I. INTRODUCTION
In January 2020, Prime Minister, Boris Johnson intimated that the United Kingdom's (UK) ‘recaptured sovereignty’ marked a pivotal moment to reassert the UK's position in the global economy. Throughout the Brexit process, the UK government has used the notion of absolutist sovereignty to justify its legal and political choices both internally, to its population, and externally, to its future trading partners. While the architecture of international law has been built around the concept of State sovereignty, the accelerating pace of globalisation has disrupted the Westphalian notion of absolute sovereignty. The word ‘sovereignty’ refers to allocations of power,Footnote 1 and the question of ‘who governs’ in respect of global regulatory governance is not a new phenomenon,Footnote 2 but there has been a general retreat from the notion of absolute sovereignty in international law. In an interdependent global order, the role of the State in governing itself and others has been called into question. It has long been recognised that the State retains an important function in developing and enforcing international legal frameworks that regulate economic activities across borders, but non-State actors also contribute to the formulation and implementation of regulations. In this article, we use the term ‘regulatory sovereignty’, defined as ‘the right of each member nation to decide on the level of risk that it wishes to tolerate within its jurisdiction’,Footnote 3 as an expression to capture the diffusion of power in the UK's trade and investment agreement negotiations amongst different actors and to reveal interconnected sovereignty fictions that have been used to advance different, contradictory, legal, political and economic aims in the articulation of the UK's future approach to global regulation.
Sovereignty fictionsFootnote 4 were explicitly discussed by John H. Jackson almost twenty years ago and this conceptual framework is used to inform this interpretation and analysis of a contemporary puzzle in international law: the UK's withdrawal from the European Union (EU). In this article, the first sovereignty fiction discussed relates to the UK government's ‘communication technique’Footnote 5 and its popularisation of absolutist sovereignty rhetoric as a rationale for withdrawal from the EU. That rhetoric has since become a core linguistic feature of the ‘Global Britain Agenda’. Since the lead-up to the 2016 Referendum, the UK government has articulated an absolutist version of sovereignty, weaponising this concept as a ‘political emotion’Footnote 6 to reinforce nationalist ideals of the British State in the de-integration process. This articulation of sovereignty is about independence and freedom from constraint—the ability to exclude others from territory—and it has been a prominent feature of the UK's ‘take back control’ narrative. However, the UK's future trade law and policy, which seeks both to promote openness and protect its values and interests, is inherently rooted in notions of cooperation and partnership. The negotiation of trade agreements requires cooperative efforts which ‘take place within a dense and complex web of norms, rules and practices’.Footnote 7 This article maps the transformative shifts in sovereignty paradigms to show how the right to be ‘left alone’, to ‘exclude’ and to ‘be free from any external meddling or interference’ now coexists with the ‘right to be recognised as an autonomous agent’ in the international systemFootnote 8. Simply put, it shows that the UK government's absolutist sovereignty rhetoric is straightforwardly incompatible with its self-professed desire to do trade deals with the wider world.
The second sovereignty fiction, which is linked to the first, relates to power and autonomy, and builds on one of the sovereignty fictions identified by many scholars in international law: the idea that power is (not) concentrated in one sovereign actor. In this article, it is submitted that sovereignty is ‘relational rather than insular’;Footnote 9 it is the depth and breadth of one State's links to other public and private actors that enhances and diminishes that State's capacity to act within the international system. Global regulatory frameworks for behind-the-border measures may be determined by a variety of formal and informal rules, soft-law and policy principles, and involve a range of actors, public and private. The relationships between government and other stakeholders involved in regulatory governance operate through networked orders which, in turn, influence and inform relationships with transnational public and private regulatory agencies. International regulatory governance is, therefore, characterised by the ‘fragmentation’Footnote 10 or ‘disaggregation’Footnote 11 of sovereignty caused, in part, by the diffusion of power to other non-State actors in trade. The participation of private economic actors and civil society organisations in ‘a networked world order’Footnote 12 has, therefore, resulted in a shift away from exclusively State-centric modes of governance toward ‘new multilateral, non-territorial modes of regulation’,Footnote 13 which call into question State-centred intergovernmentalist accounts of global regulatory governance.Footnote 14
If it is accepted that sovereignty is relational and that the right to be free from interference coexists with the right to be recognised as an autonomous agent, then the final sovereignty fiction follows: the notion of absolute sovereignty can no longer be used accurately to capture or define State interactions in the contemporary global economy. The specific instance of regulatory governance is used to show how the negotiation of and participation in trade agreements—an expression of regulatory sovereignty—necessitates constraints on absolute State power. The regulation of behind-the-border measures involves the diffusion of power in a networked world order and illustrates that accounts of sovereignty which focus on independence and autonomy are no longer appropriate or accurate. The ongoing challenge for regulatory governance is how best to structure that cooperation between actors so that States can control outcomes and respond to the fundamental needs of the people.
This article evaluates the diverging approaches to regulatory sovereignty adopted by the UK and the EU. The EU has, on the one hand, sought to transform or reimagine sovereignty; while on the other, it has moved ever more decisively towards the pursuit of regulatory sovereignty and global power. The EU has a long history of leading in the sphere of (international) regulatory governance, and the implications of centring ‘open strategic autonomy’ in EU trade policy will be examined. The UK's ‘common law’ approach, which claims to be less ‘rules-based’ than the EU's ‘open strategic autonomy’ vision, promises to offer a new way for regulatory governance. However, and while both the EU and the UK aspire to global relevance, and indeed leadership, weaknesses and blind spots can be identified in their strategies that could undermine those aspirations. The purpose of this analysis is to demonstrate the disruptive nature of sovereignty fictions and to reflect on the opportunities that might exist for the UK to emerge as a leader in regulatory governance going forward.
This article is divided into four sections. The first section briefly outlines the ‘long and troubled past’Footnote 15 of sovereignty as an international legal and political concept. Section II analyses the conceptual boundaries of regulatory sovereignty. The third section considers the EU's evolutive relationship with sovereignty and regulatory governance. The final section examines the UK's proposed ‘common law approach’ to regulatory governance. To conclude, it is argued that the UK must ‘reconcil[e] its autonomy with the wider layer of global governance’Footnote 16 because in a networked global order, the very notion of absolutist sovereignty serves as little more than a communication technique and has become redundant.
