EU lobbying in a post-Brexit world
Brexit’s over! What can corporate affairs professionals do now?
The UK has left the EU. Corporate affairs professionals and lobbyists might be hoping to kick back after a painful and protracted divorce process – the tough work of hammering out agreements and “getting Brexit done” is finished!
I’ve got bad news. In a post-Brexit landscape, I believe that corporate affairs functions will have more, rather than less, EU lobbying to do.
Why? I see two primary reasons: reduced access to decision-makers and the emergence of an additional UK-EU regulatory arena, namely the TCA.
For UK organisations, associations, and companies, these two reasons will drive greater demand for lobbying and advocacy resources.
Reduced access to decision-makers
Yes, we left – but the EU still impacts us because we’re still affected by it’s regulatory developments. UK companies are still dealing with the EU: importing or exporting, or via ownership of assets, or via branches, or through many other channels and for many different reasons.
Does that mean equal work for corporate affairs departments? Actually, it means more work. Advocacy just got a lot harder, because building relationships with UK representation has disappeared inside EU decision-making bodies. We have no influence on formal voting and no informal sway. We’re facing a tougher monitoring of dossiers and more difficult intelligence-gathering in the corridors of power.
Let’s consider just some avenues of access we’ve lost:
No UK officials in the EU Commission departments.
No UK representation in the EU Council and its working groups (COREPER, etc).
No Members of EU Parliament representing you, including UK nationals as MEP assistants.
No representation in the Committee of the Regions.
No representation in the European Economic and Social Committee.
No representation in official EU agencies such as EMA (pharma), EBA (financial services), and EFSA (food safety), to name a few.
Fewer representatives in semi-formal and informal bodies, such as EU-wide trade bodies and sectoral associations (changed membership).
Corporate Affairs directors working for UK-based organisations must now frame the UK as a ‘third country’ outside the EU. Having lost that crucial direct access and the ability to shape intelligence, those representing UK interests must now build up indirect influencing capabilities. For example, via memberships of multinational interest representational bodies, or retaining public affairs consultancies, or hiring public affairs experts in-house. This will, of course, come at a cost…
How much extra will lobbying actually cost?
To answer this question, we can look at a country and set of companies in a similar situation: the USA. For interest-representation purposes, the USA is similar as it’s not an EU-member, has a large and diversified economy with many ties to the EU member states (ranging from agriculture to data exchange and financial services), and has a high stake in the outcomes of EU regulations.
Via the EU’s Transparency Register, where we can access information about lobbying actors and key data on their actions, we can see how much US-based companies, consultancies, NGOs, and think tanks spend on EU-lobbying.
The Register shows that in 2019, 431 USA-based organisations together spent just under €128 million on EU corporate affairs management – an average of over €295,000 per organisation. In the same year, the UK (then still in the EU) had 966 organisations spending around €153 million – on average, just under €158,000 per organisation.
Comparing total average spend between the US and the UK, we can see the average UK organisational corporate affairs budget must rise to around the same level as the USA: from €158k to €295k. A rise of 187%!
The Trade and Cooperation Agreement (TCA)
The brand-new regulatory governance system between the UK and EU is the other primary reason corporate affairs budgets must inflate, and their staff work longer and harder. The TCA introduces a whole new lobbying arena (see TCA text, Title III). A simplified schema is shown here:
The new UK-EU governance structure looks significantly more complex than the USA-EU governance, which consists only of a Council and three advisory groups (see here for more details). UK companies will need to lobby in two places: the EU arena in Brussels (with 27 capitals in the hinterland) and the TCA arena.
So corporate affairs professionals – I’m afraid the hard work is just beginning. Now we’re out of the EU, organisations will need a boost in capabilities and resources to successfully represent UK interests. Be prepared for the TCA and the lack of access to decision-makers to be your first big challenges.
Tim Werkhoven is a corporate affairs director and consultant.