EU Chief Brexit Negotiator to the UK Michel Barnier meets Brexit Secretary David Davis at Downing Street, London, ahead of talks with Theresa May. February 2018. Isabel Infantes/Press Association. All rights reserved. Quite how the EU and the UK will be governed post-Brexit remains controversial. One of the main arguments put forward by the Brexiteers in the UK for ‘leaving Europe’ was that the EU had embarked on an inevitable journey towards a fully-fledged federal state, that there was little that could be done to alter this course, and that the UK wanted nothing to do with it. So, the only reasonable response was to withdraw from the whole enterprise and restore the sovereignty of the British state.

But two issues immediately arise in this context. First, was the EU on a journey towards a federal state (or had it, for all intents and purposes, already arrived there)? And secondly, is the UK state still an entity that could reasonably be described as unitary – a state capable of being governed from a single centre of sovereign power, namely the Westminster parliament?

This second issue, of course, has been debated for a long time, particularly after the various rounds of UK domestic devolution since 2010 and the emergence of mayoral-based governmental forms in several UK cities since. But it will arise acutely again in the near future – post-Brexit – because the issue will then move from arguments about the governance of the EU’s internal market and the UKs relationship to that framework, to how the UK’s own internal market will be governed. What are going to be the commercial and legal principles and relationships between the various constituent elements of the UK internal market?

Whilst the UK remains part of the EU, it is the Treaties and the ECJ that provide the ultimate constitutional context for the governance of the UK internal market. But that will be swept aside after Brexit. The focus will shift to the UK internal market itself – indeed, it has already done so to some extent, given the issue of the border between the Irish Republic and the rest of the UK.

In a moment I will come back to the constitutional status of a post-Brexit UK and its internal market. But first I outline several principles of constitutional governance that pertain to federalism and the EU. I draw a distinction between federalism and confederalism in this context, because my argument is that this latter formulation better describes both the current status of the EU and what is likely to emerge post-Brexit in the UK.

Constitutionalization or governance?

One further preliminary point is called for, however. The terms ‘governance’ and ‘constitutional’ have so far been run together (as in ‘constitutional governance’). But shouldn’t they be prized apart? Several authors have argued that the EU represents a feasible model for global governance beyond just the EU itself. Its mechanisms and procedures, as Cohen and Sable (2006) or Zaring (1998) suggest, should be scaled-up to the global level. This is to argue that fundamentally we should abandon the language of constitutionalism and instead adopt the language of governance: or perhaps better put, develop constitutionality from governance. Very much drawing on a reflection from the EU and its internal governance practices, this position stresses the role of multilevel governance, open methods of coordination, comitology, and the like. Given the well-known difficulty of the EU in developing a formal constitution of its own, the idea is to give up on this and go for a different conceptual language. Constitutionalism is a language of state making in particular: it is therefore unsuited for the EU and the new era of globalization. (On the complex relationship between constitutionality and governance see Thompson 2025b.)

Several difficulties arise with this line of argument. Clearly, the EU is not a unitary state (and very unlikely to evolve to be one) so in this respect the argument is well taken. But what, then, exactly is the EU? If it is not a unitary state then is it already a federal state or one in the making? If it were, this might make questions of its formal constitutionalization more pertinent for the scaling up approach.

However, the argument here is that the EU is actually closer to a form of ‘confederal public power’ than it is to a federal (or any other) state. And this has important consequences for the lessons that might be drawn from the EU as a model for the status of the post-Brexit UK and the wider arena of global governance beyond.

Federalism and confederalism

There are two key differences between federal and confederal political formations which can illustrate this point.

With federal structures the federees concede sovereignty to the federal power in a single act. From then on it is the federal authority that exercises decisive power over the federees. Although federated states may retain or share some residual powers it is the federal authority that can constrain those powers and ultimately override them. In addition -– and as a consequence – there is no legal way to leave a federation: federations only break up after a war (e.g., the Yugoslav Federation) or as a consequence of a constitutional crisis that destroys the federation and founds a new Grundnorm for the parties in dispute (e.g., the Czech Republic and Slovakia).