II. THE ‘INDEPENDENCE’ SOVEREIGNTY FICTION: COOPERATION IN A NETWORKED GLOBAL ORDER
To understand the UK as an independent trading State and its ambitions of regulatory sovereignty it is important to recognise how sovereignty can constrain, shape and condition legal, economic and political choices. As a concept in want of definition, sovereignty has been the subject of scholarly interrogation across the disciplines of law and international relations for centuries. While there is no agreement among scholars about how best to classify sovereignty, there are competing, but not irreconcilable, categorisations of sovereignty. The fragmented and yet overlapping nature of the different aspects of sovereignty are best understood if viewed through an interdisciplinary kaleidoscopeFootnote 17 drawing insights from international relations, international political economy and international legal theory. In this section, the changing nature of sovereignty will be critiqued to foreground our analysis of regulatory sovereignty in the second section.
Sovereignty ‘is not fixed or immutable, but contingent on the underlying structures of economic and social relations’,Footnote 18 and territorial conceptions of sovereignty are closely connected with capitalist modes of production and private property ownership.Footnote 19 As a fundamental principle of international law it has influenced the ways States interact with one another bilaterally and multilaterally for centuries. Sovereignty has developed as ‘an essentially European invention’Footnote 20 and in its absolute sense is the ultimate expression of power for a State to exclude others from causing interference in its territory.Footnote 21
Absolute conceptions of sovereignty, based on the preservation of independent action at State level, have come under strain as transnational trade has increased and economies have become increasingly interdependent. Over the course of history, the UK has played a prominent role in exercising its sovereign power to promote a liberal market paradigm globally. The UK was a leading actor in the first wave of multilateralism with the passing of the Reciprocity of Duties Act (1823), the repeal of the Corn Laws (1850) and the implementation of the Cobden–Chevalier Treaty (1860), the latter of which contained a Most-Favoured Nation clause.Footnote 22 Following the two world wars, the creation of the United Nations and the Bretton Woods Institutions, including the GATT, ‘sanctified the concept of State sovereignty, as only recognised States could be members of [these] new global club[s]’.Footnote 23
Furthermore, the process of decolonisation resulted in the liberation of newly sovereign StatesFootnote 24 across the world which fundamentally changed the power dynamics of the global economy. Growing interdependence in the global economy has meant that the ‘right to be left alone, to exclude, to be free from any external meddling or interference’ now coexists with the ‘right to be recognised as an autonomous agent in the international system, capable of interacting with other States and entering into international agreements’.Footnote 25
Throughout the Brexit debate, the UK government has sought to invoke the traditional Westphalian notion of sovereignty, placing an emphasis on what the late John H Jackson describes as the ‘core dimension’ of sovereignty—the ‘monopoly of power’.Footnote 26 This realist conception of sovereignty is associated with an absolute notion of independence and harks back to a time where States engaged in international relationships rather than global relationships, which signal interdependence. It is a departure from the ‘pooled sovereignty’ of the EU and appears to mimic the American approach to sovereignty, which bridges the notion of absolute control and popular sovereignty. It is, according to Jenik Radon, an ‘emotional flag’.Footnote 27 It diverges from the emerging pattern of negotiating limits on sovereignty and promotes exceptionalism. This ‘independence fiction’Footnote 28 of sovereignty fails to place sufficient emphasis on cooperation and on the benefits which States can secure for their populations as a result of that cooperation.
Yet the notion that absolute power is concentrated in a head of State (or government) has become one of many sovereignty fictions. Over time, the constitutive nature of sovereignty in the international order has been transformed as globalisation has changed the ways States interact with one another. Power is no longer centrally situated in an autonomous State; rather, power is diffused among different actors and agencies which operate within and between national and international contexts. International law is in a constant phase of evolution and the rise of international institutions, and State participation in those institutions, represents a distinct threat to the notion of Westphalian sovereignty.Footnote 29 The concept of absolute sovereignty in international law has been eroded over time and replaced by models of sovereignty that acknowledge the interdependent and networked nature of the global order.
In the contemporary global economy, the participation in the many regimes that regulate (inter-)State behaviour is itself an expression of sovereignty; a new sovereignty.Footnote 30 Writing in the late 1990s, Anne-Marie Slaughter was a leading authority on new sovereignty, which is decoupled from territorial control. Slaughter defines new sovereignty in the following way:Footnote 31
If the new sovereignty is the right and the capacity to act in international regimes, networks, and institutions, accompanied by a responsibility to fulfil certain minimum requirements of membership, then becoming or being a sovereign State would mean the participation of as many government officials as possible in plurilateral, regional and global government networks.
Slaughter explains that new sovereignty is ‘relational rather than insular, in the sense that it describes a capacity to engage rather than a right to resist’.Footnote 32 It follows that the diffusion of power on to ministers, policymakers, legislators and judges operating in a networked global order increases the power of States and enables them to protect and provide for their peoples.
The European Union provides an excellent example of the evolutive concept of sovereignty. The pace of integration among European Member States has been an inspiration for other regional trading blocs since its creation. Rather than seeing the EU as an expression of a loss of sovereignty, States regard membership of the Union as ‘an exercise and expansion of their sovereignty’Footnote 33 by pooling their common interests and engaging in cooperative activities. The challenges of balancing an intrinsic desire for independence against a need to pursue pooled sovereignty has been recognised by the UK government for decades. Speaking in 1999 on the issue of globalisation, then British Prime Minister, Tony Blair, stated:Footnote 34
Any Government that thinks it can go it alone is wrong … Only by competing internationally can our companies and our economics grow and succeed. But it has to be an international system based on rules. That means accepting the judgements of international organisations even when you do not like them.
In the following section, we analyse the second sovereignty fiction: that regulatory sovereignty will enable the UK government to recapture a ‘monopoly of power’ as a global standards-setter. We refer to this as the ‘allocation of power’ sovereignty fiction. Rather than expanding the UK government's political power through regulatory governance, we show how the exercise of regulatory sovereignty will inevitably result in an even greater diffusion of power away from the internal core of State power.
