BW4_Trade

The European Commission continues in its efforts to align EU policies to the Green Deal objectives, including on trade.

Parity, accessibility and transparency are three keywords that will define the EU’s trade complaints mechanism, according to the chief trade enforcement officer, Denis Redonnet.

Sustainable development provisions in trade deals are linked to a trade test, so that a violation of sustainable development has to demonstrate an impact on trade. This puts civil society at a disadvantage, which does not usually have direct access to trade information.

The complaint mechanism, called the single entry point, tries to address this barrier. It allows a complaint to be submitted on a sustainable development violation, without having to provide evidence about impact on trade. This helps to create parity, as it puts claims on sustainable development and market access on the same level.

The European Commission will also make a particular effort to help less-resourced stakeholders during the pre-complaint process e.g. with assistance in filling in the form.

The single entry point has been in operation since the end of last year, but no complaints on trade and sustainable provisions have yet been received. However, the Commission is engaged in several pre-complaint discussions. It remains to be seen how efficient the mechanism is in addressing sustainable development violations.  

DG Trade and other parts of the Commission have undergone a re-organisation, to reflect the new focus on implementation and enforcement of trade deals. Redonnet nevertheless recognises that it needs “boots on the ground”, such as more involvement from EU missions in third states and possible use of the network of member states’ embassies.

European Parliament, INTA committee discussion with the EU chief trade enforcement officer, Denis Redonnet (24 February 2021)
Brexit Watch number 57 on the single entry point mechanism

“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.

Brexit & Environment, Chlorinated chickens cluck again
2020 National Trade Estimate Report on Foreign Trade Barriers
US Trade Representative, Robert Lighthizer statement
The Observer on the leaked Downing Street memo
Financial Times on the UK pork producers

The UK might pivot to a risk-based approach, according to a briefing by the Trade Justice Movement (a UK coalition of sixty civil society organisations). This is specific to US regulations and contrary to the EU’s precautionary principle. The briefing compares the UK’s negotiation objectives with the EU and US and points to important differences between the two. On environmental policy, it shows the UK is short on detail and enforceability in both of the negotiation mandates. None mentions the Paris Agreement, although the US one points to the net-zero target and the need for a dispute settlement to ensure enforceability (which is specifically excluded in the EU mandate). Including such reference can be considered encouraging according to Trade Justice Movement, as the US negotiators asked for climate change not to be included in the deal (revealed in leaked papers last year). 

Trade Justice Movement’s report
UK negotiation mandate with the EU
UK negotiation mandate with the US

The UK government asks for a level playing field in the ambitious and comprehensive free trade agreement it is aiming for with the US. It is less forceful than what the EU is asking from the UK, but it indicates that the government is worried about getting too close to the US and losing some environmental and labour protection.

The adopted negotiation approach mentions the need to “secure appropriate provisions that promote open and fair competition”, which resembles the EU’s level playing field requirements. More specifically, on trade in services the UK asks for “ambitious commitments on market access and fair competition”. On competition law, the UK wants an ambitious chapter, with similar wording to the mandate with the EU.

The UK government says the agreement will ensure high environmental and social standards and protections. The deal should also have appropriate mechanisms for the implementation, monitoring and dispute resolution of environmental and labour provisions. This is completely different from the UK negotiation mandate with the EU, where it specifically states that environmental and labour provisions should not be subject to the dispute resolution mechanism.

An impact assessment backing the negotiation approach with the US finds that the UK outperforms the US in most environmental indicators, such as climate and energy, water resources, biodiversity protection and air pollution.

The UK’s approach to trade negotiations with the US

(27 November 2019) Leaked confidential documents of UK – US trade working group meetings over the last 30 months give new insights into how the US is pushing the UK to divert from EU regulatory approaches and standards.

The papers show the US prefers a regulatory autonomous UK post-Brexit. Rolling back EU legislation would facilitate future alignment with the US regulatory system, and would also suit US business interests. During these meetings, US trade representatives highlighted the “philosophical difference” between the US and EU approaches to food and environmental regulations. The US is also allegedly threatening to refuse any future trade agreement with the UK if it agrees to remain aligned with the EU. It is made clear in the papers that any mention of climate change cannot be included in a future UK – US trade deal. Additionally, US officials apparently advised UK trade negotiators on how to publicly “sell” the idea of chlorinated chicken to British customers.

Unearthed article (27 November 2019)
Open democracy article (27 November 2019)
Global justice article (27 November 2019)

(1 October 2019) The significance of a level playing field in the future EU-UK relationship post-Brexit emerged during the hearing of Commissioner-designate for trade, Phil Hogan.

