BREXIT : COMPROMISE, FUDGE OR NO DEAL?

Months ago writes Arnold Pindar, I was told that the discussions on Brexit withdrawal would go right up to the wire and then agreement would be achieved between the EU 27 and the UK.

Having negotiated in Europe since 1977 this did not feel right to me. As a Department of Trade and Industry (now BEIS) civil servant, working at times almost weekly in Europe, negotiations have always developed from drafts of the planned Directive or Regulation, usually but not exclusively proposed by the European Commission. Although there were key issues of substance, the vast majority of the negotiations were at the detailed level. Hence, my unease how things would turn out.

However, I do remember when privatising a DTI information service where I, as the manager of the service was concerned about the details, my boss insisted that we deal only with the principles until we had a commitment from the company that was to take on the work.  He was right. Once we had agreement in principle, I was able to negotiate all the details to ensure that the service had the best chance of survival in the private sector.

Big Decisions First

Hence, I am coming around to the conclusion that it is essential to take the big decisions on Brexit before arguing the details. But my concerns are twofold:

  • Firstly, are we able to achieve a satisfactory top-level Brexit agreement that will maximise benefits and minimise losses?
  • Secondly, is it possible to handle the myriad of details without serious omissions and errors in a timely fashion as we leave the EU?

Understanding Cultural and Legal Differences

In negotiating internationally, it is necessary to understand the cultural and legal differences between our nation states. In the United Kingdom we look for compromise that as far as possible meets the needs of all interests. Taking the Germanic nations as an example, their culture looks on compromise as “fudge”. When you negotiate with Germany you need good data. If your data is superior to that supplied from the German side, they are more willing to accept your position than to come to a compromise agreement that has elements of both sets of data. Other European cultures then simply add to the complexity of negotiations from their cultural perspectives. (I am not qualified to comment on the added issues arising from the different legal structures in the nation states.) Therefore, there are immediate difficulties for these top-level negotiations between the 28 member states of the European Union.

Within the UK we have politicians and indeed the population as a whole holding very different views on a successful way forward on Brexit. Even at the top level, the issues are so highly technical and complex that decisions of principle are exceedingly difficult. This has resulted in huge difficulties for us to achieve the compromise solutions we normally favour to put forward to the EU27. So the danger of ‘no deal’ is a very real threat.

Consumer Catastrophe

Which? has just published a report Brexit no deal: A consumer catastrophe? I fully support their conclusion that:

“…a no deal situation would have severe consequences for consumers, even if comprehensive contingency planning could be achieved in time.”

I also support the Which? four tests which are essential for consumers in any exit deal. viz:

Which? four tests for a successful Brexit for consumers are whether it:

  • Limits the potential for price rises and increases in the cost of living.
  • Maintains or enhances the current high safety standards.
  • Maintains or enhances consumer choice of a high-quality range of products and services.
  • Supports consumers with a system that ensures their rights and access to redress.

It is, therefore, essential that the UK achieves a Brexit agreement. But will it be a UK understood compromise or a fudge? Whilst we define things differently to the Germanic nations, we in the UK do not like ‘fudge’ by our definition. For us the word represents an unsuccessful compromise where no one can live with the proposed solution. This appears to be where we are with the Chequers proposals. And yet to reach agreement in Brussels we are going to need to compromise further and potentially further fudge our position.

Mechanisms for Future Engagement

The second of Which?’s four tests highlights one specific point of detail resulting from the UK decision to leave the EU. Considerable trade will continue between the UK and the EU post Brexit and hence, businesses will need to meet EU laws and regulations to trade there. It makes no sense for safety regulations to diverge between the EU and the UK in the future. This results in non-tariff barriers to trade and additional costs for consumers. To maintain some influence on future safety and trade legislation it is essential that businesses maintain membership of EU trade bodies and that consumers maintain membership of EU consumer bodies including ANEC, the European Consumer Voice in Standardisation, where we have opportunities to influence related consumer law. As ANEC is fully funded from the public purse, the UK cannot continue in membership unless a mechanism for future engagement is agreed. My attempts to address this point with UK Government have resulted in silence or more recently a bland statement that our membership would be a good thing!

So are we looking at a situation where we have to negotiate a detailed set of regulations but no longer have the access to the institutions or processes necessary to negotiate the outcomes that consumers and industry need?

 

Cross Border Parcel Deliveries

On 12 April 2018 the European Council adopted rules on cross border parcel deliveries to boost e-commerce. During the drafting of the legislation, on behalf of ANEC (The European Consumer Voice in Standardisation), I provided the European Parliament with evidence of:

  • The lack of transparency around pricing
  • Damage to goods in transit
  • Problems relating to third party courier services
  • Poor communication
  • Irresponsible delivery

I later assisted the European Parliament in drafting amendments to the legislation to include these consumer requirements and ANEC helped the Parliament to maintain these amendments through to the adopted legislation against opposition from the European Commission.