III. THE ‘ALLOCATION OF POWER’ SOVEREIGNTY FICTION: THE TURN TOWARDS REGULATORY SOVEREIGNTY
In the modern political economy, the notion of ‘new’ or ‘disaggregated’ sovereignty best captures the diffusion of power amongst State and non-State actors navigating the complex web of economic, social, political and legal relations that characterise governance frameworks. This is particularly the case for the development and implementation of regulations and standards which operate behind-the-border to regulate what can enter the UK's territory. With global tariff levels remaining relatively low and stable, the use of regulation and standards can create new opportunities for competitive advantage. However, regulatory governance involves the delegation of power and autonomy from the government to other actors.
Governments may use different techniques and instruments to achieve economic goals,Footnote 35 and it is widely recognised that the development and implementation of regulation involves actors operating through a networked order of governmental and non-governmental agencies.Footnote 36 In the 1990s, compliance with international regulatory agreements, like the Kyoto Treaty, was seen to signal a new sovereignty for StatesFootnote 37 and an opportunity to express power through different instruments. Furthermore, and over the past two decades, there has been a notable increase in the amount of private regulation which, in effect, can constrain a State's ability to interact with another State. Regulation is, therefore, best described as a form of contemporary governance,Footnote 38 which includes both public and (transnational) private regulation.Footnote 39 While States retain the right to decide on the level of risk they wish to tolerate in any sector, regulatory governance often requires States to reconcile their competing interests in order to gain access to markets.
Throughout the EU withdrawal process, the UK has asserted its goal to become a leader in global regulation. In other words, the UK is seeking to articulate its regulatory sovereignty to gain economic and political power. But what does it mean to be a regulatory sovereign? In international economic law, concepts such as ‘regulatory sovereignty’ and ‘regulatory autonomy’ are often conflated and used interchangeably. It is argued that the inevitable conflict between regulatory autonomy and trade indicates that regulatory sovereignty must entail not merely autonomy, but instead a relationship between autonomy and cooperation. If one imagines economic activity to operate on a spectrum, then free trade is at one end and regulatory autonomy at the other. Free trade, and the associated removal of trade barriers, cannot be realised to its fullest extent unless it is accepted that regulatory autonomy will, in some respects, be compromised.
Many scholars refer to the term ‘regulatory sovereignty’ uncritically and without defining the parameters of the concept.Footnote 40 Ming Du, who offers a persuasive account of the link between these concepts, asserts that regulatory autonomy is ‘part and parcel’ of national sovereignty.Footnote 41 Du states:Footnote 42
From a domestic perspective, since product standards serve important social objectives, the standard-setting power should remain within the realm of domestic regulatory autonomy, i.e. the decision-making power should be kept under regulatory control. This locus of power is necessary for democratic and accountable government and actually goes to the social and political heart of a member's sovereignty.
Du goes on to argue that there are two interrelated positions that can be identified in the discourse on regulatory autonomy:Footnote 43
First, domestic regulations should reflect domestic social preferences and respond to domestic needs, even if these preferences and needs differ from other Members or international standards. Second, the fulfilment of domestic regulatory purposes reflected in domestic regulations should be honoured despite their adverse trade effects, as long as these regulations reflect genuine preferences and priorities of citizens of the nation State rather than trade protectionism. In other words, a WTO Member should be entitled to national regulatory autonomy as regards the policy objectives it chooses to pursue as well as the means by which it chooses to pursue such policy objectives, so long as they do not constitute protectionism, overt or covert.
However, such an account of exclusionary regulatory autonomy is increasingly difficult to sustain in a networked order where power is diffused among regulatory actors. Traditionally, international trade law has placed only ‘a narrow set of limits on national autonomy’ but since the creation of the WTO, and the increasing legalisation of trade disciplines, ‘trade law has become more intrusive’.Footnote 44 Trade disciplines have expanded to include non-tariff barriers, which are typically determined and governed by regulatory agencies rather than the State. With over two-thirds of international trade operating through global value chains,Footnote 45 multinational corporations have acquired, or been delegated, a considerable amount of power to act as economic agents operating across borders. This signals a changing or diminishing role for the State in regulating and governing economic transactions and the erosion of absolute sovereignty in international law.
Furthermore, and implicit in Du's account of regulatory autonomy, is the WTO's function to allocate authority to States and regulatory agencies. While the WTO plays a role in the disaggregation of sovereignty, this has been made possible because of the globalisation of economic relations which has ‘fracture[d] the internal cohesiveness of the State’ and enabled ‘islands of sovereignty’ to develop within the State.Footnote 46 Authority is vested in central financial institutions, regulatory bodies and even private standard-setting agencies to articulate and defend State interests in international institutions. The rising influence of the international institutions—the ‘econocrats’Footnote 47 of the global order—means that, for better or worse, power is being reallocated from the State toward other public and private actors.
This suggests that exclusionary regulatory autonomy cannot form the basis for regulatory sovereignty; rather, regulatory sovereignty reflects a combination of both the ability to exclude and the desire to cooperate where common interests exist. As Anne-Marie Slaughter has argued:Footnote 48
However paradoxical it sounds, the measure of a [S]tate's capacity to act as an independent unit within the international system – the condition that ‘‘sovereignty’’ purports both to grant and describe – depends on the breadth and depth of its links to other [S]tates.
Under both WTO and EU law, regulatory frameworks, based in part on the mutual recognition principle, have developed in order to facilitate trade between nations. Compliance with regulatory frameworks may be motivated by efficiency to avoid the high costs associated with deviation, by the common interests of the parties, or by normative reasons for action.Footnote 49 The approach adopted by the WTO can be said to be based on regulatory coherence,Footnote 50 while that within the EU single market relies on a deeper form of regulatory cooperation.
When exercising regulatory sovereignty, a State chooses who to include and exclude from access to its markets based on a series of tariff and non-tariff barriers. To enable mutual exchange and the efficient flow of goods and services, trade partners may agree to ‘recognise’ one another's regulatory standards. Recognition is a ‘choice of law rule’ and ‘at its core, entails an agreement to compromise local regulatory autonomy, by accepting that the exporting State regulation is “good enough”’.Footnote 51
Within the WTO, mutual recognition, a concept that is common in trade and investment agreements, is rooted in the principle of ‘narrow reciprocity’, where both the importing and exporting States recognise one another's regulation.Footnote 52 The aim is to clarify, simplify and harmonise regulation so as to facilitate free trade. Regulatory coherence has the potential to reinforce regulatory sovereignty since ‘good regulatory practices’ can enable a State to achieve its policy interests more effectively.Footnote 53 However, regulatory cooperation can also diminish regulatory autonomy, since the State may need to compromise on how to protect its public interests. The risk of arbitration and proceedings through dispute settlement mechanisms can have a ‘chilling’ effect on regulation, both in respect of trade obligationsFootnote 54 and investment provisions.Footnote 55 The concerns that the UK's existing and future trade agreements could pose a deregulatory threat to the UK are, therefore, valid but perhaps overstated. It seems likelier that these agreements could have a chilling effect on the UK's regulatory decision-making.
