In a call involving more than 250 leading businesses, Prime Minister Johnson invited the UK industry to come up with ideas for regulatory and legislative reform to support future economic growth. However, changes to existing environmental and social legislation could be constrained by the non-regression obligation in the EU-UK Trade and Cooperation Agreement.
The UK government has launched a consultation on enabling the use of gene-edited crops. The EU does not ban the use of GMOs or gene-edited food, but its approval process is stringent. The EU process is based on the precautionary principle, which the UK committed to respect under the EU-UK Trade and Cooperation Agreement.
The environmental level playing field in the Brexit deal will be hard to enforce, agree European green groups.
It is ‘worrying’ the EU conceded to a ‘potentially more ambiguous mechanism’ (review and rebalancing clause), instead of full equivalence on environmental standards, said the interim director of BirdLife Europe, Ariel Brunner. He noted that the European Parliament must now ensure the system is robust enough.
Greener UK, along with the think tank IPPR, say the non-regression clause is limited by its link to trade and investment. If one Party thinks its trade partner regressed on an environmental protection, the complaining Party has to demonstrate a trade or investment impact.
This is considered a ‘very high bar for proof’, as also demonstrated by other trade deals with similar clauses. USA vs. Guatemala is an example of this, where the USA was not able to show the economic relationship had been impacted even though Guatemala hadn’t adopted any of the social standards it was expected to. However, Professor René Repasi believes this may be decided differently in any future dispute between the EU and UK: the economic relationship is undoubtedly not identical, and every panel of arbitrators is distinct and applies different legislation.
For the time being, chemicals trade between the EU and UK has been spared WTO tariffs of around 6.5% thanks to the Trade and Cooperation Agreement.
However, the deal did not prevent the regulatory divorce.
This means the UK has now left the EU’s REACH system for regulating chemicals. It can no longer access the EU’s chemical safety database, managed by its agency ECHA, covering some 23,000 substances. The UK is establishing its own chemical safety system, GB REACH. Its chemical safety database will not be fully populated until 2027 (and even then, will have less information in it than the EU’s) and cost industry an estimated 1 billion GBP to make it operational.
The agreement includes a chemicals annex which establishes a light form of cooperation and exchange of non-confidential information, similar to what is in place between the EU and other third countries.
Industry and environmental groups are concerned about the negative impacts:
Tow Bowtell from British Coatings Federation said this ‘is a hard Brexit’ and expressed ‘serious concerns about the way UK REACH will duplicate the onerous EU REACH’, calling for an urgent review of ‘how UK REACH is going to work’.
Marco Mensink from CEFIC expressed his concern about rapid divergence with the new EU Chemicals Strategy for Sustainability, which foresees a revision and strengthening of chemical safety rules.
Chloe Alexander from CHEM Trust believes that the result for the UK will be ‘a system that’s weaker and less protective than the EU’s’.
There is already pressure to continue negotiations for a more comprehensive cooperation on chemicals regulation and allow UK access to safety data.
Currently, the EU only gives such access to EEA countries, which are aligned with REACH and related chemicals safety rules.
Changes to the EU’s chemicals policy would cause divergences with the UK and should be avoided, says the EU chemical industry lobby Cefic.
Such ‘freezing clauses’ were typically used in international investment agreements to fix parts of legislation in time.
Cefic is now asking for something similar – it wants to freeze REACH on the pretext of avoiding divergence with the UK. It also says that any future change of rules should be done in cooperation with the UK.
This demand goes against the spirit of the negotiating mandate adopted by Member States in February 2020. They envisaged a form of dynamic alignment between the EU and UK, ‘with Union standards as a reference point’.
Questioned by Members of the European Parliament on this subject, Environment Commissioner Sinkevičius said the EU cannot hold back the implementation of the European Green Deal because others choose to go another way.
In the past, Cefic has argued that the UK should remain within REACH. This would help companies, protect people and the environment.
But regulatory divergence on chemicals has become unavoidable:
the UK has put in place a much weaker chemicals regime (the so-called BREACH) which will not have complete safety data for almost 7 years;
the EU is set to strengthen its chemicals safety regime with the recently published Chemicals Strategy for Sustainability; and
unless the UK agrees to align with EU chemical laws.
The UK government has announced that it plans to create a new UK internal market law that will limit the ability of Scotland and Wales to adopt higher environmental standards. This has been labeled ‘a full-scale assault on devolution’ by Nicola Sturgeon, First Minister of Scotland and leader of the Scottish National Party, making this a ‘constitutional crisis’.
The internal market bill, expected in autumn this year, would set in stone the principle of mutual recognition which means that the ‘rules governing the production and sale of goods and services in one part of the UK are recognised as being as good as the rules in any other part of the UK, and they should therefore present no barrier to the flow of goods and services’ (UK Internal Market White Paper). The devolved nations – Scotland and Wales – would be obliged to accept products and services with lower standards, if those standards were in place in England.
This is substantially different from the ‘Common Frameworks’ approach established after the Brexit referendum, when the UK government and its devolved nations started working together to set standards in key areas of devolved competence, including environment, food and chemicals. To date, there has been slow progress on the Common Frameworks.
‘The British government is in essence rejecting a consensual, bottom-up approach of handling internal market differences in favour of top-down legislation’, an expert stated in the Financial Times.
This reinforces the picture of a UK government determined to get rid of all controls that could interfere with its deregulation plans.
