This blogpost was written on Friday, July 13th, 2018 

If it worked once it will work again. That seems to be Theresa May’s approach to the Brexit negotiations, judging by the White Paper The Future Relationship Between The UK And The EU, published on Thursday. Back in 2012 when she was Home Secretary, using protocol 36 of the Lisbon Treaty, May opted-out en bloc from all the police and criminal justice measures adopted under the Maastricht Treaty before the EU court of justice in Luxembourg took over jurisdiction of them under Lisbon.

She then proceeded to opt back in to all of the measures she liked but was able to claim, to assuage die-hard anti-European Court Tory backbenchers, that she had opted-out.

At the infamous dinner with Jean-Claude Juncker and Michael Barnier in 2016, the one at which she asked that UK-EU discussions be held in secret until a final deal was done, she spoke of her experiences back in 2012 and suggested that a similar approach would work with Brexit. The UK would opt out of the EU but then opt back in to all the bits it likes. It could leave and not leave at the same time.

May did not understand then, and still does not understand now, that a club will cut an existing member some slack that it will not cut a non-member. To go further, it will definitely not cut a departing member slack, especially if that member has spent the greater part of its time as a member decrying what a lousy club it was in any event.

Because most of the British political and commentariat class can only deal in English and, therefore, never read European papers, they assume that Europeans do not hear or read what is being said about them in the UK. They do and they remember it. Latin, a la Rees-Mogg, doesn’t cut it.

The EU, and by the EU we mean the 27 other member states along with the Commission which work together in collective unity, sees the customs union (CU) and the single market (SM) as a menu fixe whereas the UK government would like to see it as a buffet à volonté allowing it to pick and mix as it chooses. Well, there is no buffet. Either you have the menu fixe or you can have a carry-out from a limited range of options. And you have to phone in your order in advance.

If the White Paper (WP) is the best offer the UK can make then we are heading for a bad place, we could be heading for no deal. See this by Tony Connolly: here

At its heart is a proposal that the UK and the EU create a shared customs space for goods and that the UK and the EU would follow a common “rule book” on regulatory standards for goods and agri-food products. Further, the EU and the UK would negotiate multiple agreements covering issues such as transport, energy and data protection, all regulated by new joint institutions. Services, which constitute 80% of UK economic activity and which generate significant export earnings for the UK, would not be covered by this framework. Services appear to have been thrown under the (red) bus!

It seems to us, having read the WP, that what the UK wants is a “mini-union” of the UK and the EU in which the two sides are regarded as equals and jointly set the rules of this mini-union. The mini-union would give the UK most of what it likes about the EU but with none of the obligations: no free movement of people, no supervision by the Court of Justice of the European Union (CJEU); free to do trade deals with other countries, free from paying into the EU budget.

It is an offer the EU will not accept, even if Conservative politicians, such as Henry Newman, are pleading that, given the internal turmoil in their party, it is the best offer May can make. As former Labour European minister, Denis McShane, tweeted: “Oh No. not another article in an English paper telling EU27 to shape up, obey U.K. Tory Brexiters, rewrite Treaty to suit Daily Telegraph”.

Others can comment with more authority and greater insight into the overall economic and security relationship the UK proposes with the EU in the WP. See this by Chris Grey here, this by David Henig here and this by Piet Eeckhout here.  We’ll also leave the Irish “backstop” issue to others.

In this Briefing we want to look at issues where we in BEERG have some expertise: labour law and data protection. In our next Briefing we will look at what the WP has to say about the ending of free movement.

But first a caveat.

What the WP is about is the future relationship between the UK and the EU after the UK has left. This does not have to be agreed before March 29, 2019 when the UK is scheduled to leave. All that needs to be agreed before then is the “framework” for the future relationship. How that future framework then gets fleshed out is a matter for future negotiations. A “framework” can be written in such a way as to leave all future options on the table. It does not need to be a deal-breaker. But, if the UK pushes for a “substantive agreement” on the future relationship as part of the Withdrawal Agreement then it could become a deal-breaker.

Labour law

At paragraph 121 the WP says: “The UK firmly believes in the importance of strong labour protections while also embracing the opportunities arising from the changing world of work. Existing workers’ rights enjoyed under EU law will continue to be available in UK law on the day of withdrawal.”

The next paragraph pats the UK on the back: “The UK already exceeds EU minimum standards in a number of areas, such as parental leave and flexible working arrangements, and is a leader in many others.”

Paragraph 123 then says: “Given this strong record, and in the context of the UK’s vision for the future relationship with the EU, the UK proposes that the UK and the EU commit to the non-regression of labour standards. The UK and the EU should also commit to uphold their obligations deriving from their International Labour Organisation commitments.”

Now reading this you would never know that the UK has a record of consistently blocking proposed EU labour and employment laws over the years. In the early 1990s the Commission took the UK to court over attempts to bypass core provisions of the Transfer of Undertakings and the Collective Redundancies Directives. The UK itself went to court to argue that the Working Time Directive should not have been adopted by qualified majority vote but on the basis on unanimity, so giving the UK a veto. It lost, comprehensively.