While the WTO approach is rooted in the principle of ‘narrow reciprocity’ and ‘regulatory coherence’, the EU's internal approach involves a more intensive ‘regulatory cooperation’. Mutual recognition in the EU's Single Market, a principle which leading EU law/legal scholar, Stephen Weatherill, argues does not exist,Footnote 56 carries a different meaning from mutual recognition agreements in trade agreements. The ‘need’ for EU level rules, and the nature and extent of the harmonised rules adopted at EU level, are contested. That ‘need’ is diminished as a result of the existence of the EU principle of mutual recognition, which applies in the absence of harmonised rules, and entails reciprocity on a much broader scale than is found in any other free trade agreement. It entails a general presumption that goods lawfully produced and marketed in one Member State can be freely sold in all others. This presumption is rebuttable, with the burden being placed on States to demonstrate that any measures deemed restrictive are suitable and necessary in order to satisfy public interest goals identified in the Treaties and the case law of the Court of Justice.Footnote 57
The creation of the internal market is celebrated as one of the major achievements of European integration. It involves the creation of a dense, shared, regulatory infrastructure. Its outer limits are constantly contested and redefined as the costs and benefits of closer cooperation in a variety of fields are assessed.Footnote 58 Physical, technical and fiscal barriers to trade between the EU Member States have been progressively eliminated. The internal market endeavour, aptly described by Giandomenico Majone as the creation of a ‘regulatory State’ in Europe,Footnote 59 both reflects and nurtures the interdependence which exists as between the EU Member States, conferring huge advantages upon traders across Europe by affording them close to unfettered access to the European market. It can be said to afford the EU Member States, acting together, a set of powers, whose efficacy is of course contested, to shape regulatory standards across Europe.
Thus, the EU internal market infrastructure has a negative impact on the ability of EU Member States independently to set the regulatory standards which are to apply within each of their own territories, posing real challenges for regulatory autonomy. Nevertheless, the acceptance by EU Member States that they are engaged in a collective project, which rests on the identification of common objectives with powerful enforcement mechanisms to ensure that the relevant presumptions and exceptions are applied consistently, is what enables the benefits of the internal market to be fully realised. Bernard Hoekman and Charles F Sabel argue that the ‘scrutiny required by regulatory equivalence creates novel possibilities for transparent and publicly accountable decision-making, and thus for reconciling sovereign self-determination with the stepwise extension of economic exchange and regulatory cooperation’.Footnote 60 In this context, the language of ‘divided’ sovereignty, where ‘ultimate authority is split between different jurisdictions or entities in accordance with subject matter areas’, or that of ‘pooled’ or ‘shared’ sovereignty, which is said to lie ‘with the peoples of Europe taken together rather than with each of those peoples separately’, is often used.Footnote 61
In the preceding analysis of regulatory sovereignty, the connections between the ‘independence’ and ‘allocation of power’ sovereignty fictions, which have come to characterise popular narratives of Brexit, have been brought into sharp focus. We have demonstrated that the reallocation of power and autonomy, which underpins the concept of regulatory sovereignty, places significant limits on the independence of States to act, be that as a single actor or as part of a regional or international institutional arrangement. Moving forward, the effectiveness of the UK's interventions in global regulation governance hinges on how the UK exercises its regulatory sovereignty as an independent trade actor.
In the following section, an analysis of the EU's evolutive sovereignty and its relationship to international trade will be presented, with a view to identifying the differences between the EU's more established, and the UK's nascent, attempts to become a leader in regulation and standards-setting.
IV. THE EU AS AN EVOLUTIVE SOVEREIGN TRADE ACTOR
Before the strategic orientation of the EU as a trade actor is examined, it is important to reiterate that the key driver of the transformation of sovereignty at the EU level, and through its various processes of enlargement, is an acceptance of the reality of interdependence and of the benefits of trade and cooperation. The more powerful the interlinkages between economies are and become, the harder it is to be both ‘independent’ and ‘sovereign’—at least when sovereignty is, following Locke, understood as the ability to control outcomes and respond to the fundamental needs of the people.Footnote 62 In such an interdependent world, peoples’ needs increasingly depend on the decisions taken not only within but also outside the territory of each individual sovereign State.
Nevertheless, it is clear that absolute sovereignty retains important currency—legally and politically, idealistically and emotionally—notwithstanding the challenges which it has faced in the academic literature as ‘outmoded’ and ‘incoherent’, and ‘not least as a normatively unattractive or inadequate as a way of making sense of emergent patterns of legal and political authority and imagining their future’.Footnote 63 Given that notions of ‘pooled’ and ‘shared’ sovereignty sit uneasily with ‘the sense of sovereignty as a unifying and self-identifying claim made on behalf of the polity’,Footnote 64 it is perhaps unsurprising that responses to it have been characterised by fluidity, instability and resistance.
A further difficulty with the ‘pooled sovereignty’ narrative is that, across many dimensions of the sovereignty debate within the EU, there is a profound tension between those who favour a State-like structure for the EU and those who see the EU as a community of Member States.Footnote 65 The debate can be depicted as one between those who want to replace the sovereignty of the Member States with a new sovereignty which vests in the EU, and those who are trying to reimagine sovereignty (and power) within the context of an interdependent world.Footnote 66 One topical illustration is in relation to the long-standing debate about the supremacy of EU law, a key feature of the Court of Justice's case law since the 1960s. Notwithstanding the claim of the Court of Justice that the EU Treaties create a new legal order of international law, in which the whole of European law prevails over the whole of national law, States’, and in particular national courts’, acceptance of the doctrine of supremacy has, in many cases, only been qualified.