These rules will greatly benefit consumers and increase consumer confidence in cross border purchases, especially but not only, in e-commerce transactions. They will provide information about different delivery options and delivery tariffs will be published on a website, which will help users choose the best rates. Increased transparency should help create competitive pressure. The new rules are expected to be of particular benefit to consumers and small retailers, who do not have the bargaining power to negotiate better rates.

This is an important success for consumers where we have influenced draft European legislation to ensure that consumer protection measures are adopted that would otherwise not have been included in the Regulation. Consumers should also be grateful to Lucy Anderson MEP, rapporteur for the legislation at the European Parliament, for championing our consumer interests and maintaining that support against opposition during the passage of the legislation through EU adoption procedures.

Brexit Postscript
This blog demonstrates that ANEC provides an effective mechanism for consumers to influence European legislation that is related to the organisation’s primary role of providing a consumer voice in European Standardisation. From the United Kingdom perspective, European Standards will continue to be important for UK consumers and British businesses in providing a high level of consumer protection, especially where businesses are exporting to the EU. UK consumer organisations are very keen to ensure that we maintain membership of ANEC and continue to have an influential role in the development of European Standardisation and related legislation.

Arnold Pindar
Chairman,
National Consumer Federation

Is Lift and Shift Enough?

Margot James an ex-Minister for consumer rights (how fast they come and go) got it about right when she said ‘when we leave the EU we will be leaving a system of consumer rights and protection..which sits very well with the needs of consumers in the United Kingdom.’ The House of Lords European Union Committee took her up on this to ask the question whether this will be the case post-Brexit? The Government says yes pointing to what was then called the Great Repeal Bill which “will preserve the relevant EU (consumer protection) law ….It will help ensure that UK consumers’ rights continue to be robust after we have left the EU”. This is the ‘Lift and Shift’ approach whereby we just take into our law a good and effective body of EU law that protects consumers well.

Good and Better

The UK can claim credit for helping create this body of law. Indeed in many cases UK law has gone beyond what was agreed at EU level. In some cases we were ahead of the game with laws we already enjoyed here inspiring later EU action. One simple example of ‘better in Britain’ quoted by Pete Moorey Head of Campaigns at Which? was that in Britain we can reject a product for up to 30 days if there is something wrong with it. Under that Directive at EU level, that is limited to 14 days”. As an example of how UK experience and expertise influenced EU law, Lewis Shand Smith the chief Exec of Ombudsman Services referred to what the report calls the ‘specific UK influence over the creation of the legislation introducing Alternative Dispute Resolution for consumer disputes”. Again, a proposed Directive on digital content draws heavily on the Consumer Rights Act passed here in 2015.

So that’s alright then?

Not really. The issue that worries consumer organisations and others like the Trading Standards people and national regulators like the Competition and Markets Authority is the maintenance of the infrastructure that unites and informs consumer protection action across all the markets of the EU. One example quoted of successful European-wide co-operation was the agreement by five leading EU car rental companies to introduce four improvements in their service addressing consumer problems like whether you need that extra (and bloody expensive) insurance. Standards organisations although standing outside the formal structures of the EU, aim to harmonise standards and so reduce non-tariff barriers to trade across the 34 member countries so we must keep a seat at that table. It would be a very good idea to maintain consumer safety and stay part of the food safety regulator as well as medicines and aviation agencies.

Is your NEB stuck at the border?

How do we stay up to date and in line with new regulatory ideas and actions after we leave the EU? What happens when UK standards conforming to the European ones clash with those of another trading partner eg the elephant on the block the USA with its chlorinated chickens and hormone-fed beef. What happens when our wonderfully named NEB (national enforcement body) e.g the CMA can no longer rely on the cross-border enforcement system established under the Consumer Protection Cooperation (CPC) Regulation?

No Guarantee

The Minister told the Committee that “the Government was keen to assure everybody that there will be no dilution (of consumer protection rights) on account of our leaving the EU.” The question that goes unanswered is how can we maintain access to the mechanisms that make it happen across the whole EU? Nothing is ‘absolutely guaranteeable’ (the Minister’s words) when it comes to the new reciprocal relationships. The bodies who need those relationships to develop policy and enforce the law are feeling the pinch with resources being squeezed already. How hard is life going to be post-Brexit? Certainly as the Financial Conduct Authority said, it will “involve some very hard choices”.

