Analysis 5 of the Brexit Deal: Environment and Climate Provisions

 

 

Markus W. Gehring, University of Cambridge; J.S.D. (Yale), LL.M. (Yale), Dr jur. (Hamburg), MA (Cantab). This short piece shares thoughts with the Marios Tokas and Markus W. Gehring, Briefing 4: The UK’s Draft Position - Exploring the basis for negotiation with the EU, CISDL Legal Brief 2020

 

Introduction

 

With the beginning of the new year, the relationship between the UK and the EU was fundamentally reset as the Brexit transition period ended and the new EU-UK Trade and Cooperation Agreement (TCA) came provisionally into force. This blog post looks at the provisions of the TCA on environment and climate change, following on from four earlier analyses on this blog, on: an overview of the TCA; the social security provisions; human rights; and dispute settlement. (Updated April 28 2021 to refer also to the final Article numbering of the TCA).

 

This new agreement is not just the first ‘less free trade’ agreement, but also contains a number of important innovations that are not normally found in free trade agreements (FTAs). This paper offers an initial, tentative review of the TCA and compares it with the UK and EU draft agreement texts on matters relating to the environment, particularly climate change.

 

It is worth noting that the TCA leaves the (limited) climate cooperation in the Withdrawal Agreement untouched. The Withdrawal Agreement recognised the need for close climate cooperation, particularly in the Ireland/Northern Ireland Protocol (Backstop) and includes a carbon price as an important element. However, it does not mandate the full participation of Northern Ireland in the EU Emissions Trading System outside the energy sector.

 

Despite the Political Declaration mandating no more than a discussion about climate cooperation, “both Parties could choose to safeguard strong climate legislation within a side agreement or a chapter of a new UK-EU trade deal.” As we indicated in 2019, much inspiration could be drawn from existing FTAs through ‘[a] combination of the most robust provisions – that ensure full compliance with the Paris Agreement and the highest level of ambition”, which could have the “potential to blaze a trail for deep climate cooperation in future free trade agreements, potentially for all Paris Agreement Parties around the world.” (Markus Gehring and Freedom-Kai Phillips, ‘Legal Options for Post-Brexit Climate Change and Energy Provisions in a Future UK-EU Trade Agreement’ (European Climate Foundation Paper, 2019)) The resulting set of TCA provisions is innovative in that it constitutes the “first trade agreement to make the climate crisis a ‘make-or-break issue” (See my comments to The Independent)

 

Preambles

 

Environmental protection and climate change feature prominently in the TCA Preamble. While the text of the preamble is similar to that of other EU FTAs, the TCA is the first EU FTA to immediately elevate climate change as an essential element of the agreement:

 

“REAFFIRMING their commitment to democratic principles, to the rule of law, to human rights, to countering proliferation of weapons of mass destruction and to the fight against climate change, which constitute essential elements of this and supplementing agreements”

 

Due to its prominence in the preambular text, reneging on climate commitments by either party could lead to a material breach of the treaty and a subsequent suspension or termination. Notably, the three dimensions of sustainable development, namely the economic, social, and environmental dimensions, as underlined in the preamble are resonant of both the EU treaties and previous FTAs. The second relevant preambular paragraph is a new addition and uses language agreed to in the Withdrawal Agreement Political Declaration, underlining high levels of environmental protection and climate change ambition as priorities, while ensuring a level playing field for “open and fair competition and sustainable development”. Preambular language has proven to be a significant element of trade agreements, particularly in light of the WTO DSB in the US-Shrimp dispute, where preambular language was used to add colour and shading to their interpretation of Art. XX GATT.

 

Material Breach

 

Article 764 (previously COMPROV.5) declares the fight against climate change as a one of the bases for cooperation alongside democracy, the rule of law, human rights and the non-proliferation of WMDs. Further, Article 771 (previously COMPROV.12) affirms that Article 764(1) (previously COMPROV.5(1)) is an essential element of the partnership established by the TCA as well as “any supplementing agreement.”

 

In the May 2020 EU Draft, the collective goal of combating climate change was elevated to a guiding principle, informing the operation of the entire treaty and was consequently placed at its beginning. This strongly worded provision, with mandatory language, was left almost unchanged in the TCA; the only slight change incorporated the gender-neutral language of “human-caused” climate change, as opposed to “man-made climate change” found in the EU draft, with no difference to its material meaning.

 

The language is one of the strongest found in any trade agreement, declaring that “climate change represents an existential threat to humanity”, requiring each Party to “respect the Paris Agreement and the process set up by the UNFCCC and refrain from acts or omissions that would materially defeat the object and purpose of the Paris Agreement.” Both trading partners also commit to be advocates of the fight against climate change in international fora.

 

Essential elements are important when determining suspension or termination of a treaty in international law. The TCA contains also Article 772 (previously INST.35) on the fulfilment of obligations described as “essential elements”: a provision that displaces in part the customary principles contained in the Vienna Convention on the Law of Treaties. It allows either party to suspend or terminate the TCA or any subsequent agreement in whole or in part after a specific process which mandates consultations and qualifies the invocation of a breach of an essential element. The provision singles out the Paris Agreement and helpfully clarifies that “an act or omission which materially defeats the object and purpose of the Paris Agreement shall always be considered as a serious and substantial failure for the purposes of this Article” meaning that it makes it somewhat easier to invoke the provisions when the object and purpose of the Paris Agreement is breached.  The TCA has thus become the first instance in which climate change is an essential element of a trade treaty. While the issue might be seen as essential for association agreements leading to EU Membership, this could potentially be the first agreement, provisionally in force, to contain climate change as an essential element, that is, a make-or-break issue.

 

Level playing field

 

Under ‘Title XI: Level Playing Field for Open and Fair Competition and Sustainable Development’, environment, climate change, and sustainable development more broadly, play a key role. The title is a slight misnomer as the obligations in these fields consist of non-regression obligations rather than any form of dynamic alignment, or indeed level playing field. The TCA, however, contains a quasi-unilateral set of measures that the Parties could adopt if divergence in these fields becomes too great in terms of ‘rebalancing measures’, subject to dispute settlement provisions.

 

Three different chapters of the level playing field title are relevant: the non-regression rules (chapter 7), the rebalancing rules (chapter 9), and the sustainability rules (chapter 8).

 

Environment and climate (Chapter 7)

 

This chapter groups some of the provisions on climate change and emission trading that the EU had proposed, subject to consultation, a panel of experts and, more importantly, a Panel of experts for non-regression areas.

 

It delineates the areas of law that determine the “environmental levels of protection”, to include laws in the majority of the most significant areas of current EU legislation such as industrial emissions, air quality, nature and biodiversity conservation, waste management, marine and aquatic environment, chemicals, agricultural environmental impacts. Non-EU laws are only included if they are ‘common’ to the Member States meaning that not the highest level found in any of the Member States will be used but rather the UK would have to prove that a Member State law is common which might be very difficult to prove in the expert or arbitration process.  

 

There is a separate definition of the “climate level of protection”, somewhat controversially defined in part as the reduction and removal of greenhouse gases emissions: “for the Union, the 40 % economy-wide 2030 target, including the Union’s system of carbon pricing [and] for the United Kingdom, the UK’s economy-wide share of this 2030 target, including the United Kingdom’s system of carbon pricing.” In law, that means a 37% reduction by 2030 based on 2005 levels for the UK.

