Dr Belén Olmos Giupponi – Written evidence (LPF0005)
The nature of the future partnership agreement between the European Union (EU) and the United Kingdom (UK) is that of a sui-generis or bespoke free trade agreement. In spite of the attempts to draw parallels with other similar treaties, this is a unique agreement being negotiated with a former member state which embodies “blended clauses” (inspired by previous acquis communautaire and contemporary treaty practice) and innovative clauses introduced afresh. It is worth mentioning that not all the relevant environmental law provisions are enshrined in just a section: several other provisions scattered in the text have environmental law ramifications, such as those relating to sanitary and phytosanitary measures. The following considerations are based on the joint analysis of the documents which are publicly available, as follows: on the one hand, the EU’s documents on Article 50 negotiations with the United Kingdom, the EU’s Draft text of the Agreement on the New Partnership with the United Kingdom (adopted in March 2020); and, on the other hand, the UK’s documents adopted in February 2020 including the position on The Future Relationship with the EU, the Draft UK-EU Comprehensive Free Trade Agreement (CFTA), and the UK’s Draft Energy Agreement.
1. What are the key parts of the environment and climate level playing field proposed by the EU, and what has the UK proposed in these areas?
1. According to the EU’s position, key aspects of the environment and climate level playing field (regulated under Sections 6, 7 and 8 of Title III: Level Playing Field and Sustainability) comprise general principles (including environmental principles), the precautionary principle, the right to regulate, the acquis communautaire (the block EU environmental law already incorporated into UK law and “retained”), climate change and carbon pricing as well as non-regression of the levels of protection, future levels of protection, and monitoring and enforcement of the provisions. Overall, these three sections address what would be the externalities from an economic viewpoint with the aim of striking a balance between the different priorities, and avoiding the possibility that an area may act as a deterrent for policy measures adopted in the other, reciprocally. Under the climate change pillar, there is the specific commitment of climate neutrality and no regression of the level of climate protection, including commitments and targets envisaged for the end of the transition period. These areas for cooperation are included together with other priorities identified around the issues of state aid control, competition, taxation, labour and social protection. Some provisions are grouped under an umbrella or a “chapeau” structure comprising provisions applicable across the chapters, such as the precautionary principle and the right to regulate. The draft agreement for the future partnership incorporates short and longer-term goals, the architecture and legal nature of the future partnership, and the whole suite of legal basis.
In turn, the UK’s position (crystalized in Chapter 28 -Trade and Environment- of the CFTA and Chapter 27 -Trade and Environment- of The Future Relationship with the EU) reflects a more inter-governmental approach to these issues, following in the footsteps of other contemporary free trade agreements, such as CETA. There is a loose commitment not to lower environmental standards to favour trade and investment and the recognition of the right to regulate, and the parties’ autonomy to set their environmental priorities and adopt their respective environmental policies. Future cooperation with the EU is articulated around commitments under Multilateral Environmental Agreements (MEAs). Undoubtedly, the UK seeks also to achieve an enhanced cooperation with the EU in the future. Climate change cooperation is outside of the scope of the CFTA and considered separately under the Draft Energy Agreement. In this regard, there is consensus on the commitment to effectively implement the Paris Agreement. Carbon pricing has not been yet included under the draft Energy Agreement, but the UK may consider the possible link between any future UK emissions trading system (ETS) and the EU ETS.
2. What are the key disagreements on this topic between the UK and the EU, and how substantive are they?
2. Although the different positions seem to converge on essential aspects, some disagreements are observed. The nature of the disagreements may be more political than substantive in certain areas. From the EU perspective, the priority is to strike a balance of rights, to ensure the respect the integrity of EU law and guarantee the level playing field in environment and climate law. In some cases, the disagreements are more substantive: for instance, the duty to have regard to the EU environmental principles as legal rules with stringent content. Key disagreements on the level playing field obligations between the European Union and the United Kingdom concern the threshold for the application of the precautionary principle. Another source for potential disagreement is the implementation of the right to regulate which is open to interpretation and may condition future state action. Clearly, the exercise of monitoring power by the CJEU presents another area for contention. In some areas, such as climate change, chemicals and industrial emissions, there might be more consensus as the UK moves to have its own systems. Other sectors might be less controversial, such as the issues comprised in the application of the Aarhus Convention and nature conservation.
Scope of the provisions
3. Is there a big difference in the environment and climate policy areas covered by the UK and EU proposals, and do you expect this to be a significant point of contention?
3. In terms of the differences between the proposals, there are some contentious areas, such as the interpretation of the environmental principles, particularly the precautionary principle. Furthermore, the EU seeks to include more stringent provisions potentially informing legal review tests. Climate change and the emissions trading system after the transition period may constitute an area for future cooperation and negotiation. The UK will need to develop its own Emissions Trading system and align it with the EU. Carbon markets are likely to be another source of potential contention if no agreement is reached in the mid-term. Another controversial area in the way forward is judicial monitoring and enforcement, particularly concerning the role of the CJEU after the transition period. This is expected to be a divisive point and one question in this regard is how the UK will play along and accommodate the EU’s demands. Some aspects can be ironed out in the short term, but it is likely that many other areas will require further negotiations. The key goal here should be to foster a constructive post-Brexit partnership in environmental matters.
