As the UK Government seeks to reset its relationship with the EU, the issue of alignment is back in focus. This means having similar rules for things like products so that trade barriers might be reduced. In other areas, alignment could mean cooperation becomes easier when tackling things like environmental issues.
‘Alignment’ is the term used for when rules are equivalent or the same. ‘Divergence’ is the term used for when rules differ.
Since Brexit, arrangements have been introduced to manage alignment and divergence between the UK and the EU. If the UK, or any of its nations, decide to align more closely to the EU, they need to take these arrangements into account.
This article explains the existing system, considers how greater alignment could be achieved if desirable and offers five considerations for future decision-making.
EU alignment and divergence since Brexit
Governments consider various factors before setting rules for things such as trade and the environment including how their decisions affect their exports, imports and cross-border cooperation. Having different rules to elsewhere (divergence) can be more responsive to local needs but may create trade barriers and increase costs. Aligning rules can reduce or remove trade barriers but might limit individual government plans or ambitions.
Support for greater Wales-EU alignment came through in evidence to four Senedd committees working on the implementation review of the Trade and Cooperation Agreement (TCA). The TCA is the agreement that sets the terms for the UK-EU relationship post-Brexit.
Our 2022 article and interactive map provide a more detailed introduction to alignment and divergence since Brexit.
What’s currently in place?
A mix of arrangements have been introduced since Brexit. These align the UK and the EU to different degrees. The drop down menus below contain more information on how each one could lead to greater alignment, if governments are in favour of doing so.
To keep competition open and fair, the UK and EU committed to level the playing field between them. This means they can maintain alignment or face consequences for diverging.
Divergence is allowed but rebalancing measures like tariffs can be applied if it impacts UK-EU trade and investment in a way that one side feels is unfair. This covers labour and social standards, environment, climate standards, and subsidies. Greater alignment could be achieved by agreeing changes to the LPF provisions in the TCA that discourage divergence. For example, the trade and investment threshold could be lowered/removed, or rebalancing could apply to more areas.
On 31 December 2020, the UK retained around 6,000 pieces of EU law, converting them into domestic law known as “retained EU law” (REUL). As of 1 January 2024, this body of law is now termed “assimilated law”.
The UK and EU remain aligned where these laws match, though divergence may have occurred as their laws evolve independently. To achieve greater alignment, UK or Welsh Ministers could continuously amend assimilated law to reflect changes in EU law.
If this Bill passes, UK Ministers could unilaterally recognise certain EU product requirements. The UK Government says this would maintain high product standards, prevent additional costs for businesses and provide regulatory stability.
The Senedd’s trade committee report on this Bill details several concerns, including shifting responsibility onto businesses to keep up with regulatory changes. It concludes:
…the implications for Wales-EU trade are unknown. The Bill would empower the Secretary of State to choose to recognise an indeterminate number of current or future EU regulations, or none at all.
The Welsh Government initially said there’d be positive impacts for Wales-EU trade but later clarified this as a “potential” benefit for importers and a “limited benefit” to exporters.
The extent to which the Bill could result in alignment depends on how its powers are used. To achieve greater alignment, UK Ministers could recognise the EU product requirements covered by the Bill.
In the Northern Ireland Protocol, the UK and EU agreed that Northern Ireland would continue to follow some EU rules while the rest of the UK (as Great Britain) could change its rules. The Protocol was modified by the Windsor Framework but both agreements remain in force. Either the UK, Welsh or Scottish governments can choose to stay aligned to Northern Ireland to avoid divergence (sometimes referred to as creating a border in the Irish Sea).
In anticipation of leaving the EU, Wales and Scotland developed legislation enabling their Ministers to maintain alignment with the EU. The Senedd passed the Law Derived from the European Union (Wales) Act 2018 but it was repealed following an agreement between the UK and devolved governments and the establishment of common frameworks.
Unlike Wales’ emergency legislation, Scotland’s legislation went ahead and remains in force today. The Scottish Government produces annual reports on EU alignment. In 2024, Cabinet Secretary for the Constitution, External Affairs and Culture, Angus Robertson MSP, said “there will be occasions where alignment is not, or cannot, be pursued”, including as a result of the UK Internal Market Act. Generally, that Act requires goods, services and professional qualifications that can be sold or recognised in one part of the UK can be sold or recognised in any other part, regardless of what the law in that other part of the UK says.
Five considerations
Governments will need to consider a number of issues when making future decisions on alignment. Five are discussed here:
1. How to (re)align?
Unilateral recognition of EU rules could entrench the EU’s competitive advantage over Great Britain which has not fully rolled out its import checks, unlike the EU. It could also mean Welsh exporters having to meet EU standards with no duty on EU importers to meet Welsh standards. Wales, with over 59% of its exports going to the EU, would be particularly affected.
A reciprocal approach to reducing trade barriers in a UK-EU agreement could be beneficial for Wales. As explained in our article from October 2023, post-Brexit trade arrangements have left Wales vulnerable to trade diversions, and more reliant on trade barriers being lowered. Offering closer alignment in potential EU negotiations would be an advantage that could be lost through unilateral action.
2. How to address existing divergence?
As regularly documented by UK in a Changing Europe, the UK and EU have diverged since Brexit. This gives rise to the questions about how Wales should address divergence that’s already taken place.
3. How to accommodate existing arrangements?
The system in place is far from straightforward. Any new initiative will need to wrap around existing arrangements like non-EU trade deals or domestic constitutional arrangements.
4. How to respond to live developments?
Alignment is a changing picture. For example, the Welsh Government acknowledges that an SPS (sanitary and phytosanitary) agreement might reduce checks to the extent that new trade infrastructure may no longer be needed. This raises questions, like whether planned trade controls would need to be paused and the future role of new Border Control Posts currently under construction. In January 2024, the Welsh Government said it expected further BCP costs not to exceed £70 million.
5. How to address a potential democratic deficit?
Following EU rules unilaterally gives rise to a potential democratic deficit with Wales, or the whole UK, following EU rules without representation. How any government addresses this when taking decisions on alignment will be one of the most important elements of unilateral EU alignment if this approach was taken.
Conclusion
If and how greater alignment between Wales and the EU happens is an open question.
Careful consideration will need to be given to the interdependencies of the current system and its cumulative effects with any new initiative. This is especially true if it comes in the form of a unilateral act, without mutually agreed, reciprocal arrangements with the EU.
Article by Sara Moran, Senedd Research, Welsh Parliament