 

Neither of these definitions reflects the new ambitions agreed within the EU of 55% reduction, nor do they align with the announced 68% reduction from 1990 levels for the UK. Evidently, this leaves some room for discretion for both trading partners with regard to their 2030 targets. Unfortunately, the 2050 objective is currently described in Art. 355(3) (previously 1.1.3) of Title XXI (Level Playing Field) as just an ambition: “Each Party reaffirms its ambition of achieving economy-wide climate neutrality by 2050”. The climate change definition also includes “the phase-out of ozone depleting substances”.

 

Article 391(2) (previously 7.2.2) contains one of the strictest formulations of a non-regression provision by adopting mandatory language prohibiting the weakening or reduction of levels of environmental or climate protection as defined in Art. 390(1) (previously 7.1) “below the levels that are in place at the end of the transition period”, including “by failing to effectively enforce its environmental law or climate level of protection”, with the sole caveat that this regression shall not occur “in a manner affecting trade or investment.”

 

In my view this is a strong provision, despite the nominal caveat, as WTO panels have repeatedly interpreted “affecting trade” in the GATT and GATS as having an economic impact without any qualitative level beyond de minimis, for example in cases like China – Publications and Audiovisual Products:

 

“The word 'affecting' covers not only measures which directly regulate or govern the sale of domestic and imported like products, but also measures which create incentives or disincentives with respect to the sale, offering for sale, purchase, and use of an imported product 'affect' those activities.” Panel Report, China – Publications and Audiovisual Products, para. 7.1450.

 

 

or EC – Bananas III:

 

“[t]he ordinary meaning of the word 'affecting' implies a measure that has 'an effect on', which indicates a broad scope of application. This interpretation is further reinforced by the conclusions of previous panels that the term "affecting" in the context of Article III of the GATT is wider in scope than such terms as 'regulating' or 'governing'.217 (emphasis added, footnote omitted).” Appellate Body report, EC — Bananas III, para. 220.

 

Art. 392 (previously 7.3) obligates both parties to “have in place an effective system of carbon pricing” and suggests that they give serious thought on linking their respective carbon pricing systems to preserve the system’s integrity and possibly increase its effectiveness. It is worth highlighting that both sides are now committed to a carbon price for “from electricity generation, heat generation, industry and aviation.” This commitment could support the ICAO CORSIA implementation or indeed domestic carbon pricing of aviation between both parties. It does not include shipping but then the EU discussions on expansion of the ETS to shipping are still ongoing but could start in 2023.

 

In keeping with the aim of not wanting to be bound by EU law, the parties agreed to be bound instead by “the internationally recognised environmental principles” (Article 393): principles to which they are committed through various multilateral environmental agreements: Particularly, “(a) the principle that environmental protection should be integrated into the making of policies, including through impact assessments; (b) the principle of preventative action to avert environmental damage; (c) the precautionary approach referred to in Article 356(2) (previously 1.2(2) [Right to regulate, precautionary approach and scientific and technical information]); (d) the principle that environmental damage should as a priority be rectified at source; and (e) the polluter pays principle.” The final provision could be interpreted as a stronger formulation of the TFEU’s “polluter pays” formulation, which simply states that the “polluter should pay”. 

 

Non-regression obligations include enforcement of environmental laws, including the obligation of each Party to ensure that “domestic authorities competent to enforce the relevant law with regard to environment and climate give due consideration to alleged violations of such law that come to their attention” and that “those authorities shall have adequate and effective remedies available to them, including injunctive relief as well as proportionate and dissuasive sanctions, if appropriate; and national administrative or judicial proceedings are available to natural and legal persons with a sufficient interest to bring actions against violations of such law and to seek effective remedies including injunctive relief, and that the proceedings are not prohibitively costly and are conducted in a fair, equitable and transparent way.” (Article 394, previously 7.5) These commitments are similar to the boarder Aarhus Convention access to justice obligations but include injunctive relief, costs and include the administrative not just the judicial process. The previous proposals about the independence of the Office for the Environment in the EU draft text was also dropped.

 

The enforcement of level playing field provisions follows a special panel process. The special rule on dispute settlement (Article 396, previously 7.7) highlights that in place of the general dispute settlement rules, Articles 408-410 (previously 9.1 to 9.3) of the level playing field provisions apply, which still includes the possibility of trade retaliation if the non-regression rule is breached.

 

Rebalancing

 

What makes these provisions particularly significant is the inclusion of the level playing field provisions, now called “Article 411 (previously 9.4): Rebalancing”. While both parties recognise that each Party has the right to determine its own “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,” they also 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”, as similarly stated in the Political Declaration.

 

If “material impacts on trade or investment are arising as a result of significant divergences between the Parties”, Art. 411(2) (previously 9.4.2) gives each Party the right to take rebalancing measures that are strictly necessary and proportionate to address such a situation.  Even though this instrument is predominantly relevant for future divergence and does not considerably affect the non-regression obligations, it ensures that if one Parties goes further than the other it could adopt “rebalancing” measures in the future. While these would be automatic, they are reviewable by an arbitration process. It should be highlighted that “material impacts” should be seen as a relatively high barrier, meaning that every future divergence will not necessarily qualify for rebalancing measures. On the other hand, and given that there is an arbitration process available, any significant departure in the fields of labour and social, environmental or climate protection, or with respect to subsidy control could, in the future, qualify for “rebalancing measures.”

 

Environment and Sustainable Development (Chapter 8)

 

Unlike chapter 7 of the LPF provisions or the rebalancing rules, this Chapter is not subject to normal dispute settlement. It should be noted, however, that it is subject to both consultation and the well-known EU ‘panel of experts’ process, which several other EU FTAs have introduced. Generally, we should not underestimate the latter in its ability to shine a light on environmental shortcomings, as it can be quite important in practical terms.

The trade and environment provisions in the TCA in Chapter 8 are extensive. While the UK draft text was essentially not used, its influence is evident in the formulation of the provision on forests where present and future generations are mentioned:

 

“Article 403 (previously 8.7): Trade and forests

 

1. The Parties recognise the importance of conservation and sustainable forest management for providing environmental functions and economic and social opportunities for present and future generations, and the role of trade in pursuing that objective.“

 

The provisions which integrate the sustainable development goals into the objectives of the “Chapter 8 on Sustainable Development” follows the EU Draft closely in its provisions on forests, biodiversity and climate change. A blackline reveals that the parties of the TCA weakened the language compared to the EU draft text by introducing in the provision of 8.5 on “Trade and Climate Change”:

 

Similarly, the provision on trade and biodiversity was changed, employing less binding and more optional language.

