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American Businesses active in the EU support a deal as comprehensive and ambitious as possible, reflecting the strong ties which currently underpin the EU-UK relationship. In their opinion, a Canada-style deal would not be enough. They also reject any third cliff-edge scenario at the end of 2020.

According to a recent report published by the American Chamber of Commerce to the EU, American companies are heavily integrated in the EU and UK economies. They have built complex supply chains running across Member States, with a quarter of US foreign direct investment in the EU going to the UK. A significant change to the current economic and political relationship between the UK and the EU could seriously disrupt their business.

In terms of regulatory alignment and cooperation, the report calls for divergence to be kept to a minimum and instead asks for continued regulatory convergence across industrial sectors. Significant divergence would result in substantial additional compliance costs and red tape, affecting companies, SMEs in particular, and citizens. It also states that the current EU rules are often de facto global standards to which they have already adapted.

On chemicals, they suggest the UK should obtain associate membership of ECHA and continue having access to its database. It is suggested the UK should stay as close to REACH developments as possible, to avoid damaging divergences in standards and in product development. A lack of harmonisation would result in higher costs and longer lead times, and therefore fewer products would be available on the market.

American Chamber of Commerce to the EU, recommendations on the future EU-UK partnership

Several national Friends of the Earth groups sent a letter to MEPs, Environment Ministers and Permanent Representations from the Czech Republic, Denmark, Malta and Netherlands, asking them to put high environmental ambition at the heart of the future negotiation with the UK.

The negotiation is seen as a test for the European Green Deal and for the ambitious environmental path set by the new Commission. The NGOs call for environmental and social standards in the UK not to be weakened post-Brexit and be backed by a guarantee of non-regression enforced via a bilateral mechanism. They also demand a mechanism to ensure a form of ongoing alignment that “embeds transparency and democracy while respecting the sovereignty of the UK”.

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.

Euractiv on Pascal Canfin

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”.

Inews on campaigners’ fears
The Telegraph on business groups consultation

UK Government and Labour representatives are still discussing the UK’s post-Brexit relationship with the EU, focusing now on the idea of a customs union agreement, but talks are apparently stalling. As reported by media and the environmental community, there is no sufficient progress on environmental issues, contrary to agreements supposedly reached on “dynamic alignment” for workers’ rights.

Buzzfeed article

(9 and 11 April 2019) UK NGO CEO Craig Bennett, from Friends of the Earth, said he is “delighted that Brexit has not yet happened and that at the very least we will take longer to work out the future relationship”.

He highlighted that decades of EU membership have led to high UK environmental standards. Their introduction was easier as a 28 Member State block, and it will be difficult for UK to match this progress on its own. He also pointed out the deficiencies in the method of copying across EU laws: that several elements are lost during the process, such as the schedules of the Habitat Directive. Further, the precautionary principle still does not feature in the UK’s post-Brexit legislation. He added that the UK’s Government promise of a “Green Brexit” would be broken if UK leaves the EU in the near future, as UK authorities do not have the measures in place to maintain, let alone to enhance environmental regulations and standards.

In contrast, Chairman of the UK Federation of Small Businesses, Mike Cherry, pointed out that the level of political uncertainty is detrimental to small business, which will have to bear high costs. UK companies are stockpiling and postponing investments, in view of preparing for a no-deal Brexit.

“Brexit and the environment: What’s next” event on 9 April 2019 organized by Friends of the Earth
Mike Cherry on BBC world newsday 11 April 2019

INEOS’ Director Tom Crotty wrote in October last year to the Secretary of State for Business, Energy and Industrial Strategy, threatening to shut down the petrochemical plant Seal Sands close to Middleborough, unless his company was awarded exemptions from the EU’s waste incineration and waste water emission standards.

INEOS is the largest privately-owned company in the UK and also the largest petrochemical firm in the EU. A report by the UK Environment Agency showed the company accumulated 176 permit violations between 2014 and 2017; among them, 90 were related to water and air pollution and said to be “well over legal limits”.

INEOS’ Director Crotty argued that the abovementioned pieces of EU legislation would require additional costs for technical adaptation of over €100m, that would not be economically viable as the manufacturing plant in Middlesbrough is not profitable. He therefore claimed the plant is doomed to close down, leaving around 2,350 people unemployed. In this context, he asked for the UK Government’s support to “defer compliance with EU’s regulations”.

Labour MP, Mary Creagh, described the situation as regrettable, given that INEOS registered a profit of £2bn pounds last year. She also added “this could explain why INEOS chief, Sir Jim Ratcliffe, supports Brexit”.

Unearthed, a Greenpeace UK journalism project, published the INEOS’ Director letter

With the publication of its latest Brexit Risk Tracker, Greener UK, a coalition of 14 environmental NGOs, identify a ‘high risk’ for all of the eight environmental areas described, including air and water protection, chemicals, agriculture, fisheries and nature protection. It is the 7th update of the risk tracker since inception following the Brexit referendum in 2016.

The severe rating is largely due to the prospect of a no-deal scenario. Other reasons are relating to the government’s Draft Environmental Bill and statutory instruments, judged deficient by all experts involved, and the risks raised by future trading opportunities, like the US, for lowering food and health standards. On climate change, an area where the UK has previously claimed leadership, the NGOs identify serious risks, including fears of losing investments in energy infrastructure, and a consequent slowdown in efforts to decarbonise the economy.

Greener UK’s risk tracker

(11 February 2019) Prime Minister May issued a response to Corbyn’s letter that set the terms for Labour backing the Withdrawal Agreement. While dismissing the solution of a UK-wide customs union, May’s response touched upon environmental protection and worker’s rights.

She reiterated that Brexit will not come at the expense of lowered standards and thus recalled the non-regression commitment made in the Protocol on Ireland (Part 2, Article 2). May suggested that legislation can be prepared to give force to this in the UK legal framework, but that automatically following EU norms in these areas could not be supported by the UK government. She proposed instead to give the UK Parliament a say on future EU changes in standards. Maintaining a close relationship in heavily regulated areas was also mentioned in the letter, which would imply participation in ECHA’s proceedings, as already alluded to in the Political Declaration.

Prime Minister May’s letter
Jeremy Corbyn’s letter

(21/01/2019) Within the framework of presenting a ‘Plan B’ to Parliament, Prime Minister May pledged that environmental and social rights will not be reduced as a result of Brexit, and instead that the same level of protection will be retained and even improved. She also added that Parliament should be able to consider any modifications made by the EU in these areas, in which case legislation could even be reviewed if necessary. It follows the promise of Environment Secretary Michael Gove of a Green Brexit, which has been challenged by environmental organisations for the lack of substance and the appearance of a governance gap in the draft Environment Bill presented in December last year (see Brexit Watch nr. 5).

May’s statement to the House of Commons on Brexit (21 Jan. 2019)