The UK also opposed the Information and Consultation Directive and bitterly fought the Agency Workers Directive. Just two months ago Tory members of the European Parliament voted against the revised Posted Workers Directive, designed to ensure that workers brought in from outside a country cannot undercut local pay and working conditions.

The UK government has committed to incorporate all existing EU-derived employment laws into UK law on the day it leaves the EU. In the WP it proposes that the UK and the EU commit to the “non-regression of labour standards”.

So, if I were an EU negotiator, the questions I would be asking the UK on labour law would include:

1. We start off with similar labour laws because you have incorporated all EU law into UK law. What happens in the future when we in the EU adopt new laws? Will you adopt a matching law?
2. What happens when the CJEU hands down an interpretation of an existing law? Will you follow that judgement? Will you amend you law accordingly?
3. You are committed to a common rule book on goods regulations. That includes labour regulations. If EU labour regulations change (see 1+2) will you accept those changes?
4. If you accept those changes will they be limited to workers in the “goods” sector or will they apply across the board?
5. If they are only to apply to workers in “goods” how do you distinguish between workers in “goods” and those in “services”? (See our last post: here What we call the “Otis Elevator Question.” Is an elevator a good or a service or both? Covered by the common rule book or not?)
6. Do you envisage having two labour law regimes? One for those covered by the common rule book and one for those not covered?
7. If you envisage two regimes, how would that apply? Could a large diversified business, with some goods operations and some services operations find itself having to administer two sets of labour and employment laws?
8. How would that impact a worker who moved within a business from a goods operation to a services operation?
9. Do you still see it being possible to legally base European Works Councils in the UK and for UK employees to be represented on such councils? Can disputes involving EWCs be referred to the CJEU?

Readers may be able to suggest other questions. As we argued in our last post, a hokey-cokey Brexit, half in and half out, raises a host of very difficult labour and employment law questions and could make daily life a nightmare for human resource executives. But then, the attitude of a lot of Brexiters is, as the former Foreign Secretary, Boris Johnson put it: “F**k business”.

Data protection

When it comes to data protection and data flows the WP notes that:

Data plays an increasingly important role in the global economy. Recent research suggests data flows already account for a higher proportion of global growth than trade in physical goods. (As indicated by McKinsey research: ‘Digital Globalization: The New Era of Global Flows, 2016’, McKinsey, March 2016).

The position set out in the WP as regards data flows between EU and the UK post-Brexit can best be summarised as: “Can we all pretend that the UK has not left the EU?”.

Within the EU (EEA) personal data can flow freely between countries. For such data to be able to flow freely to countries outside the EU the European Commission has to issue an “adequacy decision” certifying that a country’s data protection laws are sufficiently robust that data can be transferred. Adequacy decisions are decided unilaterally by the EU. They are not agreements, nor are they negotiated. They can be cancelled by the EU at any time. Third countries have no input into EU data protection decision making or into enforcement procedures.

The WP says that the UK is not just any old third country. It wants a privileged position for the UK as regards data protection. It wants to be out and in at the same time. “Because it’s worth it”.

It wants a framework which would “facilitate dialogue, minimise the risk of disruption to data flows and support a stable relationship between the UK and the EU to protect the personal data of UK and EU citizens across Europe”. Further, it says that on regulatory cooperation, “it would be in the UK’s and the EU’s mutual interest to have close cooperation and joined up enforcement action between the UK’s Information Commissioner’s Office (ICO) and EU Data Protection Authorities.”

Decoded, the UK wants an agreement that would strip the EU of the ability to withdraw “adequacy” from the UK and it wants the Information Commissioner’s Office (ICO) to continue to play a full part in the workings of the European Data Protection Board (EDPB).

So, some more possible questions for EU negotiators:

1. Will the UK continue to update its data protection legislation in line with EU developments and judgements of the CJEU?
2. Would the UK commit to doing so in a binding treaty?
3. Will UK courts follow CJEU rulings when it comes to data issues? Where would it leave the UK if the answer is no?
4. Would the UK commit not to pass personal data to third countries?
5. We have concerns about the level of access the UK security services and other agencies, have to personal data under the Investigatory Powers Act 2016 (here). What do you intend to do about this?
6. Do you envisage the EU allowing data controllers to be based in the UK under the “one stop shop” regime? If so, would individual citizens be able to progress complaints against such controllers as far as the CJEU?

No doubt, there are many other questions on data protection and data flows that will arise as EU negotiators dig into the issue.

The questions we have suggested on labour law and data protection alone show how difficult it is to want to be half in and half out and to think that you can easily separate goods and services.

It is not possible. As Michael Barnier puts it:

“The single market is a dynamic ecosystem based on common standards, common rules, common laws, common supervision, common regulation, and on top of this, common jurisdiction.”

Or, as a statement from the Brexit Steering Group of the European Parliament puts it, that while wanting the closest trade and economic partnership possible, that partnership must respect

…among others the principles of the non-divisibility of the four freedoms, the integrity of the single market, avoiding a sector-by-sector approach and safeguarding financial stability, the preservation of the autonomy of EU decision-making, the safeguarding of the EU legal order and the balance of rights and obligations which any future EU-UK relationship will need to respect.

It’s a long, long way from there to the White Paper.