“Brexit: will consumers be protected?” by the European Union Committee of the House of Lords published 19 December 2017.  HL Paper 51

 

Brexit and Food Standards

Besides a backbone of food safety laws, the EU has some useful systems in place which help to keep our food safe. For example, the European Food Safety Authority advises on risk, there is a rapid alert process for sharing information on food problems and also some shared monitoring of food. For example, EU member states commit to check samples of many staples for pesticide residues.

If the UK remains part of these processes and continues to apply very similar food standards legislation, the challenge will come if the UK negotiates trade deals outside the EU. Other countries and trade blocks have built up their own legislation and systems, which may differ from ours in important respects. We would not want to see our standards weakened.

In 2000 I worked with consumer organisations, the UK government and EU Commission to establish the Transatlantic Consumers Dialogue. The idea was to give consumer organisations on both sides of the Atlantic a say in any EU-US trade negotiations. The TACD is still going strong and sets out some helpful principles for food in trade deals, for example:

  • Leave responsibility for food issues with food rather than trade experts
  • Keep and be guided by the precautionary principle (which leads us to err on the safe side)
  • Maintain monitoring, inspection and testing

It is even more vital now that consumer voices continue to be heard on UK food standards and trade issues. Besides consumer organisations and networks like the TACD being active, individual consumer representatives sit on many government committees. These committees are likely to have an increased role as more decisions are taken in the UK rather than the EU. NCF will be watching how the committee landscape develops, calling for full consumer representation, and offering networking opportunities to consumer members.

Ann Davison

Ann is a member of NCF’s food group and its communication committee. Ann established the Transatlantic Consumer Dialogue. She was awarded UK Woman of Europe 2000.

How does an EHIC work and do I need one now that we are leaving the EU?

What is an EHIC and how does it work?

The European Health Insurance Card (EHIC) is free and entitles you to free or reduced-cost medical treatment throughout the EU plus Iceland, Liechtenstein, Switzerland and Norway.  In effect, you will be treated as a resident of the country you are visiting.  Be aware that the EHIC applies only to treatment in state hospitals and you may still have to pay something towards the cost of treatment if the condition is serious, so it is important that you also have travel insurance with medical benefits.  Some insurers may even reduce or waive your excess if you have an EHIC.  In some countries, you may have to pay for treatment up-front and reclaim the cost upon your return to the UK.  Visit the NHS Choices website to find out what your EHIC covers in each participating country.

What should I do about an EHIC now?

It is likely to be some time before Britain exits the EU (in all likelihood, at least two years after Article 50 is triggered).  Until then (and perhaps for some time afterwards) EHICs will still be valid. If you plan to holiday in Europe and do not have an EHIC, then get one.  An EHIC has five-year validity, is available free of charge via the NHS website www.nhs.uk/ehic and normally takes no more than seven days to process. (Beware of any websites purporting to facilitate the provision of EHICs for a fee).  If you already have an EHIC card, make sure that it is up to date. An EHIC has a five-year validity and you can find the expiry date on the bottom right of the card.

In new Brexit trade deals will we end up paying more or less for our imported goods and services?

There are arguments over how protectionist the current EU trade deals are outside the EU so that goods coming in from outside the EU are much more expensive than they need be. The EU say that the average tariff they put on in trade deals comes to between 2% and 3%. However a few goods like diary are heavily protected not just by the EU but generally by most countries.

It seems from EU tariff data that Brazilian potatoes have a 10% tariff while milk is a complex set of figures relating to fat content and organic or non-organic milk, sizes of containers and more. Some tariffs are not percentages but a cost in Euros per 100 kg.

Does it matter if a few items have a high import tariff if the average is decently low?

Brexit and the price of tea

Since announcing our intention to leave the European Union the pound has lost 15% against the euro, is at a three decade low against the dollar, and is predicted to reach parity with the euro by the time we leave the EU in 2019.  The Bank of England has warned of increasing inflation risks, Heineken is putting 6p on the price of a pint, Apple has increased prices by 20%, toy makers are predicting price rises of 15% and there is pressure on the price of a wide range of food.  But what impact has it had on our very British obsession, the price of a cup of tea?

A quick ‘survey’ on food outlets in and around Birmingham revealed the following:

A tea in Sainsbury’s is now £1.10, up from £1.00; in Morrisons it’s now £1.05 as opposed to £1.00, Costa have pushed the price of a small latte from £2.25 to £2.35.  But the worst offender is Joe’s Coffee House who has raised their prices from £1.00 to £2.00 for a takeaway tea.

So how much should you pay for a cardboard cup, plastic lid, tea bag, hot water and a splash or milk and sugar?

At Birmingham’s New Street Station, the commuter can choose from Starbucks at £1.85, Pret £1.70, Muffin Break £1.85, and Joe’s at £2.00 – or they can walk an extra few yards outside the station to McDonalds and grab one for 99p, or cheaper still if you use their loyalty card.

