As the EU and U.K. prepare to start trade talks in about two weeks time, one issue is already attracting a lot of noise: The so-called level-playing field and its enforcement.
Brussels wants any deal granting the U.K. access to the single market to ensure “zero dumping” — meaning no under-cutting of EU businesses through lower U.K. social, environmental or competition standards. The U.K. side rejects any assumption that U.K. standards should be dictated by Brussels and supervised by the European Court of Justice. Speaking in Brussels yesterday, U.K. chief negotiator David Frost made clear this was not some negotiating posture but a hard red line (ICYMI more analysis on his speech here).
“It is central to our vision that we must have the ability to set laws that suit us — to claim the right that every other non-EU country in the world has,” Frost said at the Université Libre de Bruxelles. “So to think that we might accept EU supervision on so called level playing field issues simply fails to see the point of what we are doing. That isn’t a simple negotiating position which might move under pressure — it is the point of the whole project.”
Frost has a point when he says EU trade deals with other countries such as Canada or Japan do not include supervision by the EU’s top court — instead disputes are referred to a special bilateral arbitration panel. On the other hand, Brussels has never said it wants the Court of Justice to rule on new U.K. laws or other issues that might provoke a dispute with the EU. Instead — as laid out in this chart shared with diplomats last month — the bloc only wants to involve the court when a dispute specifically touches EU law.
In most areas of trade, like tariffs or services, that’s unlikely to be the case — and that’s also the reason why trade deals such as the one with Canada don’t include EU court supervision. Brussels has also made clear that the U.K. deal is different from other deals because of Britain’s geographic proximity to the EU, which, it believes, means there’s a need for more robust clauses on competition policy and state aid. And that’s where EU law gets involved.
“The envisaged partnership should ensure the application of Union state aid rules to and in the United Kingdom,” the EU’s draft negotiation mandate says, hinting at the potential need to involve the EU court of justice when there’s a state aid dispute.
It’s clear the U.K. is not happy with such a solution, making the question of state aid and EU court supervision a likely moot point in the negotiations.
What’s more, even if the Court of Justice was to issue a ruling against the U.K., that wouldn’t force Britain to change its laws — or at least not directly. Instead, the EU proposes it would operate like a dispute settlement procedure, namely a court ruling against the U.K. would mean that Britain loses the dispute, which would allow the EU to either impose a fine against Britain or levy tariffs on certain British exports.
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