Speaking to business leaders in Vienna the Brexit Secretary rejected the idea that the UK has to stay aligned with EU regulations to avoid trade barriers, and called for “mutual recognition” between the two regulatory regimes to avoid cutting British firms off from the continent.
Mr Davis said the EU and UK should “trust each others’ regulations and the institutions that enforce them, with a robust and independent arbitration mechanism” – that he suggested could be comprised of a representative from both sides with an independent chair.
In his latest attempt to flesh out the British position on what a trade deal should look like, the Secretary of State suggested it was the “outcome” of regulations that was important to maintain standards between the two countries rather than “the way you do it”.
“The future trade talks will be a negotiation like no other,” he said, speaking at the headquarters of the Industriellen Vereinigung, an Austrian business lobby group.
“We start from a position of total alignment, with unprecedented experience in working with one-another’s’ regulators and institutions.
“The agreement we strike will not be about convergence but what we do when one of us choses to make changes to our rules.”
He added that other countries with free trade agreements with the EU were “not required to obey European rules but have mutual recognition standards” and that that was “something every free trade agreements has”.
The policy outlined by Mr Davis is an attempt by the UK to resolve the dilemma of how to 'take back control' of regulations without cutting off its access to EU markets.
Michel Barnier, the European Commission’s chief Brexit negotiator, said earlier this month that if Britain left the customs union and single market “barriers to trade in goods and services are unavoidable”.
The situation is further complicated because the UK pledged in the first phase of negotiation to stay in "full regulatory alignment" with EU rules if required to avoid a hard border of the island of Ireland.
Mr Davis also reiterated a UK warning that if Britain did not strike a trade deal, it would withhold the massive cash payment to Brussels agreed as phase one of the Brexit negotiations.
He dismissed suggestions that this was a “secret plan”, arguing that it had already been “announced by the Prime Minister”.
“We have been very plain that the withdrawal agreement follows Article 50. Article 50 says the withdrawal agreement has to take into account the future relationship. They’re bound up in one, they’re not a separate issue,” he said.
The minister also said companies that were “heavily subsidised” by EU taxpayers would not get unfettered access to UK markets, and that mergers with EU companies would continue to be regulated for “anti-competitive behaviour”.
Answering questions journalists the Brexit Secretary also revealed that “100 per cent” of government ministers who he met around Europe did not want the UK to leave the bloc. Before making his speech he held bilateral meetings with Austrian foreign minister Karin Kneissl.
As expected, Mr Davis use the speech to try and assuage concerns the UK could try and cut regulations after it leaves the bloc, saying Britain would not become a “Mad Max” society, in reference to the dystopian film.
He said Britain had in fact been at the heart of shaping EU regulations and often went beyond European standards in many areas.
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