Customer surveys like this are what local consumer groups used to do in the days before we used the internet to shop around.  At their height there were over 100 local groups meeting together to compare what was on offer to the consumer, all supported by the National Consumers Federation (then called the National Federation of Consumer Groups) which acted as their umbrella and made representations to government.

The National Consumers Federation now thinks it’s time to resurrect the consumer voice.  They’re calling a Consumer Congress to talk about the impact of Brexit on consumers and inviting anyone with an interest in all matters consumer – anyone who buys or is the end user of goods or services for their own use – to get involved.  Visit the NCF website or contact us to sign up.  Or if you want to start a local or a virtual consumer interest group, NCF will add their weight to yours.

Best of Brexit for consumers – our messages to government (6th April 2017)

NCF Consumer Congress 2017 brought experts from around the UK together to explore what Brexit means for consumers. Our aim was to send a clear message to the government about the importance of consumer protection, and what needs to be done to maintain and enhance this. Brexit provides a unique opportunity to take a fresh look at consumer protection in the UK, to change the way that consumer issues are addressed, and bring positive benefits to consumers and the UK economy.

NCF Congress 2017 The Consumer Voice on Brexit summary report

The need to avoid fragmentation and increased costs

EU framework legislation ensures the safety of consumer products across the EU. The standards that underpin the legislation ensure a level playing field for business and acceptable levels of safety and product performance for consumers, wherever they purchase their products within the EU.  No such comparable legislation exists for the safety of services, leading to legal uncertainty as well as to business and consumer detriment. Whilst consumers find the services situation unacceptable, we can be confident of two things: Firstly, consumers products complying with EU legislation and standards are generally safe across the EU, and secondly, that the European Commission is working to improve the safety of services, although Member States are slow to recognise the benefits to business and consumers from the harmonisation of rules.

How will Brexit affect this dynamic? To trade within the EU British products will need to meet the EU legal requirements and standards.  If the UK rules diverge from these requirements we shall no longer be able to sell into the EU without additional costs, and may end up with a series of different rules for different markets and further additional costs to meet these differing standards.  Applied to the consumer product sectors, divergence will add to UK business costs. This needs to be avoided.

In the services sectors where improvements can be expected within the EU, the UK will not have a seat at the EU table to influence legislative improvements as they develop. This could disadvantage UK businesses and add costs due to our lack of influence.

Recourse to international standards (ISO/IEC) will mitigate these costs to some extent but will not fully compensate for the loss of influence at European level.

What will Brexit mean for the European Health Insurance Card (EHIC)?

What does an EHIC card provide?

Twenty-seven million of us have a European Health Insurance Card (EHIC) which entitles us to free or reduced- cost medical care if we are visiting European Economic Area (EEA) countries (includes Iceland, Norway and Liechtenstein in addition to EU members) or Switzerland.  Effectively, this means that visiting patients are treated in state hospitals as if they were residents of the country they are visiting.  Britons who have retired to live in the EEA or Switzerland are likely to be holders of an S1 Certificate, in effect a longer-term version of the EHIC, which provides healthcare for British retirees in receipt of a UK State Pension on the same basis as citizens of the country to which they have retired.

When we leave the EU, what will happen to these reciprocal social security schemes?

What would be the impact of a Hard Brexit?

The EEA permits free movement of people within the Area. A Hard Brexit focussed on immigration and border control, would mean that Britain would no longer be a member of the EEA. Unless we were to remain in the single market and permit free movement of labour, like Switzerland (which is neither an EEA or EU member) it seems unlikely that we will be able to retain the EHIC or S1 Certificates.  On the other hand, the EHIC encourages British tourists to visit Europe, generating significant income for other EU member states, so perhaps there may be some room for manoeuvre in Brexit negotiations.

What is likely to happen to travel and healthcare insurance costs post-Brexit?

Currently, insurance companies recognise that a considerable portion of potential healthcare costs are covered by an EHIC, which helps to keep travel insurance costs down. Some insurers will even reduce or waive your excess if you have an EHIC. It is very probable that the cost of travel insurance will increase if EHICs are abandoned. Additionally, closure of the S1 scheme would mean that the 400,000 or so British pensioners living in the EEA would have to fund their own healthcare. This could result in many of them having to return permanently to the UK to be able to obtain treatment under the NHS, either because of the high costs of health insurance or because they are uninsurable due to poor health. Loss of the EHIC would not only mean increased travel costs for British tourists visiting European destinations, but also mean increased travel insurance costs for European visitors to Britain.  The implications are that British tourists may elect to holiday in the UK, or select non-EEA holiday destinations and European holiday-makers may think twice about visiting the UK.

Should the government lobby the EU to allow the UK to retain EHICs as part of Brexit negotiations?