The EU should not be afraid of a no-deal in December 2020, the chair of EU Parliament’s Environment committee Pascal Canfin (French MEP, Renew Europe) told reporters this week. He warned current discussions did not start on a good path, with UK asking for full single market access and divergence at the same time. He gives the example of the EU’s Emission Trading Scheme as a possibly thorny issue. As UK plans to set its own carbon market, he cites the carbon adjustment mechanism (a tool EU started designing), as a way to protect EU business in case the UK does not respect a level playing field on carbon prices.
Pascal Canfin and the Environment committee will advise negotiators on environment-related issues during talks.
Since the UK general election in December, UK stakeholders complained there have been no consultations on the future UK-EU negotiators. They say the lack of transparency in the negotiations with the EU is higher than in the trade talks the UK holds in parallel with Japan and the US (for these negations, stakeholders were invited to engage via the Trade Advisory Groups and other panels). Some campaigners feared that standards could be weakened behind closed doors. Greenpeace asked the government to bring forward a transparent Trade Bill and to include a provision in the Environment Bill stating that existing commitments won’t backslide.
Lately, UK industry became increasingly
concerned over UK officials’ statements on regulatory autonomy and
government’s preference for a basic free trade deal with the EU (similar
to Canada FTA), despite important negative consequences this would have
on UK businesses. A trade specialist said not being in touch with trade
groups is not normal practice. Governments need to be informed about
businesses’ needs and the possible sensitive sectors. Their exclusion
can bring fundamental risks.
Previously this week, the Telegraph
announced though that Michael Gove will meet with several industry
representatives. However, business groups fear this is “too little, too
late”.
No agreement without an appropriate level playing field – INTA Brexit rapporteur C. Hansen (EPP) made it very clear during EU Parliament International Trade committee’s (INTA) exchange on future relationship with UK, echoing the position of EU’s lead negotiator Michel Barnier. INTA members that took the floor agreed UK cannot be allowed to undercut EU and reduce current standards.
Rapporteur Hansen mentioned EU is in a position of strength ahead of negotiations: approximately 50% of UK exports come to EU27, while only 7% of EU27 exports go to UK. MEPs agreed they want the EU to work out a deal as ambitious as possible. They also pointed out all efforts must be engaged to avoid a no-deal cliff edge at the end of 2020.
Several MEPs said this is the strangest and most unique EU deal, as instead of approximation the Parties will explore ways to drift apart. MEP H. Hautala stressed the EU should take this opportunity to turn the future deal into a frontrunner.
(14 January 2020) The European Commission’s UK Task Force presented to the EU27 its ideas on how to achieve a level playing field in the future relationship with the UK. An agreement on the level playing field is considered to be an entry point for the trade negotiations.
According
to the slides published by the taskforce, the economic partnership must
encompass “robust” level playing field commitments, meaning the EU and
UK will have to agree on a common set of standards which will lay the
basis for a trustful future cooperation. Two types of areas will be
covered: sectoral and horizontal, the last one including a wide range of
policies (from competition to social and environment).
On
non-regression, the deal must provide minimum commitments on
environmental standards, such as EU’s 2030 targets (air and water
quality, climate targets etc.) that are in place by the end of the
transition period i.e. end of 2020. The level playing field might also
include new technical developments on certain legislations that are part
of the common standards at the end of the transition period; though
this would not cover new primary legislation.
Cross-border
pollution is put forward as an important element for the future
relationship, and could be used to justify broadening and strengthening
the required commitments under a level playing field.
A soft form
of dynamic alignment is foreseen through the activity of the Joint
Committee, which can be empowered to modify commitments over time as to
lay down higher standards or to include additional areas in the level
playing field. Only for state aid a more robust dynamic alignment is
considered by the Commission. In general, dynamic alignment is
considered to be a no go for the UK government, but several Member
States including Denmark and France have asked for it. The issue is
likely to become more pressing considering that under the Withdrawal
Agreement, a part of the UK – Northern Ireland will remain aligned to a
lot of EU’s environmental acquis.
Finally, lowering higher environmental and labour standards for competitive trade reasons is not accepted. Such a ratchet up provision makes sense for the EU in view of the European Green Deal which has a deep transformative approach, but could run counter the UK government’s interests to keep its hands free.
Civil society participation and dialogue is mentioned as an instrument for sustainable development. This would need additional details and maybe a stronger form of involvement for the stakeholders, who can push for more ambition in the level playing field future commitments.
Preparations for the future EU-UK partnership negotiation have accelerated in the EU institutions.
The
EU’s UK task force presents this month a series of preparatory
briefings to the Council. These will most probably reflect the
negotiations directives the Commission will come out with in February.
Usual procedure requires the Commission to present an impact assessment
and to organise a public consultation (see European Commission note). In
the past, the Trade Advisory Group was created and used by DG Trade to
consult with civil society and industry representatives. Nevertheless,
the group stopped working last year and is pending a Commission’s
decision on its future mandate; but most likely the Trade Advisory Group
will not tackle the future EU-UK negotiation as DG Trade is no longer
in the lead. Michel Barnier, the Brexit chief negotiator, will therefore
have to decide on how to involve stakeholders in the discussion. Taking
into account the tight timetable, it might well be possible that
stakeholders will not be consulted via a public consultation at all. In
previous trade negotiations, the Ombudsman had a played a prominent role
concerning transparency and went as far as requesting the Council to
publish documents and details of the negotiation.