 

 

A dedicated provision in the main agreement, recognizing the importance of climate change, was derived from Art 2.42 of the EU Draft, as well as paragraphs 18, 75, and 76 of the Political Declaration, to a lesser extent. Like many other EU FTAs, the EU Draft would have committed both parties to “effectively implement the United Nations Framework Conventions on Climate Change, and the Paris Agreement of 2015 adopted thereunder.” This content can be traced to the EU-Japan Agreement, which was the first FTA to contain a comprehensive commitment to implementing the Paris Agreement. Under EU-Japan, each party commits to work together to realise UNFCCC aims, take steps to meet the objectives of the Paris Agreement, and promote trade as a means of reducing greenhouse gas (GHG) emissions and achieving climate-resilient development. Similarly, the EU Draft provision also envisioned a transition to a low GHG economy and climate resilient development. In addition, the Draft employed innovative language, extending climate commitments to encompass EU-UK cooperation on:

 

“Trade-related aspects of climate change policies and measures bilaterally, regionally and in international fora, as appropriate, including in the UNFCCC, the WTO, the Montreal Protocol on Substances that Deplete the Ozone Layer, the International Maritime Organisation (IMO) and the International Civil Aviation organization (ICAO)” (Art. 2.42 para. 3 EU Draft).

 

Article 403(3) (previously 8.5.3) does not mandate cooperation as such but now obligates the Parties to ‘work together to strengthen their cooperation’; but all EU proposed fora for climate cooperation were included in the TCA.

 

Conclusions

 

In sum, TCA contains the most far-reaching commitments toward sustainable development beyond broad facilitation and cooperation provisions, going considerably further than the more recent EU FTAs. The combination of elevating climate change to an essential element of the treaty, strong non-regression provisions and future balancing measures mean that in this field the TCA is trailblazing.

Barnard & Peers: chapter 22, chapter 26

Photo credit: MichealisScientists, via Wikimedia Commons

Brexit and Labour Standards at the time of COVID-19 – To Converge or to Diverge, that is the Question

Jeff Kenner, Professor of European Law, University of Nottingham*

As the COVID-19 pandemic engulfs the world, requiring an unprecedented and, as of yet, unforthcoming global response, the idea of Brexit, the sheer self-indulgence and chicanery of Brexit, has quickly become remote from the minds of policy makers and peoples alike. Nevertheless, with negotiations on ‘forging a new partnership’ between the EU and the UK barely off the ground by mid-March 2020, as Europe went into lockdown, the UK Government has continued to insist that there will be no extension of the standstill post-Brexit transition period beyond the deadline of 31 December 2020 set by the EU-UK Withdrawal Agreement of October 2019. Any mutually agreed decision to extend that deadline must, under the Agreement, be made in matter of days, by 1 July 2020, almost certainly before the pandemic is over and there is any return to whatever will count for normal. With world GDP hurtling downwards,  businesses shuttered and ever spiralling worker lay-offs and redundancies, Brexiter ideologues seem prepared to test chaos theory to its limit by taking the UK out of the EU’s regulatory orbit and into a new age of borders, divergence and economic shock therapy from the beginning of 2021.  

In attempting to understand the rationale for this approach, the issue of social and labour standards quickly comes to the fore. If we assume that the UK means what it says, and there is no mutually agreed one-off extension of the transition period for ‘up to one or two years’ (Article 132 of the Withdrawal Agreement), then there will be less than six months in which to establish whether the UK is prepared to shift its stance and agree to non-retrogression, or what might be described as static alignment, of social and labour standards pertaining in the EU and UK at the end of the transition period. If the UK commits to static alignment to preserve a ‘level playing field’ (LPF) to prevent undercutting or social dumping, and to similarly maintain common standards in the areas of environment, climate change, tax and state aids, it may yet confound sceptics and facilitate an agreement with the EU within the timeframe.

Alternatively, if, notwithstanding its geographical proximity and interdependence with the EU, the UK chooses a path of labour market and social deregulation and divergence, pursuing a Singapore-type economic model, through a combination of ideology and a desire to secure a trade agreement with the United States, it could be hugely disruptive to the Single Market and, potentially, to the future of the European Social Model. Such a ‘no deal’ scenario, or ‘disorderly Brexit’ would require the EU to impose its Common Customs Tariff on UK goods under the rules of the World Trade Organisation. This would lead to immense short to medium-term economic problems for the UK - which exports 45% of its goods to the EU (House of Commons Library, 2018) - with a predicted fall of 5.5% in the country’s GDP and a doubling of unemployment to 7% (Bank of England, September 2019). Such problems will be magnified by COVID-19 and its aftermath. EU Member States, struggling to recover from the pandemic, would face a second debilitating wave of disruption as the UK, which imports 53% of its goods from the Union, would impose its own tariffs. The EU’s response to such a scenario would be a supreme test of its commitment to uphold Social Europe and its unity in a period when European solidarity is likely to be in short supply following the failure to burden share in response to the socio-economic crisis caused by COVID-19.

The UK left the EU on 31 January 2020. It was a unique moment. For the first time a Member State had departed from the Union and become a ‘third country’. Three and a half years had elapsed from the tightly fought referendum and, at the second attempt, the parties had settled the bare bones of their divorce with a revised version of the Protocol on Ireland and Northern Ireland annexed to the Withdrawal Agreement. Northern Ireland, territorially part of the UK but with its land border with the EU and its history of conflict, is tied by the Protocol, potentially indefinitely, to EU rules on customs and related areas of regulation considered necessary to avoid a border on the island of Ireland and preserve peace. The revised Protocol does not, however, address the issue of labour standards, unlike the original version which contained an Annex committing the parties, inter alia, to non-retrogression of the labour standards pertaining at the end of the transition period. Instead the issue is now left to the future relationship negotiations discussed below.

Under Article 50 of the Treaty on European Union the parties were required, almost as an afterthought, to take account of the ‘framework’ of their future relationship during the Brexit negotiations. This loose requirement was met by the issuance of a joint non-binding Political Declaration accompanying the Withdrawal Agreement. The Political Declaration loosely commits the parties to establish ‘the parameters of an ambitious, broad, deep and flexible partnership across trade and economic cooperation with a comprehensive and balanced Free Trade Agreement at its core’ (para. 3). It is perhaps reassuring that the Political Declaration states that the parties are determined to safeguard ‘high standards of free and fair trade and workers’ rights’ (para. 2). It must be understood, however, that back in October 2019 the parties were so focused on finding a solution to avoiding a regulatory border on the island of Ireland that there was little time spent on the Political Declaration and much of it, including this worker-friendly language, remained untouched from the previous version negotiated between the European Commission and the Government of the UK’s former Prime Minister, Theresa May, in November 2018.  

With the ascendancy of Boris Johnson to the position of Leader of the Conservative Party and UK Prime Minister in July 2019, followed by a resounding election victory five months later, the picture now looks very different.  On the one hand, May had trumpeted close alignment with EU labour standards, promising that workers’ rights would be ‘fully protected and maintained’ post-Brexit at least at EU levels or even building on them (Lancaster House speech, January 2017). In March 2019, following the adoption of the first version of the Withdrawal Agreement, May introduced proposals to safeguard EU-derived labour rights and require a report to the UK Parliament on any new workers’ rights introduced by the EU, raising the remote prospect of dynamic alignment with EU labour standards to close off the prospect of social dumping.  However, May ultimately failed to navigate the Withdrawal Agreement through the UK Parliament and consequentially resigned from the Conservative Party leadership. Following his General Election victory, Johnson, on the other hand, now with a majority in Parliament, promptly withdrew May’s proposals on labour rights from the legislation to implement the Withdrawal Agreement. Instead the Government announced that there would be a new Employment Bill but, to date, it has not been published and its ambitions are unclear (House of Commons Library, 20 December 2019).