On the other hand, confederations are limited by the treaties that establish them and continually adapt them. With confederations the confederees only concede limited powers to the confederal authority, and they do this on an issue by issue basis, as a result of a series of treaties. Each time there is a rearrangement of powers between the confederees and the confederal authority a new treaty is negotiated. Thus, fundamentally the confederees retain the ultimate power over the confederation, and they also retain the legal power to leave the confederation if they so wish.

Thus, within federations power and authority travel downwards, so to speak, from the federal authority to the federees. With confederations it is the reverse: power and authority travel upwards from the confederees to the confederal authority.

This confederal-type structure can readily be seen in operation in the case of the EU. The key treaties have been those of Rome (1957), Maastricht (1992) and Lisbon (2007) each of which have ceded only a limited range of powers to the European Union. The Maastricht Treaty set up the existing economic and monetary union via the single market programme. And the Lisbon Treaty contains an explicit clause granting the right of its signatories to leave the EU if they wish (as exercised recently by the UK in the context of the Article 50 process). But the Maastricht Treaty commits all members of the Union to eventually joining the Euro-zone, other than those three countries (the UK, Denmark and Sweden) that negotiated an opt-out from this obligation (Sweden’s op-out is based upon a technicality. It has not joined the ERMII system – a pre-requisite for full Euro-zone membership – so it has a de-facto opt-out as a consequence).

Thus, any existing Euro-zone member country cannot leave the Euro-zone without also leaving the EU at the same time. There is no separate legal provision for leaving the Euro-zone. This created a cruel dilemma for Greece as the Euro-zone sovereign debt crisis unfolded in 2011. It might have been sensible for Greece to have left the Euro-zone during that crisis period; but it could not do this without leaving the EU as well. And once out of the EU, Greece would never have been readmitted.

Note that the claim here is not that the EU is a confederal state, but that it is a confederal public power with only limited authoritative powers, themselves granted as a consequence of the treaties signed by the participants.

The founding treaty in the UK case is the 1706 Treaty of Union (ratified by the 1707 Acts of Union), which has most recently been modified by the two Scotland Acts in 2012 and 2016, a Wales Act of 2015 and (arguably) the Good Friday Agreement of 1998 between the UK and the Irish Republic. Of course, the EU is an incredibly complex legal, institutional and organizational entity not all of which can be readily captured by the single idea of a confederal public power. But this captures enough of its basic characteristics for us to draw clear lessons for the imagery of the post-Brexit UK and the global system beyond.

This is not one to be based upon the EU’s internal governance mechanisms however, but as a confederal form of power in itself. The international commercial system is more like a version of this confederal public power than it is like an EU governance structure (Thompson 2015a). And this more appropriate imagery is pertinent for the UK’s internal market as well.

UK Internal Market

Unlike the EU, the UK is a proto-confederal political entity only, as further discussed in a moment. Much comment on constitutional reform in the UK, particularly in a post-Brexit context, suggests the formal development of a federal structure: the UK should become a federal state with separate Scottish, Welsh, Northern-Irish and crucially English Assemblies, with the Westminster parliament becoming the seat of the Federal government (an imagery very much in play in the terrific book by Barnett 2017).

But this is highly problematical given the severe asymmetries between England and the other constituent elements in terms of populations and economic power. So, this is very unlikely to happen. Rather, the more profitable route to consider is the UK as a confederal political formation in the making. Confederations are messy entities with lots of ambiguous sources of power and authority and loose-ends. They are flexible in their design and operation. Since the debates about the shortcoming of the Confederacy in the USA in the 1780s, the idea of confederations has had a bad press. But it would be good to revive this interest in the current era. We are going to have to get used to dealing with lots of ambiguity and loose ends in a world of increasingly fragmented economic and political systems. Why not embrace this, rather than sticking with conceptual structures that privilege outdated formulations like unitary states or federations?

One of the worrying developments in connection to the internal UK market is the way that this is being virtually ignored in the UK. Other than the issues of the possible hard border within the island of Ireland – which has come into prominence recently – there has been almost no discussion.

