Regulatory Autonomy of Great Britain: Problems and Perspectives

Abstract

Sovereignty does not imply regulatory autonomy. After Brexit, the UK should align its regulatory policy with European norms, if it is interested in close partnership with the EU. Compromises must be made by both sides in order to ensure stability of the partnership. The EU will have to acknowledge the UK’s right to diverge from European rules. Britain will have to partly accept the jurisdiction of the European Court of Justice. The structure of dispute settlement mechanism which will be created under the partnership agreement should be a product of a compromise. The present study shows that optimal structure of dispute settlement mechanism must include two different procedures: one for political issues and the other for commercial issues. The central role for the European Court of Justice must be envisaged as a part of politically oriented procedure. There must be no role for the European Court of Justice or any Union to set the pace of political communication. The latter reflects the interest of Great Britain to simplify economic relations, which means that, firstly, disputes are resolved by independent arbiters; secondly, the EU acknowledges the UK’s right to diverge from European regulations; and thirdly, the UK accepts the EU’s right to impose countervailing duties to compensate for adverse effects of divergence on competition. This article also examines the main problems of future British regulatory policy, especially in the field of state aid. Boris Johnson’s government has decided not to form a full-fledged regulatory regime in the area of state aid. Its stance is politically appropriate since Conservative party manifesto for the 2019 general election promised to support local industries without limitations. But that decision created a great deal of economic risk. Firstly, the absence of a domestic subsidy control regulator can cause chaos within regulation system because workable norms and rules can only be sustained by a tight enforcement mechanism. Secondly, the EU can cite lack of subsidy control as an obstacle for British business to have unrestricted access to the European market.