Member States
representatives will participate this month to nine Article 50 working
parties, discussing a wide range of subjects related to the future EU-UK
relationship. The level playing field will be covered on January 14.
The purpose of a level playing field is to avoid unfair competition, for
example through lower standards (e.g. environmental, labour standards).
A draft negotiation position is expected in the first week of February,
which will be adopted by the Council later in the month. Diplomatic
sources say it will be mainly based on the Political Declaration yet
remain very high level. Concerning the level playing field, EU’s demands
are expected to match the provisions in the Irish Protocol. This is
seen as a baseline below which the EU will not go. The structure of the
future agreement – whether it will be a (non)-mixed agreement – is also a
thorny issue which Commission will clarify during the briefing session
on January 21.
On January 21, the International Trade Committee
of the European Parliament will hold a vote on the Withdrawal Agreement
(followed by a vote in Plenary on January 29), and then continue with a
discussion on the future relationship with the UK. This will pave the
way to a resolution aiming at influencing the negotiation mandate,
expected to be voted on by the Plenary in the week of 10 February.
Negotiation
rounds with the UK should begin early March. The European Council
summit on June 18-19 is seen as a pivotal point, indicating if there is
any chance to agree on a basic agreement on trade, fishing rights and
security by the end of 2020.
(8 January 2019) In a speech delivered at the London School of Economics, Commission President Ursula von der Leyen laid down some leading principles for the future partnership negotiation between the EU and UK. The EU stands ready to move towards a partnership of “unprecedented scope”, but limits might intervene due to the tight negotiation time frame and eventual divergences pursued by the UK.
Von
der Leyen clearly stated the more divergences the UK will seek for, the
more distant the future partnership will get. The access to EU’s single
market can be weakened without an agreement on a level playing field in
sectors like environment and labour.
With a tight negotiation period of almost 11 months, the partnership cannot cover every single aspect. Priorities will clearly be set, the integrity of EU’s single market and customs union being one of them. The other EU red lines will have to be established in the negotiation mandate.
The European Commission is preparing a negotiation mandate as it has been asked by the European Council at its last meeting. A draft mandate is likely to be presented at the next Council working party meeting on trade questions on 14th January 2020. The European Parliament should also be immediately informed about the mandate. Concerning the text of the mandate, the European Council expects that “the future relationship will have to (…) ensure a level playing field.” Michel Barnier, the head of the Commission’s UK task force, has also made this clear on multiple occasions.
Throughout January
2020 the Council will be busy getting ready to negotiate the future EU-UK trade
agreement. The working party on Article 50 will go through a series of
intensive seminar sessions on a range of trade-related topics, the level
playing field being one of them.
Prime
Minister Johnson’s team have worked on an amendment to the Withdrawal Agreement
Bill which will make it impossible for the UK to ask for an extension of the
transition period (due to end on 31 December 2020). The move comes as a result of
a promise in the Tories’ manifesto to “get Brexit done”.
This raises
the risk of falling off a cliff edge exit on 31 December 2020, into a WTO
rules-based system for the UK minus Northern Ireland, in case there is no trade
deal agreed by this date. EU officials are doubtful of whether a trade deal can
be achieved in this short timeframe, with slightly more chances of just agreeing
a basic deal.
Following the outcome of the UK general election, the UK chemical industry has reiterated its willingness to stay aligned with the EU’s regulatory system. This is considered to be an essential point for ensuring frictionless access to the EU’s internal market post-Brexit. This position is echoed by UK NGOs, who have reiterated the importance of safeguarding ECHA membership.
The global chemicals giant BASF
estimated that complying with requirements for a UK REACH replica will
cost the company around 75 million euros. For certain substances, the
cost of registration would be seven times higher than the profit it can
generate per year. Due to the high costs for a relatively small market,
BASF may decide not to register some substances in the UK. As other
competitors are also taking into account this option, it might leave UK
chemical users with a smaller palette of substances to choose from
compared to their EU counterparts.
Former Prime Minister May’s intention was to seek associate membership of ECHA, but it is unclear if this will be prioritized under Johnson’s government. Although ECHA is still mentioned in Johnson’s revised Political Declaration, the subsequent sentence on aligning with Union rules was removed. Further, “level playing field” references on environmental standards have been deleted from the legally binding Withdrawal Agreement and moved into the Political Declaration.
(28 November 2019) The Commission plans to hold technical working groups with Member States in January, prior to the UK’s exit on 31 January and before trade talks can begin, in order to advance the preparation for obtaining its negotiation mandate. The European Commission has only 11 months to finalise a trade deal with the UK before the transition period ends and the backstop set out in the Brexit deal kicks in. Despite the fact trade negotiations typically last for several years, Boris Johnson has committed not to extend the transition period beyond 2020 in the Conservative manifesto for the upcoming election (12th December).
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