The U.K. and EU's Brexit argument is worsening, with regulatory freedom being a core issue.
Good morning. David Meyer here in Berlin, filling in for Alan.
Was Brexit worth it? There’s no definitive answer to that question yet, less than eight months into the U.K.’s divorce from the European Union, but we are nonetheless at an illustrative juncture.
In the yes-it-was-worth-it corner: The hope of slashing red tape. “For the first time in a generation, we are free to implement rules that put the U.K. first,” said David Frost, the lead Brexit negotiator (and not the Nixon interrogator) this morning as the government unveiled a consultation on seizing “our new opportunities as an independent nation.”
At this early stage, the U.K.’s rulebook is still aligned with that of the EU. Divergence was always one of the main arguments for Brexit, and here’s how the government wants to make that happen: regulatory “sandboxes” that lift some rules as new products are tested in a real-world setting; mandatory reviews of regulations after two rather than five years; a duty on regulators to “promote innovation and competition”; and a shift away from the EU’s precautionary approach, so that “regulation is reset to focus on outcomes, not process, and be proportionate to the issues and impacts on businesses and people.”
It remains to be seen what this would mean in practice, but these are nonetheless significant proposals with obvious attractions for business. However, let’s now look at the other corner, because the impossible dilemma posed by Brexit—the standoff over customs checks between Northern Ireland and the rest of the U.K.—is back on the agenda, big-time.
The British government is now trying to rewrite the Northern Ireland protocol, an essential part of the Brexit withdrawal agreement that says there must be no impedance to the free movement of goods between Northern Ireland (which did not vote for Brexit) and the Republic of Ireland, the EU member that it borders—the aim is to preserve peace in the province by allowing people there to continue living a sort of hybrid British-Irish life.
This agreement is one of the two reasons why border checks are now supposed to take place in the Irish Sea—a mechanism that is causing trade disruption and, in bad news for peace, infuriating unionists who don’t want Northern Ireland separated in any way from the rest of the U.K. The other reason is the British government’s insistence on avoiding regulatory alignment with the EU; this is what makes the checks necessary in the first place.
The dilemma has been apparent for years, but here’s Frost on the U.K.’s demands: “We cannot go on as we are.” And Business Secretary Kwasi Kwarteng: “A deal is a deal but it wasn’t something that was going to last forever.” Reminder: Frost himself negotiated the protocol less than two years ago, and the government made it part of British law just last year.
Unsurprisingly, the EU’s response to this display of bad faith has not been positive. EU Vice-President Maroš Šefčovič: “We are ready to continue to seek creative solutions, within the framework of the protocol, in the interest of all communities in Northern Ireland. However, we will not agree to a renegotiation of the protocol.” Now the EU is planning to formally detail the U.K.’s breaches of the protocol, an escalation that could see the argument head to the EU’s highest court.
The Brexit circle remains unsquared, to say the least. More news below.
David Meyer
@superglaze
david.meyer@fortune.com
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This edition of CEO Daily was edited by David Meyer.
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