The European Union will seek to establish a Brexit deal with the United Kingdom which prevents its government from cutting taxes, scrapping burdensome regulations, or supporting industries through more liberal state aid.
The president of the European Council, Donald Tusk, laid out the bloc’s draft guidelines on the upcoming Brexit negotiations in Malta. “Any free trade agreement should be balanced, ambitious and wide-ranging [but] cannot, however, amount to participation in the Single Market or parts thereof, as this would undermine its integrity and proper functioning,” he stated.
Tusk then went on to say this limited trade agreement would come with various strings attached: “It must ensure a level playing field in terms of competition and state aid, and must encompass safeguards against unfair competitive advantages through, inter alia, fiscal, social and environmental dumping.”
Therefore, it seems likely the EU’s ideal Brexit deal would not allow the UK to begin showing greater preference to UK producers when offering public contracts or being afforded greater flexibility when awarding state aid to key industries, such as steel.
— Steel GO (@Steel4GO) March 30, 2016
The proposed provisions on “safeguards against unfair competitive advantages” through what Tusk describes as “fiscal, social and environmental dumping” would also prevent the UK from emulating booming low-tax economies such as Hong Kong and Singapore, which would likely drain business and commerce from the Continent.
— The Spectator (@spectator) September 23, 2016
Downing Street’s official response was typically prosaic, pointing out the above are only “draft guidelines” but declining to challenge them in detail.
“These are draft guidelines and we look forward to beginning negotiations once they have been formally agreed by the 27 member-states.
“It is clear both sides wish to approach these talks constructively, and as the Prime Minister said this week, wish to ensure a deep and special partnership between the UK and the European Union.”