CIWM Chief Executive’s Blog: Brexit, Waste & Resource Management

colin-churchCIWM’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…

 

brexit-stop-signIn 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):

  1. 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

  1. 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’.

  1. 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.)

  1. 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

brexit-eu-flag-union-flagSo, 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?colins-blog-read-more

 

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  1. Interesting blog piece, Sir. You may be right on timing, in so far as CEP is made up of regulations that have direct effect. However, if there are elements in Directives that will need to be transposed into UK law by a Statutory Instrument under S2(2), I am less convinced. These usually take many months to enact. So the Government would need to be convinced it should regulate when it could probably do nothing and the Directive would lapse by itself. I have not seen a definitive Government statement on what happens with EU law that is adopted between now and Brexit/the commencement of the Great Repeal Bill (love your abbreviation BTW). This raises an interesting point in both short and long term. This is an example of the short term. The long term is whether there will be a process for adding to the UK body of law ‘sensible’ EU Directives/Regulations, e.g. those that would make exporting easier. We live in interesting times…

    • Thanks Tim. As always at the moment on Brexit, perhaps more questions are raised than answered! I think there are many influences on whether/how the package could bite:

      – On timing of transposition of the CEP into UK law, the deadline for that could be within the Article 50 process timing; it is often 18 months after adoption, so if adoption is by September 2017 (not impossible), it could be. There would of course be the question of political will in England….

      – The original ‘master’ EU legislation will be repealed/amended by the CEP; the national legislation refers to it. This will need to be resolved

      – The existing framework – in many respects – ‘runs out’ between now and 2020. Given the intellectual energy being devoted to the current negotiation, and the short supply of that energy for new thinking in this area, there may be little choice but to incorporate the CEP

      – All the signs are that NI, Scotland and Wales would want to line up with the CEP. So you can imagine a strong and wide industry lobby pushing England to do so too for consistency across the UK (at least for some parts of the package)

      – All this is more likely the happier the UK is with the final package. And as other Member States may well want the UK to have a similar set of rules (for competitiveness reasons) as they do, this may be more likely in the end game than it might seem at the moment

      – It also depends on how the Gerbil works. If it simply replaces Section 2(2) then yes, it all comes down to transposition timing. But there are several regimes (REACH, medicines, pesticides) where this won’t work and the Gerbil may have to incorporate the EU legislation directly (depending on the policy solution chosen), which would provide a vehicle for the CEP too…!

  2. Whichever path is taken, Brexit means a rocky future for the UK, simply because of the lost goodwill with EU trading partners. This loss, and our reputation for being uncooperative, is not recoverable by any degree of tough negotiating in Brussels. However we could recover our prospects by deploying the UK’s innovative capacities to contribute solutions to the mega-issues that continue to pull the EU apart. We could pursue this irrespective of Brexit pathways.

    From the perspective of circular economy these mega issues are:
    1. Show how to make circular economy happen at scale by building it into the economics. Scotland’s aim for a single framework for producer responsibility is a good start, https://s3.amazonaws.com/v3-app_crowdc/assets/f/fa/fa061a28dcebf8ae/James_Greyson.original.1476098107.pdf
    2. Show how to end austerity so sustainability (and everything else) becomes fundable. http://blindspot.org.uk/seventh-policy-switch/
    3. Show how to reverse the tide of refugees and security threats by helping make all regions habitable and thriving. http://blindspot.org.uk/seven-policy-switches/

    This takes the debate beyond the usual political commentary but perhaps that’s where it needs to be?

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