Although national courts have found ways to accord priority to EU law over conflicting provisions of national law in almost all cases, they locate the reasons for so doing not (exclusively) in the ‘new legal order of international law’, but rather (or additionally) within their own domestic constitutional law. In recent years, across a number of Member States, the tensions between the Court of Justice and national courts, and their conception of the EU legal order, have been increasing, with theoretical approaches, such as those grounded in ‘constitutional pluralism’, coming under ever greater strain.Footnote 67 It is little surprise that the strongest voices on both sides of the debate—both those insisting on the unqualified supremacy of EU law and those seeking to resist it—are quick to invoke the language of absolutist sovereignty.
In the context of regulatory sovereignty, these tensions have resurfaced. The EU's approach to regulatory governance has elements both of a response to the perceived need for cooperation among EU Member States for the effective functioning of the single market and of a ‘the pronounced need for self-justification’Footnote 68 to observers within and outside the EU. This has implications not only for the relationship between the EU and its Member States, but also for the EU's ability to cooperate with external partners.
Over the past 30 years, the EU's approach to regulatory governance across social, economic and cultural policy fields has been aimed at mitigating against risks arising from economic activity and preventing misconduct by economic actors, including businesses of all sizes. Internally, the EU has expressed its regulatory sovereignty by requiring that Member States remove barriers to facilitate the flow of goods and services within the internal market. This, coupled with continuous phases of EU enlargement, has resulted in the legalisation, codification and enforcement of regulations. EU regulatory governance has, therefore, moved beyond legislative practices to include bureaucratic and administrative processes, which operate through multi-actor and multi-level settings.Footnote 69
With the rise of regulatory measures being used as forms of ‘hidden protectionism’Footnote 70 and instruments of foreign policy,Footnote 71 the role of regulatory governance has become ever more important. A close connection between risk regulation and market regulation has developed in the EU, and the ‘EU's understanding of risk regulation, and of its role as a regulator, [has] matured in a context of trade and economic competitiveness, which [has] imbued the EU regulatory agenda, strategies and instrumental choices with some profound idiosyncrasies’.Footnote 72 The EU has strengthened its approach to ‘risk regulation’,Footnote 73 especially in the health and environment sectors, and it has developed a strong legislative basis for the precautionary principle.Footnote 74 To simplify its regulatory environment the EU has implemented its Better Regulation Agenda,Footnote 75 which continues to be revised to reflect contemporary concerns.
Inter-State cooperation is fundamental to the sustainability of the EU's single market and its presence as a trade actor on the global stage. President Macron, for example, has said that he believes that the way forward ‘is a strong and political Europe. Why? Because I do not believe that Europe waters down France's voice: France … builds much more useful and stronger action when it does so through Europe.’Footnote 76 The focus is less on the role of ‘Europe’ and of ‘France’ but instead on the aspiration to build ‘useful and stronger action’. In this he echoes Anne-Marie Slaughter's viewFootnote 77 that structures are needed to enable States to accomplish ends which they once could, but no longer can, accomplish alone. These sentiments, which identify sovereignty closely with power, are echoed in the words of EU Commission President Ursula von der Leyen, in a statement given on the day the Trade and Cooperation Agreement with the UK was agreed:Footnote 78
But we should cut through the soundbites and ask ourselves what sovereignty actually means in the 21st century. For me, it is about being able to seamlessly do work, travel, study and do business in 27 countries. It is about pooling our strength and speaking together in a world full of great powers. And in a time of crisis it is about pulling each other up – instead of trying to get back to your feet alone. The European Union shows how this works in practice. And no deal in the world can change reality or gravity in today's economy and today's world. We are one of the giants.
It is clear from this statement that the EU is making a strategic choice to prioritise regulatory sovereignty in its trade policy.Footnote 79 It would appear that the European Commission recognises internal cooperation among Member States as fundamental to the success of the EU's external trade policy. In its 2021 Trade Policy Review,Footnote 80 the European Commission outlined that the future trade policy will be modelled on the concept of ‘open strategic autonomy’, which it declares to be not only a ‘policy choice’ but a ‘mind-set for decision makers’ in the context of international trade.Footnote 81 Strategic autonomy finds its origins in the common foreign security policy (CFSP) sphere. European policymakers define strategic autonomy as ‘the capacity to act’Footnote 82 but the meaning of the term differs in the context of defence and trade.
It is worthwhile linguistically unpacking this concept. It comprises three words—‘open’, ‘strategic’ and ‘autonomy’—which should be analysed individually before being interpreted together. In trade vernacular, the use of the word ‘open’ signals the liberalisation of markets and stands in opposition to concepts like ‘protectionism’ and ‘discrimination’. Under this model, and in its external relations, at least, the EU should be pursuing the elimination of tariff and non-tariff barriers through cooperative practices with its trade partners. The word ‘strategic’ means that the EU must act in the way that is in its material and non-material strategic interests. This has been the long-standing practice of the EU and does not mark a departure from past practices. Finally, the word ‘autonomy’ means that the EU has the capacity to act free from constraint, albeit within the powers designated under EU law and subject to the principle of subsidiarity. Implicit in all three words is the notion that there is tacit or explicit agreement and cooperation internally among the EU Member States. Read together as one concept, ‘open strategic autonomy’ embodies an approach to trade that will enable the EU to exercise its agency and act in a manner that is strategically in its best economic and social interests while maintaining its commitment to the project of market liberalisation. It is an expression of the EU's regulatory sovereignty.
To pursue the model of open strategic autonomy in trade means ‘shaping the new system of global economic governance and developing mutually beneficial bilateral relations, while protecting [the EU] from unfair and abusive practices’.Footnote 83 The emphasis is on the ‘EU's ability to make its own choices and shape the world around it through leadership and engagement, reflecting its strategic interests and values’.Footnote 84 In describing what the open strategic autonomy approach entails, the Commission states:Footnote 85
It reflects the EU's fundamental belief that addressing today's challenges requires more rather than less global cooperation. It further signifies that the EU continues to reap the benefits of international opportunities, while assertively defending its interests, protecting the EU's economy from unfair trade practices and ensuring a level playing field. Finally, it implies supporting domestic policies to strengthen the EU's economy and to help position it as a global leader in pursuit of a reformed rules-based system of global trade governance.
