At the moment, the biggest single obstacle in the Brexit talks is the so-called ‘ratchet clause’. This is what Boris Johnson is complaining about with his slightly torturous analogy that the EU wants to treat Britain like a twin with the right to punish the UK if it doesn’t get the same haircut or buy the same handbag.
As I sayin the Times this morning, the problem with this proposed ratchet clause is that the EU wants the right to unilaterally impose tariffs in the circumstances where it has tightened its regulations and the UK has not followed suit. There would be no obligation to show that the UK’s different standards were distorting trade. The EU would simply be able to act. But the UK would not be able to hit back. The text proposed by the EU would block this country from responding to measures that it thought were unfair or disproportionate with tariffs of its own.
It is hard to see how it is sustainable to have a system where the EU can act as judge and jury and then unilaterally disarm the UK to prevent it from taking countermeasures.
There is, though, a potential solution to this problem. The EU could still have the right to respond if it increased regulations and the UK didn’t follow. It would, though, not be able to do this automatically. Rather, it would have to go to arbitration and show that the different standards were having a material effect. This would deal with the EU’s medium-term concern about the UK trying to undercut it while maintaining zero-tariff, zero-quota access to its market. But it would also reassure the British side that it could not be subject to capricious actions by Brussels every time the EU introduced a relatively minor change.
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