The Prime Minister promised a consideration of the issues only after the main negotiations over Brexit had ended (Reuter Report, 7 December 2017) and there was a very brief exchange in the HoC in January 2018 (Hansard, 16 January 2018, Volume 634). The negotiations over Brexit have completely eclipsed the issue.

Of course, these are related in many ways and the Irish border question is no trivial matter. But there are over 3,000 EU single market directives which in some way or another will be repatriated to the UK with the passing of the European Union (Withdrawal) Bill. Traditional single market issues deal with matters like the harmonization of goods safety standards, common labour market conditions (rights, qualifications, pensions and unemployment insurance), tax differences (especially consumption and corporation taxes). Issues like social and environmental ‘dumping’ involving a minimum level of labour rights and strong anti-pollution rules, and the alignment of regulatory norms either through mutual recognition or harmonization.

All these could become quite contentious. What is to become of the EU working time directive, the part-time workers directive and the temporary workers directive (embodying rights UK governments have consistently fought against)?

This may all sound mundane and easy to deal with but there are emerging differences between the Scottish, Welsh and Northern Irish legislative positions on these, let alone the English, which could become more acute after Brexit.

According to one of the few politicians to comment publicly on this matter (David Linton, Chancellor of the Duchy of Lancaster – in the Daily Telegraph 24 Feb 2018) “We proposed that powers returning from Brussels which touch on devolved matters should transfer directly to Holyrood, Cardiff Bay and Stormont. Westminster would only be involved where, to protect the UK internal market or to meet our international obligations, we need a pause to give the governments time to design and put in place a UK-wide framework”.

So the huge amount of legal and political work simply in order to safeguard basic standards of legal continuity and legal certainty, has hardly begun. 

In addition, the UK needs to design and implement completely new regimes to govern sectors such as agriculture, fisheries, customs and (EU) immigration.  Several Bills meant to deal with these issues are at present stuck in Parliament, awaiting the outcome of the Brexit negotiations.

Conclusion

What is needed is for this to be politically addressed head on. At the moment the UK is an interdependent market system but not a single internal market system. Just like the EU internal market the UK internal market will have to be constructed legislatively. As it stands, when disputes arise – which is almost inevitably given the uncertainties – this will go immediately to law, with the Supreme Court as the ultimate backstop.

But on what basis can it adjudicate? This is unsatisfactory unless one thinks that judges are the best guarantee of wider commercial justice. Without a strong input from the political process, democracy will be further compromised as lawyers, barristers and High Court judges begin to make more political decisions on our behalf.

But if we are looking to the overall architecture of this process, it is the imagery of a confederal political configuration that begins best to describe it. The UK is neither a unitary state any more nor is it evolving towards a proper federal formation. Whatever happens it is going to be a rather loose configurative order that emerges, with the regulation and management of the UK internal market at its centre.

Of course, not every feature of a confederal structure is present, but increasingly the constituent elements of the UK single market and its polity will begin to exercise greater autonomy as legitimacy and powers move in complex directions. Such a confederal governance formation, initially centered on the economy, will increasingly put in question the characteristics of the political formation of which it is a key part.

References

Barnett, A. (2017) The Lure of Greatness: England’s Brexit and America's Trump, Unbounded, London.

Cohen, J. & Sabel, C.F. (2006) ‘Global democracy’, Journal of International Law and Politics, Vol.37, pp.763-97.

Thompson, G. F. (2015a) The Constitutionalization of the Global Corporate Sphere? Oxford University Press, Oxford.

Thompson, G.F. (2015b) ‘The constitutionalization of everyday life?’ Chapter 10 in The Evolution of Intermediary Institutions in Europe: From Corporatism to Governance, eds E Hartman & P.F. Kjaer, Palgrave Macmillan, Basingstoke, pp. 177-97.

Zaring, D. (1998) ‘International law by other means: the twilight existence of international financial regulatory organizations’ Texas International Law Journal. Vol.32, No.2, pp. 281-330.