Fashion Roundtable Press Release on Theresa May's Mansion House Speech On Future EU – UK Relations
The Prime Minister`s March 2nd speech came at a time when the territorial integrity of the UK was brought into question following the EU`s no border proposal between the Republic of Ireland and Norther Ireland. The speech was a departure from earlier ones as it describes a future relationship built on a bilateral trade agreement which will ultimately impact all UK citizens. Mrs. May reaffirmed that she has agreed to the key principals of the withdrawal agreement although some questions remain regarding the proposal from the European Commission. One of those questions is the length of the transition period, which the UK would like to keep open while the EU has put a deadline of Dec 31, 2020. Another contentious issue is that of the Norther Irish border, for which the UK has not yet submitted a counter-proposal.
The transition period will be a short one providing barely enough time for businesses to learn how to maintain their competitiveness in a world full of borders, tariffs and regulatory requirements.
The speech goes onto to state that the UK is leaving the single market, something which we at Fashion Roundtable know from our survey, will be hard for our audience to hear, as 98% of our survey respondents were keen to remain within the European single market.
"We are leaving the single market. Life is going to be different. In certain ways, our access to each other's markets will be less than it is now. How could the EU's structure of rights and obligations be sustained, if the UK - or any country - were allowed to enjoy all the benefits without all of the obligations?
So we need to strike a new balance. But we will not accept the rights of Canada and the obligations of Norway."
Leaving the single market but tariff free, quota free access
From 2021 onwards, the real era of Brexit will begin. As this new era is without an end date, the terms and conditions of operations and collaborations with other key markets, whether EU, NAFTA or ASEAN will be they to competitiveness for UK businesses and freelancers as well. The Prime Minister spoke of a bespoke trade deal that goes beyond CETA, the EU-Canada free trade agreement. She spoke about the need to ensure that "UK business can compete fairly in EU markets and vice versa" hinting perhaps not only at tariff-free trade but also at an agreement providing full access to each-other`s public procurement markets.
For fashion brands there is some assurance, that Theresa May appreciates that: "The EU is the UK's biggest market - and of course the UK is also a big market for the EU. And furthermore, we have a unique starting point, where on day one we both have the same laws and rules."
The ultimate goal of the UK Government is to create tariff-free access and strong regulatory harmonisation. The rule of the European Court of Justice (ECJ) will end in most areas, although in some cases where agreements is critical such as data protection legislations will continue to be aligned.
Mrs. May spoke out against weakening environmental, product standards and workers rights ensuring EU counterparts that the break and future trade deals with third countries (which Mrs. May hopes the UK will be able to retain the right to negotiate) will not result in declining product quality in the UK. This is a direct reference to a possible US-UK trade agreement in which the US may require the UK to lower certain standards to provide access for US products into the market.
Three Options for customs and a frictionless NI border
Mrs. May drafted three options on how she could imaging maintaining borderless trade in Ireland and with the EU as part a customs union. These included the introduction of a double customs system; one for EU products entering the UK and another one for third country products. She also called for the mutual recognition of trusted operator schemes (such as the AEO- authorized economic operator scheme in the EU) and called on both parties to utilize the latest technologies at border crossings thereby minimizing waiting times for exporters.
While these suggestions look good on paper; there are serious doubts if they could ever be implemented and function efficiently at border crossing where thousands of carriers cross with numerous products every day. In order to maintain control over the quality of goods arriving and to filter and identify counterfeits and prohibited items, all European countries have in place strict border control procedures. The EU will be very critical against potential openings into these customs and border protection practices.
The speech was relatively well-received in Brussels as it had elements of realism with regard to a future relationship, although at the same time there is awareness that the remaining months may not see much change in terms of negotiation dynamics. Therefore, the EU will continue to set thterms and discussions will follow regarding the details.
If Theresa May can deliver on maintaining regulations, on providing frictionless movement of goods and services between Europe, mainland UK and over to Northern Ireland and RoI, with legal and customs alignments, as well as partnerships on educational programmes, such as Horizon 2020 and Erasmus, then she has managed to steer between both Brexiteers, the DUP and her own Remain backbencher MPs, to potentially garner cross party support in the House of Commons, as well as being applauded for "clarity" by Michel Barnier, the EU's Chief Negotiator. Some MEPs in Brussels have already responded saying that these wishes are undeliverable from the EU, which is where our lobbying for the best interests of the fashion industry is imperative as we enter the vital negotiations stage.
Written and edited by Fashion Roundtable's CEO Tamara Cincik and Eszter Kantor our EU Politics Expert.
Note to Editors: Fashion Roundtable's Brexit paper will be released in the next few days, outlining Fashion Roundtable's position and asks, based on our series of Brexit focused roundtables and stakeholder survey.