4. Both the EU and UK have included clauses on upholding levels of environmental protection, what are the implications of the different approaches?
a. How would the EU and UK’s different approaches to non-regression affect UK policy-making?
b. What happens if a party lowers their standards or level of protection under each approach?
4. Approaches to upholding levels of environmental protection differ on the meaning and scope given to non-regression. Whilst the EU aims to set common standards on environmental protection and common targets, the UK’s draft embodies a loose commitment not to weaken or reduce the levels of protection afforded in their environmental law. The said levels (to be applied at the end of the transition period) need to be sufficiently spelled out whether referring to qualitative levels of protection or to quantitative requirements for environmental protection.
a. Non-regression approaches across the environmental law spectrum raise the question of how to address the imbalance between future commitments and the ratchet clause. The stance on this will depend upon the UK’s needs to adjust to new scenarios and will influence the EU and the UK’s reactions vis-à-vis common trading partners. Interim arrangements are introduced with the aim of avoiding disruption, but the question regards the situation after the transition period. Non-regression may be interpreted by the EU as the commitment not only to maintaining but also to exceeding existing environmental standards which will (up to a certain extent) retain the influence of EU law.
b. It is common practice to include in free trade and investment agreements this type of non-lowering of standards clauses. However, they may prove difficult to be enforced in the event of a breach. The consequence of non-compliance with the clause usually leads to a non-binding result (publication of a report). Enforcement and surveillance are problematic aspects. It is advisable, therefore, that the strict legal position should be to achieve reciprocity in terms of standards.
5. Must the agreement refer to the common standards that apply in the EU and UK at the end of the transition period to be acceptable to the EU, or could it refer to other standards in some areas, for instance those in international environmental and climate agreements?
a. Would a reference to common standards in the EU and UK at the end of the transition period bring in the Court of Justice of the European Union (CJEU)?
5. For avoidance of doubt, it should be indicated to what extent the parties will have regard to either common standards (spelling them out) or international standards. Multilateral Environmental Agreements (MEAs) could be taken as a starting point or the base-line for environmental protection, including treaties and other international protocols in the field. Evidently, the Paris Agreement may be the paradigmatic case which is already cited in both draft texts. The overall number of MEAs that the UK is party to is quite considerable, and requires a closer analysis in order to identify common sectoral priorities. Although there is a convergence between the standards set at international level and those set by the EU, the latter tend to be higher and therefore more rigorous. A stark discrepancy in this respect may limit or hinder future action.
6. If the environmental principles are included in a UK-EU agreement, what difference would that make to policy-making and the decisions of courts in the UK?
6. There are some environmental principles included in the text: (a) the precautionary principle; (b) the principle that preventive action should be taken; (c) the principle that environmental damage should as a priority be rectified at source; and (d) the "polluter pays" principle. Clearly, other environmental principles such as public participation are embedded in the draft. The application of principles, particularly of the precautionary principle, is relevant as it might necessitate the intervention of the CJEU. The precautionary principle is conceived as a cross-cutting principle applicable to all the different sections of the title and not just to the environmental “bits and pieces”. The precautionary principle as understood in the EU approach implies not merely influence on policy making, but also regards the decisions of courts as they are applicable through the tests of a legal review. Conversely, the UK’s approach seems to be more rooted in policy as the impending post-Brexit legislation may indicate. The Environment Bill does contain a definition of “environmental principles” providing for the adoption of a “policy statement on environmental principles” that must be regarded by a Minister of the Crown in policy making (Clauses 16 to 17).
Enforcement and dispute resolution
7. What shape should the relevant enforcement and dispute resolution mechanisms take to be both negotiable and to help ensure that the agreement can be maintained in the long-term?
Impact on other trade deals
a. Would non-regression provisions prevent the UK from allowing lower standard products to enter the UK market, for example through a dual-tariff regime?
8. Level-playing field commitments may generate asymmetries concerning other agreements negotiated with third countries. Although it may not directly restrict the UK’s power to strike new deals, it may create a differential impact as this implies a reinforced cooperation and may lead to claims about concerning “disguised trade discrimination”. Conversely, environmental provisions may generate some spill over effects on the rest of agreements concluded with other countries. Ultimately, from a realpolitik standpoint what is relevant in trade talks is the respective bargaining power of the parties and their ability to push forward standards in their own benefit.
a. The question of a dual-tariff regime is controversial and potentially inconsistent with World Trade Organisation (WTO) law. If the standards refer to environmental protection and a conflict with the non-discrimination principle arises, they could be justified under the GATT exceptions. In the event of a dispute, the legality of these standards boils down to the specific circumstances of each individual case as demonstrated by the WTO case law. More difficult would be if these standards fall into the category of “process and production methods” (PPMs) which legality under WTO law is highly contested.
Room for agreement
9. Are there helpful precedents or creative proposals that the negotiators should be considering in the main areas of contention?
10. Is there space for an agreement in this area? Where do you see the landing zone between the UK and EU’s positions?