Brexit and the Brussels Effect

April 5 2024, by David Gow FRSE

The Scottish Government is committed to pursuing the closest possible regulatory alignment with the European Union when it comes to public policy initiatives. This is self-evidently because the continuing objective of the ruling SNP and Scottish Greens is for an independent Scotland to rejoin the EU and the more divergent Scottish legislation is from EU law the harder it will be to achieve this goal. Scottish ministers and campaigners are acutely aware of this.

But this commitment is proving to be a pious wish, as our workshops have heard throughout the series over the past year. This is not just typical political backtracking. In the four years since the UK officially exited the EU, hundreds of new regulations have emanated from Brussels. This sheer volume obviously renders it impossible for a small sub-state like Scotland, with limited devolved powers, to keep up.

It’s clear, however, that regulatory divergence at both UK and Scottish levels is proceeding apace in key areas such as the environment (200 new targets adopted post-Brexit) and that Scotland is willy nilly fostering this even within areas of its own devolved competence – despite appearances to the contrary. See the second report on the Scottish Parliament’s EU Law Tracker from Dr Lisa Whitten of QUB, one of our Scotland-Europe Initiative workshop speakers. She says at one point: “The articulation of the Scottish Government position in relation to actual or potential alignment with specific EU instruments or proposals is vague and leaves room for ambiguity…”

Dr Whitten talks of “potential for divergence by default” and finds just one instance where Holyrood intends aligning with upcoming EU legal changes without caveat while our final (12th) workshop heard warnings of “passive divergence” and growing distrust in the commercial UK-EU relationship from inside the heart of UK business.

Indeed, the final workshop – moved at the last minute from Scotland House in Brussels’ EU Quarter to online only because of farmers protesting at over-zealous green regulations – heard of worse actual and potential outcomes. The picture painted was of the EU moving in one direction and the UK, including Scotland whether it likes it or not, in another. And this includes Westminster watering down, say, environmental standards or ignoring them so as to (perhaps) make the UK more attractive as a place to do business. “There’s simply no dialogue anymore,” one Brussels-based attendee lamented.

Gold standard

The downside of this growing divergence in terms of the impact upon national output, productivity growth, increased trade, let alone personal prosperity and well-being, is becoming starker by the month. But a little-known/under-appreciated risk is to the UK’s and Scotland’s economic relations with not just Europe but the rest of the world as workshop attendees/speakers underlined.

As we witness on a daily basis in terms of privacy with GDPR and may soon with AI, the EU is often setting the gold standard for regulation on a global scale. This is the so-called Brussels Effect – or How the European Union Rules the World in the title of a much-praised book by Prof Anu Bradford who shows how Brussels has shaped the world in areas such as consumer health & safety and who talks of the Europeanisation of global commerce.

In a tripolar world dominated by the US and China, Europe is imposing its regulatory soft power despite its sluggish economy and comparatively poor record in hi-tech innovation. The Brussels Effect does not go unchallenged, with pro-Brexiteers keen to chart an independent (and looser) regulatory course for business. Some (see Zach Meyer on the CER website) argue that the “death of the Brussels Effect is greatly exaggerated.”

Others worry that the threat to EU regulatory supremacy remains. Sebastian Mack of the Jacques Delors Centre in Berlin argues in a recent policy brief on financial greenwashing (I edited) the EU must take action to defend its role as a global standard setter. The European Sustainability Reporting Standards are a positive case in point, Dr Mack says: “While a global framework for sustainable finance has yet to emerge, the EU should keep its own ambitions high.”

The overwhelming message from speakers and discussants at the final workshop of the Initiative (in the current series) was to urge Scotland to set its own ambitions high, notably in reaching out to EU partners. It’s a message we will underline and reiterate in any further work we do.

David Gow FRSE is a member of the RSE’s Scotland-Europe InitiativeHe was European Business Editor of the Guardian in Brussels (2004-12). He co-founded and co-edits, sits on the Federal Trust council and EMiS executive and is consultant editor for Acumen PA (Brussels) as well as for Bertelsmann Stiftung and Jacques Delors Centre in Berlin.

The RSE’s blog series offers personal views on a variety of issues. These views are not those of the RSE and are intended to offer different perspectives on a range of current issues.

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