Looking forward, the Political Declaration declares that the proposed Free Trade Agreement (FTA) ‘will be underpinned by provisions ensuring a level playing field for open and fair competition’ (para. 17). More bluntly, European Commission President, Ursula von der Leyen, has made clear that an FTA is contingent upon an LPF guarantee of ‘zero tariffs, zero quotas, zero dumping’ (London School of Economics speech, 8 January 2020). As regards labour standards, the Political Declaration enunciated that LPF provisions must encompass ‘robust commitments’ to ‘uphold the common high standards applicable in the Union and the United Kingdom at the end of the transition period in … social and employment standards … and include appropriate mechanisms to ensure effective implementation domestically, enforcement and dispute settlement’ (para. 77, emphasis added). Although the ILO is not mentioned, Union and international standards are the reference point for the LPF and, moreover, the parties are committed to ‘promote adherence to and effective implementation of internationally agreed principles and rules’ (para. 77).

There has, however, been much water flowing under the bridge since the Political Declaration was issued.  When the ink was barely dry on the document, a leaked UK Government paper revealed its view that the ‘interpretation of these [LPF] commitments will be very different’ and binding arbitration was ‘inappropriate’ (Financial Times, 25 October 2019). In response, the UK stated that it had ‘no intention of lowering the standards of workers’ rights’. Following the election, however, Johnson’s Government has indicated that it regards such commitments as merely rhetorical and not conditional for an FTA.  This was borne out in February 2020 when the UK published its approach to the negotiations (Command Paper 211). Its bottom line is that it will not negotiate any arrangement ‘in which the UK does not have control of its own laws and political life’ (para. 5). The UK Government has seized on the suggestion by the EU’s chief negotiator, Michel Barnier, that the UK’s desire post-referendum to leave the EU Customs Union and Single Market would mean that the EU would look to an FTA similar to the agreement between the EU and Canada (CETA). Barnier presented an illustrative single slide pointing to the Canada option at a very different stage of the process in December 2017.

For the UK, the reference to CETA presents an opportunity to suggest that labour standards should merely be promotional. In its negotiating strategy document, the UK notes that: ‘In line with precedent, such as CETA, the Agreement should recognise the right of each party to set its own labour priorities and adopt or modify its labour laws’ (para. 76). No reference is made to an LPF. At most the UK is prepared to agree to ‘reciprocal commitments not to weaken or reduce the level of protection afforded by labour law and standards in order to encourage trade and investment’ but these provisions ‘should not be subject to the Agreement’s dispute resolution mechanism’ (paras. 76-77). From this it can be discerned that the UK wishes to self-regulate its labour standards and could determine that any prospective domestic diminution of labour law might be unconnected with trade relations with the EU. In return, the EU would be expected to accept the UK’s commitment to reaffirm existing ILO principles and rights, which is a rather limited assurance given that the UK has ratified only 88 ILO Conventions, which includes the eight ‘core’ conventions but is significantly lower than several EU Member States including Spain, 133, France, 127 and Italy, 113 (ILO, NORMLEX, April 2020).

Not surprisingly, key Member States, notably France and Belgium, have demanded stricter LPF provisions in response to the UK’s negative messaging in order to prevent undercutting of labour standards even if it means that no agreement is concluded in 2020 (Financial Times, 23 February 2020). The EU’s ‘Negotiating Directives’ (Council of the EU, 25 February 2020), known as the ‘negotiating mandate’, set out the parameters for the Commission to negotiate with the UK. There has been a degree of internal compromise but, nonetheless, a marked toughening of the language used in the Political Declaration. Part 15 of the Negotiating Directives sets out a series of LPF conditions, specifically that ‘the envisaged agreement should uphold common high standards, and corresponding high standards over time with Union standards as a reference point, in the areas of [inter alia] social and employment standards’ (para. 94, emphasis added). Thus, the position of the EU has shifted from static alignment at the end of transition to a form of dynamic alignment without necessarily requiring full convergence. Turning to enforcement mechanisms, the document repeats the language in the Political Declaration on effective domestic implementation, enforcement and dispute settlement but adds a reference to the need for ‘appropriate remedies’ and seeks to reserve a power for the Union ‘to apply autonomous, including interim, measures to react quickly to disruptions of the equal conditions of competition in relevant areas, with Union standards as a reference point’ (para. 94). Such Union intervention would be anathema to the UK which makes clear in its negotiating document that there should be ‘no role for the Court of Justice’ in the governance arrangements (para. 6).

The EU’s LPF proposals identify the following areas of labour and social protection for alignment to the common standards applicable within the EU and the UK at the end of the transition period: ‘fundamental rights at work; occupational health and safety, including the precautionary principle; fair working conditions and employment standards; and information, consultation and rights at company level and restructuring’ and to ‘protect and promote social dialogue’ (para. 101). In a further sting in the tail for the UK, and possibly also to prevent backsliding within the EU, the mandate suggests that if the parties increase their respective levels of social and labour protection beyond these commitments the partnership ‘should prevent them from lowering those additional levels in order to encourage trade and investment’ (para. 110).

Moreover, building on the parties’ commitment to ensure sustainable development in the Political Declaration, the EU proposes that  the partnership ‘should include provisions on adherence to and effective implementation of relevant internationally agreed principles and rules’ including ILO conventions and the European Social Charter (ESC) of the Council of Europe (para. 109). The UK remains a member of the Council of Europe and has ratified the ESC. Finally, there would be a system of monitoring the implementation of commitments and the ‘social and environmental impacts’ of the partnership (para. 113).

On the face of it the differences between the parties are widening and could soon be irreconcilable. During the hiatus before negotiations resumed on 20 April, the Commission published a 440-page ‘Draft Treaty’ putting its negotiating directives into concrete form (UKTF (2020) 14). As the parties adapt to Zoom, Teams or other newly learned technologies, or even face to face, there will have to be compromises on both sides to reach agreement and an extraordinary amount of goodwill. Moreover, labour standards to ensure an LPF is only one of several issues, including fishing, Gibraltar and State aids, that threaten to wreck the negotiations. The position has been further complicated by a statement by the key UK’s ministerial negotiator, Michael Gove, that the UK is prepared to give up on tariff free and quota free access to the Single Market if it means committing to the EU’s demands for an LPF (The Independent, 5 May 2020).

