Any future EU-UK trade agreement post-Brexit will have to deal with the financial sector; and the long-term consequences of such a deal could be dire. Despite current uncertainty over Brexit, such a trade deal remains the most likely scenario. It will include the highly contentious financial sector, whose lobbyists have influence in both London and Brussels, and are already coordinating to ensure a deregulatory and industry-friendly agreement.
A new report by SpinWatch (UK), Corporate Europe Observatory (EU), LobbyControl (Germany), and Observatoire des multinationales (France) highlights the risks posed by giving greater control over rule making to industry. Worryingly, the formula pushed by the financial sector – and devised by lobby groups that bring together big players from Britain, continental Europe, and the US – has traction both in London and Brussels.
The negotiations will deal with the level of market access between the two sides (’regulatory cooporation’) and how to handle future rule-making. The ‘regulatory cooperation’ approach was heavily criticised by broad coalitions of NGO’s during previous major trade negotiations (such as TTIP and CETA) because of the undue influence it gives to industry. Yet it is the financial sector’s preferred method to ensure mutual market access. Under regulatory cooperation, divergence and conflicts between the parties over how the financial sector is governed are dealt with through bureaucratic, opaque procedures that allow lobbyists to exert influence behind the scenes, and avert public debate about crucial issues.
The report ‘Brexit, finance sector lobbying and regulatory cooperation’ by Corporate Europe Observatory, LobbyControl, Observatoire des multinationales and SpinWatch shows how the financial sector has been coordinating a lobby campaign from very early on in order to influence the negotiations for a future trade arrangement. While they do not appear to be successful on all points, they have the ear of the negotiators on regulatory cooperation.
Kenneth Haar, Corporate Europe Observatory, said: “The experiences with regulatory cooperation on finance are pretty terrifying. During the financial crisis the flawed supervision of insurance giant AIG was down to just that: regulatory cooperation between the EU and the US that proved to be a very bad idea. We should not risk repeating that.”
Max Bank, LobbyControl, said: “What we have uncovered is a plethora of highly dangerous proposals. Besides regulatory cooperation, they include special courts that will allow financial corporations to attack any new regulatory initiative. And it doesn’t end there. One association argues there should be a stop to new regulation entirely."
Tamasin Cave, SpinWatch, said: “Transparency is set to be minimal at the trade negotiations – on both sides. Both the European Commission and even the European Ombudsman have opted for a standard well below even the TTIP negotiations."
Olivier Petitjean, Observatoire des multinationales, said: “For the moment, most of the debate around Brexit and finance has been about which European capital would get the most spoils from the City once it loses its access to the EU. But behind the scenes, all the big players in the financial industry are also pursuing a long-term strategy, using Brexit to get a bigger influence than ever on regulation on both sides of the Channel.”
While it is clear in the report that the bulk of lobbying so far has been performed by groups with their base in the City of London, there seems to be agreement among the big European players about the way to go with the negotiations. There will be pressure on both sides for a deal that provides the financial sector with further elbow room in the future.
Photo : Paolo Magari CC via flickr