It follows that by exercising ‘strategic foresight’ the EU will be better placed ‘to detect strategic dependencies … to identify existing risks and trends and take appropriate mitigating and strategic actions’.Footnote 86 Open strategic autonomy captures the balance that must be struck between the EU's right to exclude and the coexisting right to be recognised as an autonomous agent in an interdependent and networked global economy. It recognises the diffusion of power across different actors operating in multi-level environments both within and outside the EU and its Member States.
The external dimension, emphasised by Ursula von der Leyen in the quote above, is of critical importance to the claim that the EU is ‘one of the giants’. The aspiration is to use trade policy so as to increase the EU's global power and to ensure that the EU's power and influence extend beyond its borders. Enhancing its strategic autonomy is now an integral part of the EU reducing its dependency on raw materials and pharmaceuticals, for example.Footnote 87 The EU's regulatory governance requires that openness and engagement are ‘a strategic choice that also cater for the European Union's well-understood self-interest’.Footnote 88 In its external trade relations, the reorientation of trade policy to an open strategic autonomy model signals the importance of asserting regulatory sovereignty in the global economy. The ‘strong protectionist approach of EU autonomy’Footnote 89 has long been recognised by the Court of JusticeFootnote 90 and the EU's rhetoric of strategic autonomy overstates the extent to which the EU can dictate the terms of its relationships with external partners. Indeed, international cooperation would be impossible if the EU were to insist that all terms of an agreement must serve the interest of the EU. Much like that of the UK's, the EU's rhetoric is illustrative of the EU's own absolutist sovereignty fiction.
The EU thus accepts one of the core claims of this article: that sovereignty is relational and not insular. By 2024, it is estimated that 84 per cent of the world's gross domestic product (GDP) will be generated from outside the EU, while the EU is expected to grow modestly by 1.4 per cent annually.Footnote 91 To retain its position in the global economy as ‘one of the giants’, the EU will need to harness growth opportunities and this will require cooperation not only between States but among the raft of public and private actors that operate in the networked world order. What is clear is that the effectiveness of the open strategic autonomy model hinges on the compatibility between the internal and external dimensions of EU regulatory sovereignty. There may yet be further sovereignty fictions to be revealed once the model of open strategic autonomy has been implemented over a period of time.
While the EU has, albeit imperfectly, attempted to reconcile political and regulatory sovereignty, and to find ways in which pooled political sovereignty and regulatory power and influence can be combined, the UK now appears to be set on a very different path. In the UK's case, loud assertions of absolutist sovereignty, with references to independence and the freedom from external constraint, are combined with a ‘Global Britain Agenda’, which aspires not only to global influence but also to global leadership and stewardship. In the final substantive section, we evaluate the UK's new ‘common law approach’ to regulatory governance.
V. THE COMMON LAW APPROACH TO REGULATORY GOVERNANCE: AN EMERGENT SOVEREIGNTY FICTION?
The earlier sections of this article mapped the ‘independence’ and ‘allocation of power’ sovereignty fictions that have characterised the UK's withdrawal process from the EU. We have shown that the UK government's communication technique, which uses absolutist sovereignty as a ‘political emotion’, is incompatible with the desire to implement trade agreements with other States. Given that cooperation and partnership are core features of the Global Britain Agenda, the UK government, at some levels at least, recognises that the independence sovereignty fiction does not reflect the realities of international trade. Furthermore, the Global Britain Agenda recognises the different and varied roles public actors and private economic actors—transnational corporations, small and medium-sized enterprises, exporters, importers, sole traders—will play in enabling the UK to realise its ambition to become a leader in responding to global challenges. In effect, this reinforces the relational nature of sovereignty. To become a global actor, the UK government recognises that its capacity to act as an autonomous State is determined by the nature of its relationships with other public and private actors in the international system. Thus, the Global Britain Agenda reveals the independence and allocation of power sovereignty fictions.
A. The UK as a Regulatory Sovereign
In its Global Britain Agenda, the UK Government has expressed its commitment to ‘upholding standards and continuing to be a world leader in better regulation’.Footnote 92 Its ambition is to develop a ‘world class regulatory regime’Footnote 93 through its ‘vision of an open and outward looking Britain that champions free trade and seeks to tackle the ever-growing proliferation of non-tariff barriers which are impeding growth in the world economy. The UK as a liberal and free trading nation will’, we are told, ‘continue to be a driving force for good.’Footnote 94
In May 2021, the UK's independent Taskforce on Innovation, Growth and Regulatory Reform (TIGRR), commissioned by the Prime Minister, Boris Johnson, pronounced its vision for the UK's regulatory environment to emerge as a regulatory sovereign on the international stage with a ‘common law approach’ to regulatory governance. TIGRR has been mandated to articulate the UK's vision as a regulatory innovator on the global stage. Brexit offers the UK an opportunity to project a ‘bold new UK regulatory framework based on a set of principles embedded in UK common law, which prioritises innovation, growth and inward investment as part of the UK's new global trading freedom, building on the UK's global reputation for leadership in setting the highest standards of environmental and consumer protection’.Footnote 95 The TIGRR Report identifies nine areas of regulation that should be prioritised for reform: financial services, data, clinical trials, digital health, energy, transport, space and satellites, agri-environment and nutraceuticals.Footnote 96 By prioritising these sectors for ‘transformational change’,Footnote 97 it is expected that new investment and opportunities for economic growth will be stimulated.
Central to the common law approach to regulation is the diffusion of power, and sovereignty, from the UK government to regulators:Footnote 98
The TIGRR report proposes that this can be achieved by delegating more power and discretion to the UK's regulatory bodies, removing many of the detailed rules in the existing statutory frameworks to make them less prescriptive (replacing them with outcomes to be achieved), and allowing the regulatory regime to be shaped more by case law.
Under the new regulatory approach, it is proposed that UK regulators will be under a duty to promote and report on competition and innovation.Footnote 99 While this marks out a new role for regulators, their increased autonomy will also be met with increased accountability, with scrutiny of their decisions by Cabinet, including the National Economic and Recovery Taskforce (NERT) Cabinet sub-committee on Better Regulation created in 2021.