A crunch point will be reached in the autumn of 2020 if not earlier. It is possible that there will be a fudged commitment to an LPF based on static alignment with enforcement only by the UK authorities subject to limited mechanisms for independent dispute settlement. For the EU this may be enough to move on from Brexit and concentrate fully on how to recover from the disaster of COVID-19. The toughened-up provisions having been presented in the negotiating mandate can be climbed down from assuming that this can be levelled with all Member States and the European Parliament. For the UK it may be much more difficult. It would have to accept the social acquis and be indefinitely tied to converged labour standards with, at most, gradual divergence over time if, somewhat optimistically, it is assumed that workers’ rights are considerably enhanced at EU-level in the next decade or, perhaps more likely, developed through the case law of the Court of Justice. The problem with concluding that there will inevitably be a fudged convergence is that the UK is temperamentally inclined towards having the sovereign right to diverge its labour standards even if it chooses not to exercise this divergence in practice for domestic political reasons. It wants to be ‘an economic competitor on [the EU’s] own doorstep’ as Chancellor Angela Merkel has warned the German Parliament (Politico, 11 September 2019). For Boris Johnson, at the zenith of his political power, the whole point of Brexit is to ‘take advantage’ of the ‘freedoms’ including what he euphemistically describes as ‘better regulation’ for the sectors in which the UK has a commercial advantage (The Guardian, 23 September 2019).

The EU is faced with a difficult choice. It can negotiate a ‘partnership’ which gives the UK enough latitude to accept the status quo in the interim but slowly diverge from common labour standards without effective EU oversight or remedial powers, or it can accept the likelihood that the UK will go its own way towards potentially more rapid divergence which, even if it does not create a ‘Singapore on the Thames’, will mean that there will almost certainly be no negotiable FTA in the short to medium-term. The economic and social pain that this choice will entail, on both sides of the English Channel, may be delayed by an extension of the transition period but it probably cannot be avoided.  For the EU, the choice to accept divergence may be the lesser evil in the longer run. It would provide an opportunity to show that more advanced social and labour standards offer a better path to economic prosperity and social cohesion in a more fragmented world. For the UK, it may advance the realisation of the stark reality of its isolation and the high economic and social price to be paid for alternative ‘deals’ with any of the United States, China or Russia. Over time the negative effects of divergence from EU standards could bring about the change in British mindset that is needed to return to the regulatory orbit of Social Europe, a move which could still fall short of re-joining the Union. For the time being, for both sides, whether to maintain convergence, be it static or dynamic, or embrace divergence, is an urgent question that must be answered soon.

*This is the English version of an editorial in Dirriti Lavore Mercati, 2-2020, ‘Brexit e tutele del lavoro al tempo del Covid-19: convergenza o divergenza, questo è il problema’. It was first published in English in the Regulating for Globalization Blog (Wouters Kluwer) – the author is grateful to the publishers for agreeing for this contribution to be published in this blog.

Barnard and Peers: chapter 27

Photo credit: Roger Blackwell, via Wikimedia commons

Negotiating the future relationship between the UK and EU: the EU negotiating mandate

Professor Steve Peers, University of Essex*

*Thanks to Georgina Wright, of the Institute for Government, for a 'track changes' version of the negotiation mandate. The usual disclaimer applies.

This week the process of negotiating the future relationship between the UK and the EU took another step. On the EU side, the Council adopted the negotiation mandate for the talks.  This text differs somewhat from the proposed mandate for the future EU/UK relationship, which I discussed here. This blog post is an updated version of that one, and explains the main differences between the Commission proposal and the final text.

The following analysis summarises the EU negotiating mandate, further comparing it to the mutually agreed political declaration on the future relationship (which I previously annotated here). It explains where the EU position has departed from or elaborated upon the political declaration. Obviously, the EU position differs in some respects – but not all – from the UK position, which is why negotiations are expected to be difficult. (Update: the text of the UK position has now been published)

Legal basics

On the EU side, the adoption of the negotiation mandate is the latest step in the procedure. Under Article 218 TFEU, which sets out how the EU negotiates international treaties, first of all the Commission proposes a mandate to negotiate with a non-EU country. Next, the Council, ie Member States' ministers, decides on adoption of that mandate. When adopting the negotiation mandate the ministers acted unanimously (more on that below).

The next step is the formal negotiations with the UK, in which the Commission is the negotiator. These start next week. Note that the Commission now has a mandate from Member States when doing so: Michel Barnier will not be on a frolic of his own. (This point was often missed during the withdrawal agreement negotiations). As the mandate states, during the negotiations the Commission will be reporting back to a 'special committee' of Member States’ officials. In fact this committee was set up recently. It's made up of Member States' officials who keep an eye on the Commission as negotiator. This isn't unique to these talks; it's a requirement in Article 218 TFEU as regards all international treaty negotiations.

There's no formal role for the European Parliament at this point, although it can pass non-binding resolutions (such as the one passed earlier). It will have a veto over the final agreement. The negotiating mandate doesn't take a view on whether ratification by each national parliament will be needed. This will depend on the content of the final text, as the Commission’s Q and As explicitly point out.

Timing of the talks

The transition period in the withdrawal agreement (discussed here) expires at the end of the year, meaning that the de facto current treatment of the UK as a Member State of the EU will then expire. While the withdrawal agreement’s provisions on issues like citizens’ rights and Northern Ireland will still apply, most of the relationship between the UK and EU will end at that point unless new treaties replace it.

Although the transition period could be extended by one or two years if both sides agree (the deadline to agree this is 30 June 2020), the UK objects in principle to any extension. The negotiation mandate decision mentions a possible extension, but aims to get as much as possible done during the available time. It does refer to the jointly agreed ‘best endeavours’ to agree a new fisheries treaty by July 2020 (para 74 of the political declaration), saying that a fisheries treaty ‘should’ be agreed by that point. But it does not explicitly make this a condition for further negotiations, and the mandate refers to ‘parallel’ negotiations, not to negotiations on fisheries exclusively at first.    

Form of the relationship

The Commission proposal referred to a ‘single package’ with general provisions, economic arrangements, and security arrangements. This possibly implies a single treaty, although the Council mandate does not say so expressly.  It would also be possible to have separate treaties which are linked in some way.

Furthermore, the Council gave the Commission legal authority to negotiate an association agreement on the basis of Article 217 TFEU, although it avoids using those actual words. The Q and As note that when it comes to the end of the negotiations, things might be different. (For instance, the scope of the agreement might be narrower, or it might take the form of multiple treaties: either way, this could change the ‘legal base’ of the treaty or treaties concerned).

Legally, an association agreement (if that's what is eventually negotiated) requires unanimity in Council and consent of the European Parliament. It might need ratification by national parliaments but that depends on the content (as the Q and As point out). It can be put in force provisionally (at least partially) if needed.

Territorial scope

Gibraltar is outside the scope of the negotiation mandate (para 167). This is not a new EU position, and is not a territorial claim: the point has often been misreported. As the Commission pointed out, the EU position goes back to 2018, when the European Council took the view that any agreement regarding Gibraltar would be separate, and subject to the agreement of Spain:

After the United Kingdom leaves the Union, Gibraltar will not be included in the territorial scope of the agreements to be concluded between the Union and the United Kingdom. However, this does not preclude the possibility to have separate agreements between the Union and the United Kingdom in respect of Gibraltar. Without prejudice to the competences of the Union and in full respect of the territorial integrity of its Member States as guaranteed by Article 4(2) of the Treaty on European Union, those separate agreements will require a prior agreement of the Kingdom of Spain.

In any event, every Member State will have a veto over the future relationship treaty with the UK anyway, if it remains an association agreement.

