Theresa May Is Said to Propose Blurring Key Brexit Red Line

(Bloomberg) -- Prime Minister Theresa May is drafting plans to sign British businesses up to a clutch of regulators that will be overseen by the European Court of Justice, a move likely to spark a fierce backlash from Brexit supporters in her party.

Two people familiar with the matter said government documents propose placing industrial sectors such as chemicals under the jurisdiction of European regulators, which are in turn overseen by the ECJ. The move would be designed to help maintain the best possible access to the EU single market after Brexit.

Brexit campaigners already fear May is planning to water down their vision of a clean split with the bloc, with some Conservatives even prepared to oust her if she keeps the U.K. tied too closely to European rules. They see escaping the power of the ECJ as totemic.

May's senior cabinet colleagues agreed on Thursday to align British regulations with those of the European Union in some sectors, such as car-making, as they set out the negotiating position to take to Brussels when trade talks begin next month. 

The EU has rejected what it's seen of the U.K. position so far, in part because of May's long-held red line on the role of EU judges. It also rejects the sector-by-sector approach as cherry-picking the best bits of the single market. EU President Donald Tusk said on Friday the U.K. position was "based on pure illusion."

Debate Goes On

One official said the issue was still being debated in strategy meetings among senior ministers, who cannot agree. The idea was drawn up by the Brexit negotiating team in the Cabinet Office and the Department for Exiting the European Union.

A government spokesman said no final decisions have yet been made on the U.K.'s future relationship with the EU's agencies and bodies after the country leaves.

A senior Conservative Brexit-backer said the civil service seemed to believe that the U.K. had already opened the door to a long-term role for the ECJ when May agreed to give it a place in guaranteeing EU citizens' rights during the transition phase. May's team continues to say in public that the ECJ won't have jurisdiction in the U.K. after Brexit.

The Brexit supporter said that when the public finds out that the U.K. will remain under the authority of the ECJ in so many areas of trade, voters will react angrily. Breaking free from the rulings of European judges was a key part of the campaign to leave the EU in 2016 and May quickly made it a red line when she came to power.

Read more: May Under Pressure After Tory Hardliners Demand Clean Brexit

The prime minister promised to end the jurisdiction of the ECJ as part of her blueprint for a hard exit, leaving both the single market and customs union.

“We will take back control of our laws and bring an end to the jurisdiction of the European Court of Justice in Britain,” May said in January last year. “Leaving the European Union will mean that our laws will be made in Westminster, Edinburgh, Cardiff and Belfast. And those laws will be interpreted by judges not in Luxembourg but in courts across this country -- because we will not have truly left the European Union if we are not in control of our own laws.”

May has already conceded that ECJ rulings will continue to apply to the U.K. during the transition period and earlier this month she suggested the court could still have a role in the future security partnership between the U.K. and the EU.

One official also confirmed reports that May is considering abandoning her fight with the EU on the rights of EU citizens to stay permanently in Britain if they arrive during the two-year transition period. The matter is not yet settled but the EU has pushed back very hard against May's position, the person said.  

To contact the reporter on this story: Tim Ross in London at tross54@bloomberg.net.

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Emma Ross-Thomas

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