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“While the EU and UK are currently largely aligned, it is clear […] that the status quo will fall away at some stage”, according to a report by the European Scrutiny Committee in the House of Commons.

It states this is mainly due to the EU chemicals strategy, which will take forward a series of important changes to the EU chemicals regime.

The report considers it plausible that changes in chemicals regulation could have a material impact on trade and investment. This is an important aspect, as the level playing field mechanisms in the Brexit deal (e.g. rebalancing) require such a material impact to initiate legal action on a given standard divergence. To prevent legal proceedings, the two parties have to avoid significant regulatory divergence.

The Brexit deal could therefore become a factor in determining EU and UK chemicals policies. That is even more true for the UK, as the EU has been the first-mover on chemicals policies, with the publication of its Chemicals Strategy for Sustainability in October 2020. The UK has to keep pace to avoid opening a significant regulatory gap.

Northern Ireland would also have to follow many of the changes announced in the EU chemicals strategy, especially those relating to EU REACH (which Northern Ireland is obliged to implement under the Withdrawal Agreement). If the UK does not keep pace with EU developments, the House of Commons’ report says it might lead to a situation where a chemical is deemed safe in Great Britain, but unsafe in the EU and Northern Ireland.

House of Commons, European Scrutiny Committee, report (17 February 2021)

Preserving regulatory autonomy is one of the main elements of the Brexit deal. This was a red line for the UK in negotiations. However, experts argue the right to autonomy must be exercised with moderation.

The deal includes a rebalancing mechanism which can be triggered if significant divergences impact trade or investment in “a manner that changes the circumstances that have formed the basis” for the agreement. Exercising regulatory autonomy can indeed lead to economic impacts and ultimately to different circumstances compared to December 2020. The rebalancing clause “partly offset[s] this autonomy”, says the report of the House of the Lords on the institutional framework of the Brexit deal.

The rebalancing mechanism is “unusual” and “utterly novel and remarkable” according to law experts Marie Demetriou QC & Prof Dr Holger Hestermeyer.

Lord David Frost also acknowledged its uniqueness. He indicated it has been introduced as an alternative to an equivalence mechanism, that was requested by the EU.

The practicability of the mechanism remains to be tested and will largely depend on how certain words will be interpreted – especially “significant divergence” – and the level of evidence required to prove a material impact on trade or investment.

According to Lord Frost, if the rebalancing is used too much, it could trigger a broader renegotiation of the deal.

Based on the report Beyond Brexit: the institutional framework, by the House of Lords

Regulatory cooperation in seemingly technical meetings and without Parliament’s democratic scrutiny might influence EU legislation, according to a policy paper commissioned by the Greens in the European Parliament.

It gives the example of Canada that tried to influence, among other issues, the EU’s hazard-based approach inside CETA‘s regulatory committees. Documentation on this was disclosed at the request of Foodwatch Netherlands.

This should inform the implementation of the Brexit deal, according to law Professor Dr. René Repasi who wrote the paper.

Within the framework of EU-UK technical regulatory cooperation, the parties may (1) inform each other about legislative proposals or review and (2) to the extent feasible, consider each other‘s approach on the matter, (3) provide information and discuss regulatory measures.

Such an “early exchange of regulatory plans can also mean that the contracting parties have an influence on draft regulation at a time before the European legislator has received these drafts”, said Repasi.

Therefore, he proposes the appointment of a permanent European Parliament representative to the regulatory cooperation committees, who should be present in the room and get early access to the discussions.

Professor Dr. Rene Repasi policy paper on Options for a stronger parliamentary involvement in the implementation of the TCA with the UK
Foodwatch Netherlands report (2020)
EU–UK TCA text, Article GRP.12 on Regulatory cooperation activities, page 193

Since the conclusion of the EU-UK agreement, one of the big questions among stakeholders and MEPs has been: how can civil society have a role in monitoring and enforcing the deal?

The Single Entry Point (SEP) was introduced by the European Commission last year, together with the appointment of the Chief Trade Enforcement Officer. The latter was promised in President von der Leyen’s political guidelines (2019) and is part of a growing recognition that ‘trade is not an end in itself’, that trade deals must have ambitious sustainable development chapters and compliance needs to be improved.

The SEP allows EU citizens, NGOs, trade unions, companies and other entities to bring complaints about violations of commitments in trade and sustainable development chapters. The European Commission will review lodged complaints in wide-ranging interdepartmental consultations, which could eventually culminate in a dispute settlement procedure. The complainant will receive notification of receipt of their complaint, will be informed as to whether an enforcement action is started and might receive updates depending on the sensitivity and confidentiality of the issue at stake. 

This could be an important avenue for civil society to support the implementation of the EU-UK agreement, in addition to the Domestic Advisory Groups (DAGs) and Civil Society Forum, both foreseen in the deal, but which have a weak role.

A similar complaint mechanism for civil society has not yet been developed in the UK.
 
Political guidelines of President Ursula von der Leyen – My agenda for Europe
On the Trade Chief Trade Enforcement Officer and the Single Entry Point
Operating guidelines for the Single Entry Point and complaints mechanism

‘I urge the Commission to be strict should the agreement not be fully respected’, said Pascal Canfin, chair of the ENVI committee in the European Parliament.

This week the ENVI committee published its opinion on the EU-UK trade deal in a six-page letter.

The letter stresses the European Commission should ‘stand ready to make full use of dispute resolution tools available in the Agreement’. In case the UK regresses on environmental standards, the committee believes the link to trade and investment ‘should be broadly interpreted’. This trade test is mandatory for accessing the dispute settlement mechanism.

ENVI says it will maximise its scrutiny of the deal’s implementation. The European Parliament’s committees should be involved in future review processes of the deal and should hold the European Commission accountable for its participation in the Partnership Council (the highest governance entity of the deal).

It also calls on the Parties to aim for dynamic alignment of climate targets and environmental protections, and welcomes future negotiations on a closer form of cooperation on chemicals safety management.

ENVI committee, opinion letter on the EU-UK trade deal
European Parliament, press release 27 January 2020

The European Commission was given a hard time when it briefed MEPs on the level playing field mechanism in the EU-UK Trade and Cooperation Agreement (TCA).

MEPs asked pointed questions about what constitutes regression and what action could be taken if the EU-UK level playing field is undermined. However, some of their concerns were not fully addressed. MEP Pascal Canfin (RE, FR) said he was not satisfied with the Commission’s replies and might submit written questions.

MEP Bas Eickhout (Greens, NL) gave some concrete examples, such as the UK’s recent interest in enabling greater use of gene-edited crops – and asked if this was a form of regression. If the EU strengthens its legislation banning the use of neonicotinoids (bee-killing pesticides), what happens if the UK does not follow?

NGOs’ and think tanks views on the weakness of the non-regression clause were echoed in the Parliament. ‘Is it sufficient to safeguard the level playing field if the burden of proof is so high?’ asked MEP Pietro Fiocchi (ECR, IT).

Committee on Environment, Public Health and Food Safety, exchange on the Trade and Cooperation Deal, 14 January 2021

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.

ENDS on BirdLife Europe and Greener UK
IPPR analysis
Professor René Repasi’s legal explanation of the Brexit deal – webinar Understanding the Brexit Deal

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.

CHEM Trust blog on Brexit deal
Euractiv on CHEM Trust, Cefic, CIA positions
ICIS on Cefic and CIA positions

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.

CHEM Trust analysis

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.

The Constitutional Affairs Committee draft opinion
The Legal Affairs Committee opinion
The Internal Market Committee draft opinion
The Budget Committee opinion