Data protection

The negotiation mandate (para 13) refers to an adequacy decision on UK data protection law. Note that an adequacy decision is a unilateral decision by the EU under the GDPR. The political declaration (para 9) referred to an objective to adopt such decisions by the end of 2020. There is another reference to data protection in the security part of the mandate (see below). Cooperation between regulators, which was mentioned in the political declaration (para 10), is not mentioned explicitly in the mandate.

EU programmes

The negotiation mandate (para 14) covers UK participation in EU programmes, such as research funding and Erasmus. The wording of the mandate reflects the political declaration (para 11). Northern Ireland peace funding is also mentioned (para 15, mandate; compare para 13, political declaration). However, there is no explicit mention of association with European research infrastructure (which was mentioned in para 12, political declaration). Note that the EU has not yet agreed the conditions for non-EU countries to access the next phase of EU programmes: for the draft text on this, see Article 16 of the proposed new Erasmus programme.

There’s no explicit mention of negotiation of UK links to the European Investment Bank, although the political declaration (para 15) only referred to the UK’s intention to seek such links, without suggesting that the EU side shared this objective.

Economic partnership

The core of the UK/EU economic partnership would be a free trade agreement (FTA) covering both goods and services (para 17 of the negotiation mandate). It's often inaccurately claimed that there's no intention for an FTA in services between the UK and EU, but both sides have always intended to negotiate one (paras 19 and 28 of the political declaration). But note that an FTA falls short of single market participation. Unlike the political declaration, the mandate makes an explicit link between the economic partnership and fisheries and a ‘level playing field’.

Free trade in goods

The negotiation mandate (para 20) provides for no tariffs or quotas. However, unlike the position as a Member State (and during the transition period), the mandate refers to rules of origin, to determine where goods come from (para 21). This is an extra burden on trade between the UK and EU compared to EU membership, and is a consequence of the UK's decision not to negotiate a customs union. This reflects the political declaration (para 22); indeed a reference to a need for rules of origin was added to the revised version of the political declaration (whereas the first version of the political declaration ruled them out).

The reference to using the EU’s standard preferential rules of origin is new compared to the political declaration, and presumably refers to the pan-European rules (PEM Convention) in use between the EU and other countries across Europe, the Middle East and North Africa. Using the standard rules will be simpler and quicker than negotiating from scratch (rules of origin often take some time to negotiate in FTA talks).

Next, the negotiating mandate refers to introducing anti-dumping duties, anti-subsidy duties and economic safeguards between the UK and EU, referring to WTO rules. Again, this is a new possible barrier in UK/EU trade. Such measures are provided for in most FTAs (not just the EU’s: the US applies anti-subsidy duties to some Canadian products, for instance). For EU FTAs, the only exception is the European Economic Area (EEA), which rules out anti-dumping and anti-subsidy duties for most products, because the countries concerned have signed up to EU single market laws. The possibility of such measures is therefore not a ‘punishment’, but the inevitable consequence of the UK’s decision to leave the EU without remaining a participant in the single market. However, there is an inconsistency between the EU approach to the UK compared to the EEA countries: if the UK signs up to EU State aids law, as the EU proposes, it would still be subject to possible anti-subsidy measures.

The possibility of such measures would be there even without an FTA between the UK and EU. The objective of such measures is, respectively, to react to goods sold below their normal value (anti-dumping), subsidised by States (anti-subsidy), or which damage domestic producers (economic safeguard) – subject to more detailed definitions and procedural obligations in the WTO Codes dealing with these issues. 

The negotiation mandate also extends to customs facilitation and agreement on non-tariff barriers (technical and sanitary rules), going beyond WTO provisions. However, it does not mention the possibility of UK links with EU medical, chemical, and aviation safety agencies, even though the political declaration referred to this possibility (para 23).

Finally, the Council added a para referring to cooperation on return of stolen cultural property. Some interpreted this as a demand for the return of the Elgin marbles, but the text refers to cooperation on the basis of current EU law - which only applies to property stolen after 1993.

Free trade in services

The negotiation mandate refers to an FTA in services going beyond WTO commitments, but as usual the EU will exclude audio visual services. This exclusion was not mentioned in the political declaration, but is hardly unexpected. On the other hand the proposed mandate mentions free trade in certain services sectors that were also expressly mentioned in the political declaration: professional and business services, telecommunications services, courier and postal services, distribution services, environmental services, financial services and transport services.

This will include movement of service providers (as required by WTO rules on FTAs in services), but this falls short of free movement of people. There is a general reference to agreement on investment (not just in services industries), but as under the political declaration there is little further detail. The mandate also includes recognition of professional qualifications, as referred to in the political declaration (para 34). Financial services equivalence decisions will be unilateral.

Intellectual property

It’s usual for FTAs to include provisions on intellectual property, going beyond WTO and other international rules. Here the big EU ask here is protection for future ‘geographical indications’ (GIs: these are rules which specify that, for example, ‘feta cheese’ must originate from Greece). Note that current GIs are protected in the withdrawal agreement, so the negotiation here would be about future GIs. There’s also a reference to maintaining current protection in many other areas of IP, where there is extensive EU legislation going beyond international IP treaties. There’s no reference to what happens to the plan that the UK hosts part of the planned Unified Patent Court, which is linked to an attempt to create a unified EU patent. Some specific references to IP issues in the political declaration (databases, resale rights, exhaustion of rights) do not appear explicitly in the proposed mandate. The notion of still applying EU standards might be an issue in the case of the controversial recent EU copyright law, which the UK supported when it was adopted but now intends not to apply (see discussion here).

Public procurement

As is common for FTAs, the negotiation mandate envisages opening up public procurement markets more than under the WTO procurement agreement. This reflects the political declaration, although note that the rhetoric on this issue in the UK is inconsistent, with an obvious conflict between the competing slogans of "Buy British" economic nationalism on the one hand, and export oriented "Global Britain" on the other. Since the UK is signing up to the WTO procurement agreement in its own name and non-EU countries may also wish to include additional procurement obligations in FTAs, the “Buy British” folks may be disappointed – although opening up markets reciprocally enables exporting British companies to sell their goods and services too.

Mobility

The negotiation mandate falls short of free movement of people here. It refers to waiving visa requirements for short term travel, which the EU has done already unilaterally on the condition of reciprocity (see discussion here). A visa waiver treaty between the two sides could go further – most notably waiving visa requirements for paid activities (which is now an option for Member States), which would be useful for the music industry, for instance. But it is not clear if the mandate is referring to a visa waiver treaty.  Note that the section on mobility is in addition to the planned negotiations on services, which would include some movement of people (discussed above).

The mandate also refers to “setting out conditions” relating to migration of students and researchers (areas where the EU has already legislated on non-EU migration, as discussed here). There could also be agreement on social security coordination, but note that this would be for future UK/EU migration. Those who moved before the end of the transition period are covered by the withdrawal agreement (see discussion here), which also covers the common travel area referred to in the mandate. Note that there’s no reference to possible negotiations on retaining free movement rights for UK citizens who move to the EU before the end of the transition period.

There’s no mention of the political declaration’s reference to facilitating travel (para 53 of the declaration), perhaps because of the UK government’s plan to match the EU’s planned advance travel authorisation system. However, the Council added a reference to negotiations on family law civil judicial cooperation, as mentioned in the political declaration (para 56), even though the proposed mandate had omitted this issue.

