as those applied to Union businesses.
However, there is a big difference. The Commission has no jurisdiction
over the internal organisation and the enforcement of controls within
the sovereign territories of third countries. It cannot take the
governments to the ECJ and they cannot be fined for non-compliance with
EU law.
Nevertheless, the EU will require as conditions for entry, compliance
with EU production regulations, licensing of establishments and much
more, in a graduated hierarchy of controls. But, to compensate for the
inherent limitations of its power within the third country territories,
the EU also imposes border controls.
When we thus turn to Article 229 of Regulation (EU) 2016/429, we see a five-tier control system in place, carried over from legislation already in force.
Firstly, goods must come from a country officially listed as permitted
to export the relevant categories; secondly they must come from
establishments which are approved and listed; thirdly, they must comply
with all relevant animal health requirements laid down by the Union; and
fourthly they must be accompanied by animal health certificates and by
other declarations and documents as required.
Finally, the consignments must be presented to a Border Inspection Post
(BIP) – now called Border Control Post (BCP) – where they must pass
inspection. Only when the fees due are paid and the "Common Veterinary
Entry Documents" are endorsed can the goods be presented for customs
clearance.
Now the point here is that regulatory convergence is implicit in the
country listing, in the approval of establishments and in complying with
the relevant animal health requirements. But convergence is not an
either/or requirement.
The Member State cannot argue that, because it is convergent, it can be
exempted from other controls – particularly border controls. Put simply,
convergence is the "starter for ten" which gets your products as far as
the border. Once there, the documentary and physical checks must be
carried out.
Essentially, what it amounts to is that, inside the European Union,
members "enjoy" a system of internal controls, which allows free
movement of goods throughout the Union without border checks.
For those operating outside the Union, conformity with EU rules is still
required, but additional checks are applied before the goods can pass
through the external border to enjoy free circulation within the Union.
Regulatory convergence/equivalence is a necessary but not sufficient
condition for entry.
And while we have used fresh meat for our regulatory example, similarly
complex arrangements apply in other sectors, to other goods. And in all
cases, border checks will apply. Regulatory convergence/equivalence is
not a "get out of jail free" card. It is merely a "starter for ten".