This ‘sovereign approach’Footnote 100 to agile regulation expresses a move away from the EU's ‘code-based’ approach to a more ‘principles-based’ framework.Footnote 101 It introduces a ‘proportionality principle’, which will make ‘regulation proportionate to both the scale of the risk being mitigated and the capacity of the organisation being regulated’.Footnote 102 The ‘bold’ approach to regulation envisages the UK ‘leading from the front’ to create new markets by shaping and supporting the development of new technologies and ‘recognising what works’ by enabling the revision of regulatory interventions where appropriate.Footnote 103 By reinforcing the commitment to setting high standards domestically and internationally, UK regulators will aim to lead and influence decision-making at all levels. The ability to lead and influence regulatory frameworks is recognised by the EU as an ‘important competitive advantage’Footnote 104 and one that the UK is keen to harness. The TIGRR report sets out the rationale for the common law approach:Footnote 105
UK regulation should build on the strengths of the common law being adaptable. It should evolve in a predictable way. There is scope for elements of retained EU regulation to be rewritten using the common law method in clear, simple English. Case law should be welcomed, so as to regain the benefits of precedent-based, incremental regulation making. The common law system would allow regulators to apply simpler rules, more of which they make themselves, on the delegated authority of Parliament but within defined parameters. This would be inherently more flexible, but will require checks and balances to deliver legal predictability, fairness and accountability.
It is argued that this new approach will ‘allow regulations to be made in a more agile and proportionate way’Footnote 106 as it marks a shift away from the codified approach to regulation pursued by the EU. To simplify regulation, the UK has used the ‘one in, two out’ rule.Footnote 107 A more integrated approach to regulation is imagined under the common law approach, which will see the development of a single framework for regulatory disciplines with a focus on outcome rather than the process of compliance.Footnote 108
However, the extent of the differences between the common law approach to regulation, and the EU's approach to regulatory governance is overstated. For example, the UK's new regulatory agenda foregrounds the proportionality principle; a principle which has a long and rich history in EU administrative law.Footnote 109 Indeed, the EU has been a pioneer in the ‘migration of constitutional ideas’ to regional and international economic law.Footnote 110 While the move away from codification and its associated administrative burdens will inevitably make the process of developing and implementing regulation more straightforward, both the UK and the EU have embedded proportionality in their risk regulation through the precautionary principle and both use strategic foresight to mitigate against risk. Further, while the Global Britain Agenda places significant emphasis on the quality of the UK's new regulatory regime, it does little to indicate how such a regime will translate into a position of global leadership. By embedding the principle of proportionality into its new regulatory agenda, the UK is merely replicating EU practice, thereby reinforcing our claim that sovereignty is not absolute and regulatory frameworks are designed around notions of interdependence. However, and as the UK's regulatory architecture is in the early stages of its development, it is not yet clear whether or to what extent the UK's proportionality principle might diverge from the EU's long-standing proportionality principle. Time will tell whether the UK is able to convince other States of the merits of its new regulatory approach.
An interesting change proposed in the common law approach relates to how the UK proposes to manage compliance. Rather than requiring a ‘tick box’ exercise to demonstrate compliance with codified rules, the UK is proposing a regulatory approach based on outcomes. This approach draws on non-EU practices from Singapore and Japan, for example, which have respectively adopted more forward-looking and outcome-focussed regulation.Footnote 111 It will also build on existing practice in the UK like regulatory sandboxes, the first of which is the Financial Conduct Authority's sandbox on regulating fintech which has been an important site of experimentalism for financial services. The use of sandboxes where specific conditions are met enables regulators to balance innovation with risk mitigation.Footnote 112
The risk associated with the use of sandboxes has been noted by the UK Department for Business, Energy and Industrial Strategy (BEIS), which has formally opened a consultation on the relevant aspects of the UK's ‘better regulation frameworkFootnote 113 raised in the TIGRR Report. In the consultation paper, BEIS notes that the delegation of power to regulators and the use of regulatory sandboxes may have mixed results:Footnote 114
The pros include the ability for regulators to do more through guidance, decisions and rules that can be adapted quickly outside of legislative frameworks. This could allow them to adapt more quickly to disruptive new technologies or other changes in circumstances … On the other hand, this approach could lead to more uncertainty in the regulated markets and litigation. It could ultimately lead to more regulation being created overall, through mechanisms which are less responsive to public scrutiny and democratic accountability.
Notwithstanding the UK's absolutist sovereignty rhetoric, the success of the proposed common law approach to regulation is contingent on the delegation of autonomy and power from central government to other actors. As such, this agile regulatory approach serves as a contemporary example of diffused regulatory sovereignty and does not align with the government's proclaimed Brexit ambition to recapture absolutist sovereignty.
B. Regulatory Governance in the UK–EU Relationship
The UK Government takes pride in the fact that it:Footnote 115
… completed our withdrawal from the EU and agreed a Trade and Cooperation Agreement – the broadest and most far-reaching bilateral trade agreement ever. Many said this would take years to complete or could not be done at all. We never believed that. Instead we delivered a platform for a new relationship between this country and the EU in record time.
While there are differences between the EU's open strategic autonomy and the UK's Global Britain Agenda, there are also synergies between them. Notwithstanding areas of common interest, the protection of sovereignty has been a primary driver behind the Withdrawal Agreement,Footnote 116 the Northern Ireland Protocol,Footnote 117 and the Trade and Cooperation Agreement.Footnote 118
For both the EU and the UK, there have been concerns that a future trade deal would undermine their respective high standards on social, health and environmental matters. Protecting regulatory autonomy has been central to the UK–EU trade negotiations. The commitment to maintaining high environmental standards features as part of the level playing field negotiations, which included heated debates about the inclusion of a ‘ratchet clause’,Footnote 119 non-regression clauses and/or the ‘dynamic alignment’ of regulatory issues. In order to reach agreement on both the Withdrawal Agreement (and the Northern Ireland Protocol) and the Trade and Cooperation Agreement, the UK accepted ‘more robust [level playing field] and governance mechanisms than it wanted’. It ‘retained the right to diverge, theoretical sovereignty, but that right did not come cost free’.Footnote 120
To ensure that minimum standards are maintained on implementation of the Trade and Cooperation Agreement (TCA), the parties agreed to non-regression clauses in key regulatory areas. Title XI TCA sets out important regulatory provisions under the agreement relating to the level playing field, which aim to enable the parties to ‘maintain and improve their respective high standards’ in matters relating to the level playing field and sustainable development. However, the title of Chapter XI has been described as ‘somewhat of a misnomer’ since the obligations set out therein are ‘more akin to non-regression clauses than any form of dynamic alignment, or indeed level playing field’.Footnote 121 Under Article 356 (‘Right to regulate, precautionary approach and scientific and technical information’) each party can ‘determine the levels of protection it deems appropriate’.Footnote 122 The ‘precautionary approach’ provides that ‘where there are no reasonable grounds for concern that there are potential threats of serious or irreversible damage to the environment or human health, the lack of full scientific certainty shall not be used as a reason for preventing a party from adopting appropriate measures to prevent such damage’.Footnote 123 The precautionary approach appears to be a weakened version of the EU's precautionary principle, which requires scientific evidence to form the basis of risk regulation. In this instance, the UK's approach to regulatory governance of health and environment might perhaps lead to the lowering of standards in its relations with other States.