Transport

On air transport, the negotiation mandate states that the UK will not have the same market access as an EU Member State, but is willing to negotiate. It also refers to aviation safety standards.

On land transport, it refers to market access for road haulage, but not cabotage (haulage within a single Member State/multiple Member States). This would be linked to a standstill on social rules relating to drivers plus tachograph discussions (this concerns the devices keeping track of how long drivers are driving for). There’s no reference to private motorists, although the political declaration referred to them.

The mandate refers to international law on coach transport, which suggests that the UK and EU would not negotiate additional provisions. On rail transport, there’s a reference to the Channel Tunnel, and the Council added a reference to Dublin/Belfast rail links here, in accordance with a reference in the political declaration.

The Council also added a reference to possible negotiations on maritime transport, matching a reference in the political declaration. The reference to cooperation with the EU maritime safety agency in the political declaration was not retained.

Energy

The negotiation mandate has a number of references to renewable energy, along with a level playing field on carbon pricing, and a Euratom deal including a standstill on nuclear safety standards and isotope issues. (On post-Brexit relations with Euratom, see my earlier discussion). The Council added a reference to nuclear waste, perhaps reflecting Irish concerns about Sellafield.

Fisheries

The focus of the negotiation mandate is EU traditional fishing in UK waters, with a link to the rest of the economic partnership, and a reference to agreed July target date. As noted above, the target date does not seem to be an absolute demand.  The Council strengthened the EU’s position here, referring to ‘upholding’ the existing degree of access. The topic is a prime candidate for crashing the whole negotiations – as is the next topic...

Level playing field

The term ‘level playing field’ might be used differently in other contexts, but for these discussions it refers to law on State aid, competition law, and aspects of tax, labour and environmental law. It’s common for the EU (and also the US and Canada) to require some form of LPF clauses in its FTAs, but the question is whether to go beyond the EU’s usual provisions in the EU/UK FTA – with the rationale for the EU side being that the FTA would go further in abolishing all tariffs than other EU FTAs go.

The first point to emphasise is that in addition to LPF clauses being in other EU FTAs, the UK signed up to the concept of LPF in the political declaration. Both sides agreed that the LPF:

…should be commensurate with the scope and depth of the future relationship and the economic connectedness of the Parties. These commitments should prevent distortions of trade and unfair competitive advantages. To that end, the Parties should uphold the common high standards applicable in the Union and the United Kingdom at the end of the transition period in the areas of state aid, competition, social and employment standards, environment, climate change, and relevant tax matters. The Parties should in particular maintain a robust and comprehensive framework for competition and state aid control that prevents undue distortion of trade and competition; commit to the principles of good governance in the area of taxation and to the curbing of harmful tax practices; and maintain environmental, social and employment standards at the current high levels provided by the existing common standards. In so doing, they should rely on appropriate and relevant Union and international standards, and include appropriate mechanisms to ensure effective implementation domestically, enforcement and dispute settlement as part of the future relationship. The future relationship should also promote adherence to and effective implementation of relevant internationally agreed principles and rules in these domains, including the Paris Agreement.

So the commitment was to ‘uphold common high standards’ applicable in the EU and UK at the end of the transition period; ‘maintain’ standards ‘at the current high levels provided by the existing common standards’; ‘rely on appropriate and relevant Union and international standards’; and include provisions on implementation, enforcement and dispute settlement. So there were several references to EU rules, most in the context of a standstill, but partly more open-ended (ie possibly application of future rules too); and a general reference to dispute settlement, with no specific reference here to the CJEU (but see the reference to the CJEU role below).

The negotiating mandate partly repeats this text, but also adds many points. On LPF enforcement in general, it states that the EU ‘should also have the possibility to apply autonomous, including interim, measures to react quickly to disruptions of the equal conditions of competition in relevant areas, with Union standards as a reference point’ (italics indicate that the Council added words to the Commission proposal). On future measures, it states that the ‘envisaged partnership should commit the Parties to continue improving their respective levels of protection with the goal of ensuring corresponding high levels of protection over time’ (italics are the Council’s added words), with the governing body having power to extend the LPF or add to it over time (note that the governing body would have to act jointly). The Council also added general references to ‘a sustainable and long-lasting relationship between the parties, referring not only to ‘common high standards’ but also ‘corresponding high standards over time with Union standards as a reference point’.

On specific issues, EU State aid should apply ‘to and in’ the UK, although they would be enforced by an independent UK body, not the Commission; and disputes ‘about the application of State aid rules in the United Kingdom should be subject to dispute settlement’. For competition law, general provisions similar to EU law (although here there is no specific cross-reference to EU law) should apply as regards EU/UK trade, along with a commitment to ‘effective enforcement’. There should be limits on special rights for state-owned enterprises, with no specific reference to EU law or enforcement.

On tax, there should be a commitment to international standards, and also the UK should apply ‘the common standards applicable within the Union and the United Kingdom at the end of the transition period in relation to at least the following areas: exchange of information on income, financial accounts, tax rulings, country-by-country reports, beneficial ownership and potential cross-border tax planning arrangements’, along with ‘the fight against tax avoidance practices and public country-by-country reporting by credit-institutions and investment firms’, and (without reference to common standards) ‘the Parties’ commitment to curb harmful tax measures, taking into account the G20-OECD BEPS Action Plan’ and the UK reaffirming ‘its commitment to the Code of Conduct for Business Taxation’.

On employment law, there should be no reduction ‘below the level provided by the common standards applicable within the Union and the United Kingdom at the end of the transition period in relation to at least the following areas: fundamental rights at work; occupational health and safety, including the precautionary principle; fair working conditions and employment standards; and information and consultation rights at company level and restructuring’. There should also be provision on enforcement within the UK, ‘through adequately resourced domestic authorities, an effective system of labour inspections and effective administrative and judicial proceedings’.

On the environment and health (‘health’ being added by the Council), again the LPF should provide that ‘the common level of environmental protection provided by laws, regulations and practices is not reduced below the level provided by the common standards applicable within the Union and the United Kingdom at the end of the transition period’. The text refers to ‘at least the following areas: access to environmental information; public participation and access to justice in environmental matters; environmental impact assessment and strategic environmental assessment; industrial emissions; air emissions and air quality targets and ceilings; nature and biodiversity conservation; waste management; the protection and preservation of the aquatic environment; the protection and preservation of the marine environment; health and product sanitary quality in the agricultural and food sector; the prevention, reduction and elimination of risks to human and animal health or the environment arising from the production, use, release and disposal of chemical substances; and climate change.’ The words in italics were added by the Council; note that food standards issues, in the EU mandate, therefore cross over between the pure trade issues (SPS checks, mentioned above) and the LPF clauses.

Also, the LPF ‘should lay down minimum commitments reflecting standards, including targets, in place at the end of the transition period in those areas, where relevant’; ‘should ensure the Parties respect the precautionary principle and the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay’. For enforcement, again, the LPF ‘should ensure that the United Kingdom implements a transparent system for the effective domestic monitoring, reporting, oversight and enforcement of its obligations by an independent and adequately resourced body or bodies’. (Note that the proposed Environment Bill would include some provisions to this effect).