The UK would be vulnerable to a legal challenge from the World Trade Organisation if the government’s border policy plans are implemented. The UK government said that full border controls will not be put in place until July 2021, despite leaving the EU at the end of 2020.
This warning was privately expressed by Liz Truss, International Trade Secretary, in a letter to senior members of the cabinet that was leaked to the press. She also fears the government’s plans could damage the UK’s reputation at the World Trade Organisation and undermine its international trade policy. Some UK stakeholders say the letter validates their concerns about the UK’s readiness for the end of the transition period at the end of December 2020.
Prime Minister Johnson is expected to publish soon the Government’s full plans on border controls.
“If they pass legislation (the UK internal market bill) then we will have no intention of implementing that”, said Michael Russell, member of Nicola Sturgeon’s cabinet. The UK internal market bill would give to Westminster powers to force on Scotland and Wales new standards on food, environment and animal welfare agreed in future trade agreements. These policies are normally overseen by the devolved administrations, but a Westminster-led trade policy could restrict policy flexibility in these devolved areas. In addition, the devolved administrations have no formal role in negotiating or approving trade treaties. Leaked notes and official statements by American officials show US intention to pressure the UK into accepting lower food standards (chlorinated chicken, pork produced with lower welfare standards etc.). A leaked Downing Street memo called for “no specific policy” on animal welfare in the US trade talks. Welsh and Scottish ministers are concerned by the “mutual recognition” regime proposed in the internal market bill, which could force them to accept controversial products from the US.
If the devolved nations do not implement legislation passed in London, the UK government needs to go to court to enforce it. This would apparently be the biggest constitutional conflict between London and Edinburgh since the 2016 Brexit referendum.
A white paper on the bill and the government plans to rush it through in the autumn are expected in the coming weeks.
“What the US failed to obtain from the EU, it is now trying to gain from the UK”, says a blog post by Brexit and Environment. The US is pushing for the inclusion of its meat that’s produced to lower standards in a future trade deal with the UK. The 2020 annual report by the US Trade Representative features complaints about the EU’s “unscientific ban” on meat produced using hormones and other growth promotants. US Trade Representative, Robert Lighthizer, stated earlier this week that the US will not sign a free trade deal with the UK unless its farmers can sell meat and other agricultural goods to Britain without barriers.
The UK government has always said it opposes the import of products such as chlorinated chicken, but is starting to backtrack on this. A recently leaked Downing Street memo called for “no specific policy” on animal welfare in the US trade talks. The Brexit and Environment blog suggests this matters for the UK’s future regulatory identity: will it stick with the precautionary principle adopted by the EU, or will it shift toward the risk-based approach embraced by the US? The UK’s apparent willingness to accept lower US standards also has repercussions for the EU-UK negotiations, as it makes it increasingly hard for the EU to accept only political commitments for a level playing field.
The future UK-US trade deal raises concerns among UK pork producers as well. They fear they will not survive competition from US pork, which has production costs about half that of the UK due to lower welfare standards and growth-enhancing feeds. Last month, the government refused to legally enshrine a “level playing field” on welfare standards in the Agriculture Bill.
The UK is looking to negotiate access to the EU’s chemical safety data, the world’s largest chemical database managed by ECHA. It is also proposing that each party could require a consultation on the scientific information, as set out in its chemicals annex proposal for a trade deal. Data access would resolve many of the problems associated with setting up a separate UK database, particularly the cost on industry of re-registering and providing duplicate safety data on chemicals that are already registered with ECHA. Even after this phase-in period the UK database would have far less information in it than the EU’s. It took the EU over ten years with a total budget of EUR 1 bn to ensure the registration of all chemicals on the market and to execute a minimum level of quality checks – a process which is still ongoing.
The EU has refused to discuss specific requests like this, which it perceives as cherry-picking, unless there is an agreement on the level playing field, including on state aid, environmental principles such as precaution, and other aspects of regulatory cooperation. However, the UK has rejected these demands so far on the grounds that it would impede its ability to act like a sovereign state. For example, the UK prefers to work with what it describes as a science-based approach, something which does not exist in the EU treaties.
A process by which the UK could require the EU to consult with it on scientific information could be perceived as the tail wagging the dog, as one EU expert in the talks called it.
The UK should not be able to freely pick and choose elements and legal constructions from previous EU’s FTAs, as the current situation is not comparable, according to the draft opinion of the European Parliament Committee on Constitutional Affairs. It insists that any agreement on a new relationship must be coherent and adapted to the geographic proximity and the high level of interconnectedness of both parties’ economies. It also rejects the idea of resorting to several sectoral agreements because of the limited negotiation time available.
Other European Parliament’s committees also published their (draft) opinions on the future partnership with the UK. The majority of them mention the importance of having a comprehensive deal, with an overarching institutional framework and strong enforcement mechanisms.
The Legal Affairs Committee emphasised the importance of the effective implementation of the Withdrawal Agreement, which is seen as a precondition for a minimum guarantee of good faith and mutual trust between the two parties. It also highlighted the inevitable role of the Court of Justice in the examination and interpretation of EU law in the future agreement and that any body set up by the agreement for its enforcement will not be competent to interpret any concepts of EU law.
The Internal Market Committee stressed that an ambitious deal can be agreed only if robust commitments for a level playing field are in place. This should also include dynamic regulatory alignment on the market surveillance of products and regulatory cooperation.
The Budget Committee added the need to establish arrangements between the UK authorities and Union agencies.
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