The level playing-field for labour and environment in EU-UK relations

Briefing 15-11-2021

The level playing-field (LPF) provisions of the Trade and Cooperation Agreement (TCA) between the European Union (EU) and the United Kingdom (UK) constitute a key part of the agreement, and are the product of some of the more challenging issues in the negotiations. The LPF provisions seek to safeguard fair competition between the parties. A notable component are the rules on social provisions, labour, environment and climate change, often referred to as the 'trade and sustainable development' (TSD) chapters in other free trade agreements. The trading relationship between the EU and the UK is fundamentally different from that between the EU and other countries. Indeed, not only was the UK a Member State of the EU until 31 January 2021 and (almost all) EU laws applied to the UK until the end of the transition period on 31 December 2020, but the two economies are also close and strongly-interconnected neighbours. The TCA was therefore designed to ensure that a LPF continues post-Brexit. This could be achieved by maintaining levels of protection at the end of the transition period, as well as by either avoiding significant divergences in the future or by taking appropriate (rebalancing) measures. To this end, the TCA requires that parties do not weaken or reduce their levels of social, labour and environmental protection below those in place at the end of 2020 (non-regression). Existing commitments and ambitions on climate change, in particular on climate neutrality by 2050, remain in place for both parties. In addition, the TCA introduces a mechanism whereby a party can take appropriate rebalancing measures to offset any (adverse) 'material impacts on trade or investment' arising from 'significant divergences' between parties. It also allows either party to request a review with a view to amending the agreement, and either party can opt to terminate the trade chapters if the envisaged amendment is not satisfactory. The TCA LPF provisions on labour and environment, in view of the LPF focus, strengthen the enforcement of non-regression provisions by allowing for remedial measures in the event of non-compliance, and also reinforce the precautionary approach. The TCA also represents a notable innovation with its rebalancing and review provisions. This Briefing updates an earlier one, published in April 2021.