There are also some specific provisions on climate change: the UK should maintain ‘a system of carbon pricing of at least the same effectiveness and scope as provided by the common standards, including targets, agreed within the Union before the end of the transition period and applicable for the period thereafter’, and the two sides ‘should consider linking a United Kingdom national greenhouse gas emissions trading system with the Union’s Emissions Trading System (ETS)’ which should be ‘based on the conditions agreed within the Union, ensure the integrity of the Union’s ETS and a level playing field, and provide for the possibility to increase the level of ambition over time’. Besides carbon pricing systems, the LPF should ensure that the UK ‘does not reduce the level of protection below the level provided by the common standards, including targets, agreed within the Union by the end of the transition period and applicable for the period thereafter’.

The negotiation mandate also refers to ‘adherence to and effective implementation of relevant’ international rules, which ‘should include’ International Labour Organisation conventions, the Council of Europe European Social Charter and multilateral environmental agreements including those related to climate change, including the Paris Agreement. On top of that, where the parties have higher standards above the minimum commitments, ‘the envisaged partnership should prevent them from lowering those additional levels in order to encourage trade and investment.’

Has the EU ‘moved the goalposts’ here? The agreed text in the political declaration refers explicitly to both EU and UK standards, vaguely to dispute settlement, and indirectly to future measures. It’s not surprising that the EU puts forward a maximalist interpretation of this, or that the UK puts forward a minimalist interpretation – although it cannot seriously be argued that the political declaration made no commitment to a standstill as regards EU standards. Compared to the political declaration, then, the issue of dispute settlement remains vague, although there is a specific demand for potential EU reaction in the event of divergent future standards. The reference in the political declaration to maintaining current standards is maintained. It’s unclear if the EU position is that the UK must keep up with future EU measures in these areas, or whether it simply wants to reserve the right to react in the event that the UK does not.

The dispute settlement point is significant because in the first withdrawal agreement, which contained some of the detail which appears in the negotiation mandate, dispute settlement was limited: only some issues could be subject to the dispute settlement regime in that text (in particular, disputes about the substance of labour and environmental commitments could not be subject to dispute settlement; only disputes about enforcement systems for those obligations could be). So even the references to EU law in the LPF part of that agreement did not mean that the CJEU would have jurisdiction via dispute settlement arbitrators to interpret those references, since the dispute settlement arbitrators would never get hold of such disputes in the first place.

This also meant that EU retaliation for the breach of such obligations was impossible, since retaliation was only possible via the dispute settlement system. While the negotiation mandate refers to possible EU retaliation for breach of LPF rules, it’s not clear if the limits on such retaliation (both in terms of which issues are subject to dispute settlement and the constraints on retaliation within the dispute settlement system) would be different from the limits in the first withdrawal agreement. It should be noted that in the first withdrawal agreement, UK retaliation against EU breaches was also possible within the dispute settlement system; one might expect that the UK would argue that it should similarly have reciprocal powers to retaliate in the future relationship treaties.

As compared to EU FTAs with other countries, the negotiating mandate is different as regards the references to EU law (although the UK had previously signed up to this), but it is not clear if the arrangements on dispute settlement will be different. The prospect of the EU withdrawing preferences due to divergences already appears in the EEA, which avoids CJEU jurisdiction on this issue by making the process automatic (if attempts to settle the issue have not worked). Furthermore, the EEA has an approach to dispute settlement which might possibly work between the EU and the UK: if attempts to settle a dispute fail, arbitrators can rule on whether a reaction by one party is disproportionate, but not on the underlying EU law dispute (if there is one) – thereby avoiding the mandatory involvement of the CJEU.

Security cooperation

In the negotiation mandate, the security cooperation is not linked to the LPF or fisheries. But instead it would be made dependent not only on UK adherence to the ECHR, but also the Human Rights Act (HRA), along with the unilateral adequacy decision on data protection - expressly referring to possible CJEU challenges (see the challenges to adequacy decisions relating to the US, discussed here). The ECHR and data protection points reflect para 81 of the political declaration, which referred to the ECHR ‘underpinning’ the relationship; the HRA point goes beyond it. Also, there would be fair trial and double jeopardy standards.

The mandate here reflects the issues that would be litigated anyway about data protection and human rights standards in the UK. They are already litigated as regards non-EU countries and other Member States.

For police cooperation, the mandate refers to passenger name records, DNA/fingerprint/vehicle info, and exchange of information in individual cases. There is no mention of the Schengen Information System (which the UK currently applies as regards criminal law data) and the exchange of information in individual cases can't simply copy it. As regards PNR, the mandate refers to a CJEU case discussed here, which sets out limits on what the EU can exchange with non-EU countries to comply with data protection standards. On PNR and DNA data et al, the mandate reflects the political declaration. On individual exchanges of information instead of the Schengen Information System, the mandate is explicit on the issue whereas the political declaration fudged it (because the two sides did not agree).

On criminal justice cooperation, there is a reference to fast track extradition. Note that the EU, Norway and Iceland have agreed an extradition treaty which is very similar to the European Arrest Warrant applied between EU countries, but with certain exceptions. On this, the Council added a reference to Member States possibly refusing to extradite their own citizens (three Member States already do this during the transition period), plus unspecified other guarantees.  Also the mandate refers to exchanging evidence and criminal records (the Council removed the reference to doing so in a similar way to existing EU laws), which would limit the impact of the UK leaving the EU on these issues. Note that this would probably go further than the EU has gone with other non-EU countries.

Foreign policy

In this area, the negotiation mandate proposes "alignment" on sanctions (the only explicit use of the word in its proposal). There would be case by case involvement in defence missions or defence industry projects (reflecting the wording of the political declaration, which makes clear that the UK would not be tied to EU defence cooperation against its will), and limited access to Galileo (the Council watered down the latter bit).

The Council added a timely reference to cooperation on health security at the end of this section.

Governance and dispute settlement

Finally, the future relationship treaties would have a joint committee to oversee and implement them (which is standard in international treaties). To settle disputes, there would be consultation then binding arbitration.  The Council added a reference to dispute settlement between different agreements. The CJEU would be involved if an issue concerns the interpretation of EU law (as explicitly agreed in the political declaration). There is NO reference to CJEU involvement otherwise (note that the political declaration explicitly ruled that out). The mechanics of dispute settlement are not spelled out in detail; it is possible that they might be based on the provisions in the withdrawal agreement (see my annotation and analysis of them here).

As discussed in the LPF section above, it is possible that some parts of the agreement might not be subject to dispute settlement at all, in which case there is no issue of CJEU involvement or any other remedies issue (unless the agreement allows for remedies to be applied without such remedies being subject to dispute settlement). So the CJEU would only have jurisdiction over the UK in the future relationship treaty where the agreement a) refers to EU law AND b) provides for dispute settlement. Again: key parts of the level playing field in the first withdrawal agreement met condition a) but NOT b). The details of the future treaty therefore will be crucial.

Barnard & Peers: chapter 27

Photo credit: Michael D Beckwith, via Wikimedia commons