CIWM’s chief executive, Dr Colin Church, delivers his second blog piece, this time taking on the subject of Brexit. What will it look like? What will Brexit + the circular economy mean for the UK? And where will it all end up? Feel free to share your thoughts too…
In this blog I’m going to try to tackle three aspects to the Brexit question. The first is around what kind of Brexit we end up with, and what that means for the future of our relationship with the EU. The second is what the combination of Brexit and the circular economy package means. The third is some speculation about the implications for our sector in the longer term. I’d welcome comments and thoughts on all of this!
Types of Brexit
Much has already been written about what is Brexit and where we might end up. http://www.bbc.co.uk/news/uk-politics-32810887 and https://en.wikipedia.org/wiki/Brexit provide lots of background.
In summary, there are four main options for the final destination, in increasing order of separation (and therefore, likely negative economic impact on the UK, at least in the short to medium term):
- Don’t leave at all
The situation will be as now, with the UK a full member with voting rights, etc. This seems increasingly unlikely to be the outcome
- Leave the European Union, but not the European Economic Area (the ‘single market’)
The UK retains access to the single market, which is defined as the free movement of goods, services, people and money – so unless something changes radically, this option means no new curbs on EU migration. In this model, single market legislation (which for example includes the Packaging and Packaging Waste Directive) will continue to apply, including anything new. The application of other areas of legislation (environment, employment, etc) is the subject of a decision by the non-EU EEA Member States (currently Iceland, Liechtenstein and Norway). Most European legislation has been included; the main exceptions have been agriculture and fisheries policies. The UK’s influence would be limited in this model. There is currently a discussion about whether it is possible legally to leave the EU but remain within the EEA, but it is certainly possible to leave both and re-join the EEA alone, if the other parties agree. This option is often called ‘soft Brexit’.
- Leave the EU and the EEA, negotiate a free trade deal with the EU (or EEA)
Free trade deals take many years to agree (the recent Canada-EU deal took five years to negotiate and then two more to adopt). They can cover a range of issues as the negotiators agree, so it is impossible to predict now the full consequences for the UK. This is a variation on a ‘hard Brexit’.
(It might be quicker for the UK to join the European Free Trade Association, but that also has free movement of people implications so may not be any more acceptable an outcome than Option 2 to those that wish for a hard Brexit.)
- Leave the EU and the EEA, trade with them under general World Trade Organisation [1] The UK would only need to comply with European rules insofar as it needed to in order to trade with EU Member States. Again, a variant of ‘hard Brexit’.
Once Article 50 is triggered, the UK and the other Member States have two years to agree an exit deal. This is unlikely to be long enough to do more than agree on the share-out of liabilities and other ‘housekeeping’, so the risk of the UK defaulting to Option 4 in a ‘dirty Brexit’ are high, whatever the intent.
Brexit and the Circular Economy Package
Irrespective of the final model of Brexit, it seems to me likely that in the short term the changes to European legislation currently being negotiated through the ‘circular economy package’ (CEP) (including changes to targets, definitions, etc) will apply to the UK. Why?
The Government has announced the introduction later this year of the Great [European] Repeal Bill (‘Gerbil’):
“The European Communities Act will be repealed on the day we leave the EU – meaning that the authority of EU law in Britain will end. We will convert the body of existing EU law into domestic law and then Parliament will be free to amend, repeal and improve any law it chooses.” – Department for Exiting the EU
Government officials have explained that the intent, wherever possible, is to move into UK law [2] all European legislation as-is, leaving any changes to the future. Exceptions will include things like the chemicals regulatory regime, which practically cannot simply be ‘lifted and shifted’ given the complex interaction with the European chemicals Agency, etc. For waste and resource management, almost all will be transferable, with some work needed around trans-frontier shipment, maybe one or two other small areas.
At the same time, the negotiations in Brussels on the legislative elements of CEP seem likely to conclude in 2017 or, at the latest, early 2018. The Article 50 process, if triggered at the end of March 2017, would almost certainly conclude in March 2019. So at the time of Brexit, European waste and resource management law will almost certainly have been amended by the CEP, and if the Gerbil principle is maintained, that is what will move into UK law at the point of Brexit. Indeed, previous versions of European legislation will in legal terms no longer exist.
Of course, this doesn’t necessarily mean the UK Government won’t seek to amend things further down the track, or indeed that it will race to implement all the provisions, but they will be there in UK law from the day of Brexit.
Possible Future Implications
So, what can we say about the possible future implications for the waste and resource management sector, especially given the fact that European law has driven most of the developments in this sector for the past 20 years or so? There is a lot of speculation around this, so here are some thoughts from me:
- Without the over-arching framework of EU law, will the four nations diverge more and more in waste and resource management policy (and indeed other environmental policy)? We already see some signs. Where will this lead? What will it mean for businesses and citizens?
- Export of waste. It seems very unlikely that the UK would leave the Basel Convention (on international waste shipments) so we will continue to have controls on waste export. But there may be a hard border with the EU, including a land border on the island of Ireland, which will mean potential for customs controls, issues with product and material standards, etc if we no longer benefit from the non-discrimination rules of the EU.
- Investment. Foreign direct investment into the UK is already suffering from a Brexit effect as potential investors wait to understand the deal with the EU. On the other hand, British assets are currently cheap because of the weakening pound. Domestically, companies have investment decisions on hold because of the market and policy uncertainty, and those that are part of European groups are seeing the parent company investment going elsewhere
- Policy. In the short term, Brexit seems unlikely to have a major impact on policy. But in the longer term, will the release from the constraints of EU policy mean more environmental ambition or less? Will protections be weakened to boost business, or will price volatility and short-term security of supply issues promote greater circularity? Will the UK take the opportunity to radically reform its approach to waste and resource policy (changing the definition of waste anyone?)? Defra’s forthcoming 25 Year Environment Plan will give us some insight into Government thinking here, as will BEIS’ Industrial Strategy.
One thing for sure, waste and resource management will remain both an essential public service and one of the most fascinating and engaging topics around!
References
[1] But see e.g. http://www.ictsd.org/opinion/nothing-simple-about-uk-regaining-wto-status-post-brexit for a discussion of some of the WTO issues
[2] One good question is what this means for a policy area like waste and resource management that is almost entirely devolved – does it mean one piece of UK-wide law, or will each Devolved Administration have to do its own work?