Danuta Maria Hübner, Polish EPP Member of the European Parliament, raised the importance of ensuring a level playing field and common cross-borders standards. According to Hübner, this would be particularly important when taking into account the proximity and the size of the UK, as well as the current UK government’s position on regulatory divergence. She alluded this should be treated as a red line by the EU.

Phil Hogan praised the Withdrawal Agreement as a balanced one, with reassuring provisions on the level playing field and standards varying from environment to state aid. He also presumes such a framework should be included in the negotiation mandate for the future agreement. Hogan expects the European Parliament to have its say over such a mandate. 

Phil Hogan’s hearing in the European Parliament

The UK’s new Prime Minster Johnson declared in his first speech that it is time “to liberate the UK’s bioscience sector from anti genetic modification rules”. EU policy on genetically modified organisms (GMO) is guided by the precautionary principle. At the moment, only one GMO has been granted an EU authorisation for cultivation (MON 810 corn from Monsanto, now Bayer). Nineteen countries, including France, Germany, Italy and Poland, have banned GMO cultivation altogether. Whilst the US, followed by Brazil, is the world’s largest GMO cultivator with over 100 million hectares (around 20% of its farmland).

Prime Minister Johnson’s international trade secretary, Liz Truss, is portrayed as an ultra-free market ideologue and has in the past spoken in favour of economic liberalisation and deregulation. Last year she also allegedly met US groups to discuss deregulation and the benefits of Reaganomics.

… but US help is uncertain

Immediately after the change of power in the UK, some US government representatives declared a readiness to agree a trade deal as soon as possible. They also “enthusiastically” supported a no-deal Brexit which they consider to be a window of opportunity to strike a “very substantial trade agreement”. But Nancy Pelosi, speaker of the House of Representatives, ruled out the House’s support for any trade agreement with the UK which jeopardises the Good Friday Peace Agreement

Boris Johnson’s first speech as Prime Minister (24 July 2019)
European Parliament on GMOs cultivation ban in the EU
The Guardian on Liz Truss
Politico on US backing no-deal Brexit
The Irish Times on Nancy Pelosi
Brexit Watch previous related articles (see under section Trade)

President Trump’s visit to the UK came amidst comments made by the US Ambassador to the UK, Woody Johnson. According to Johnson, “the entire economy (…) all things that are traded would be on the table” in future UK-US trade negotiation talks.

He suggested amongst other areas that a future trade deal would have to cover agricultural products, including chlorinated chicken. According to Johnson, British consumers should have the last say, by choosing to buy or not buy US products once they are put on the UK market. This is no new approach, as the US follows the same process in regard to the transatlantic trade deal with the EU. The US Ambassador to the EU, Gordon Sandland, mentioned during the European Business Summit last May that any trade deal with the EU would have to include provisions on agriculture. Public consultations held by the US government have already demonstrated this further, as US companies asked for the “mutual recognition of equivalence in safety measures” (Brexit Watch n°10).  

Another point of controversy relates to the UK’s National Health Service (NHS). Ambassador Johnson stated this should also be on the negotiation table. This confirms the fears expressed some time ago by Shadow Health and Social Care Secretary, Jonathan Ashworth, who claimed that private healthcare corporations in the US could “get their hands on NHS contracts”. Amidst growing concerns, the incumbent Health Secretary, Matt Hancock, nevertheless made clear that the NHS would not be for sale in any future trade deal talks. 

The Guardian article on US-UK trade deal demands
Brexit Watch n°10
Jonathan Ashworth’s interview on NHS

Environmental law group Client Earth has set out its demands for an overhaul of the UK International State Dispute Settlement (ISDS) mechanism for a future EU-UK trade deal. The current mechanism applied (in all EU trade agreements concluded post-2000) is described as the “most illegitimate dispute settlement mechanism in international law” (Professor Alessandra Arcuri), and is often used as a threat against regulation. Professor Arcuri and Friends of the Earth campaigner, Lora Verheecke, suggested that any form of EU-UK ISDS should take into account the need to provide better guarantees to communities’ rights, as well as a series of obligations and legal responsibilities for investors.

Recording of “Brexit and the environment: What’s next” event
Client Earth report on ISDS

The UK signed a series of trade continuity agreements to ensure minimum trade disruption after Brexit day. However, it has only secured nine out of 40 trade agreements that the EU has with more than 70 countries and thus will obviously not be able to transfer all the trade deals in time. Covered by these agreements are countries including Switzerland, Norway, Israel, Chile and others. These agreements mostly follow the EU model, even though some might include modifications. The UK’s trade department has allegedly faced difficulties in replicate the EU’s treaty with Japan, as Tokyo is pushing for a better deal. 

UK Trade department guidance
BBC article
Financial Times article