Non-regression clauses have been set out in the TCA to protect the regulatory sovereignty of the UK and the EU in relation to labour and social policy (Article 387), the environment and climate (Article 391). In respect of both provisions, there is a clause which stipulates that ‘A Party shall not weaken or reduce, in a manner affecting trade or investment between the Parties, its … levels of protection below the levels in place at the end of the transition period, including by failing to effectively enforce its law and standards.’Footnote 124 It remains unclear what the scope of the non-regression clauses might be in practice, but the language of these provisions reinforces the importance of preserving regulatory sovereignty in areas of significant national interest. The parties may also seek to rely on exceptions clauses enshrined in the TCA as a defence to otherwise discriminatory trade and regulatory measures.Footnote 125
A further measure to preserve the regulatory sovereignty of each Party is Article 411 TCA, which contains the ‘rebalancing’ clause.Footnote 126 Under Article 411.1 the parties recognise each other's right to determine its future policies and priorities with respect to labour and social, environmental or climate protection, or with respect to subsidy control, in a manner consistent with each party's international commitments, including those under this Agreement. Nevertheless, they acknowledge that significant divergences in these areas can be capable of impacting trade or investment between the parties in a manner that changes the circumstances that have formed the basis for the conclusion of this Agreement, and so allow either Party to take ‘appropriate rebalancing measures’ to address the situation.Footnote 127 In acknowledgment of the potential difficulties here, Article 411.4 states that in order to ensure ‘an appropriate balance between the commitments made by the Parties in this Agreement on a more durable basis’, either party may request, no sooner than four years after the entry into force of this Agreement, a review of the operation of this part of the Agreement.Footnote 128 While there are significant questions about the operation of these clauses, in relation both to the substance of the ‘trade’ test and to the effectiveness of the enforcement mechanisms, it is clear that the constraints imposed by the TCA ‘qualify the control that has been repatriated’.Footnote 129
It is too early in the relationship to speculate on how the UK and EU approaches to regulatory governance may align or diverge from one another. To date, the main focus has been on the implementation of the Northern Ireland Protocol, and fishing quotas.Footnote 130 Sovereignty, and the perceived need to protect regulatory autonomy, has created friction between the UK and EU and this has led to a lack of trust. While both parties are committed to a rules-based system, the UK's accusation is that the EU is exhibiting ‘legal purism’,Footnote 131 and sticking too closely to the terms of what was agreed in the Protocol, without showing the imagination and flexibility required to meet UK concerns and to react to developments in Northern Ireland. In the name of pragmatism, the UK is seeking to revisit agreements it has recently signed (and on the back of which a general election victory was obtained), without seeming to be aware of the consequences which an erosion of trust in the UK is likely to have on its ability successfully to pursue its Global Britain Agenda. What is clear is that the notion of absolute sovereignty can no longer be used accurately to capture or define State interactions in the contemporary global economy.
VI. CONCLUSION
The purpose of this article has been to illustrate three sovereignty fictions associated with the UK's ambition to emerge as a regulatory sovereign through its Global Britain agenda. Absolutist sovereignty is one fiction of the UK's ambition to become a global leader in international trade. It has been shown that the diminishing significance of tariffs and the increasing importance of non-tariff barriers operating behind-the-border as market access tools and instruments of foreign policy have led to a shift in emphasis toward regulatory sovereignty. Sovereignty has been used a discursive tool to justify the legal, economic and social choices made by the UK, and the UK government has popularised the rhetoric of absolutist sovereignty as a communication technique to gain public buy-in to the withdrawal process. The independence fiction does not reflect the realities of ‘doing business’ with the wider world in the modern political economy.
The second sovereignty fiction addressed in this article relates to the allocation of power in governance frameworks. This analysis has been structured on the basis of the arguments put forward by leading scholarsFootnote 132 that sovereignty is a relational concept: that the capacity to act as an autonomous agent relies on the relationships that have been cultivated with a range of other actors in the international economy. The evolution of sovereignty away from exclusively State-centric modes of governance, towards ‘disaggregated’ models operating in networked global orders has been charted. Implicit in this ‘new sovereignty’ are cooperation and partnership with other States and the diffusion of power and autonomy to a range of public and private actors. In an increasingly interdependent and globalised world, cooperation, and participation in international governance networks, increases the power of States, enabling them better to protect and provide for their peoples. It has been shown that within the EU, political sovereignty has been reconceptualised and deprioritised, although absolute conceptions of sovereignty retain significant political salience. The evolutive nature of sovereignty has been analysed in the context of regulatory governance to illustrate how States operate within networked orders of public and private actors to protect and grow their economies. This analysis leads to the third sovereignty fiction, which arises from the interplay between the other two: absolute sovereignty can no longer be used to capture or define State interactions in the contemporary global economy.
With a focus on the EU and UK approaches to regulatory governance, this article has highlighted sovereignty fictions and argued that regulatory governance, as an expression of regulatory sovereignty, necessitates constraints on absolute State power. By charting the evolutive nature of sovereignty, it has been demonstrated that cooperation is a core feature of regulatory sovereignty. Through institutional frameworks, States must structure cooperation between actors so that States can control outcomes and to respond to the fundamental needs of the people. The EU's open strategic autonomy model and the UK's common law approach to regulation have been examined, and opportunities identified for the UK to mark out a new and more innovative path to achieve its regulatory aims. But, in both contexts, sovereignty fictions can be disruptive to the realisation of policy goals. To emerge as leaders in global trade and regulation governance both the UK and EU must address the blind spots in their approaches which are, in large part, driven by an inability to look beyond or resolve sovereignty fictions.
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