EU agreement implementation, Northern Ireland, UK Australia & NZ, Week in London column

Week in London: TCA dispute settlement, Northern Ireland, New Zealand

Another week another discovery of how the United Kingdom’s post-Brexit trade policy is unfolding in reality.

European Commission formalises powers to take action against any UK TCA breaches

The European Commission has tabled a proposal which would give it legal powers to suspend all or part of the EU-UK trade and cooperation agreement, in the event of serious non-compliance on the part of the UK.

But despite the drastic-sounding subject matter, the draft regulation actually does little more than create a mechanism to implement measures which the EU is already empowered to take under both the TCA and the earlier EU-UK Withdrawal Agreement.

The Commission is therefore making provision for an eventuality which it is hoping will never happen.

The enforcement provisions within both the TCA and the Withdrawal Agreement were framed in such a way that in certain circumstances the parties could take remedial steps without needing to resort to the relevant dispute settlement mechanism.

This particularly relates to any breach of the so-called ‘level playing field’ provisions on social and environmental legislation – or for serious non-compliance with provisions relating to the Northern Ireland protocol.

In ratifying the TCA in early 2021, the Council of the European stated that specific legislation should be adopted in due course to govern the triggering of any such action under the TCA or the Withdrawal Agreement.

The current proposal essentially represents the fulfilment of that pledge by the Commission.

‘Making appropriate use’ of EU powers

In the words of the draft regulation itself, “the Union should be in a position to make appropriate use of the instruments available to it [in the area of TCA sanctions] swiftly and in a proportionate, effective and flexible manner, while fully involving Member States”.

But is there anything sinister in the fact that this legislation is being tabled at this specific point in time?

Not really.

A joint Commission/Council statement issued at the time of the conclusion of the TCA in December 2020 stated that “without prejudice to its right of initiative under the Treaties, the Commission will aim to propose the specific legislative act referred to above no later than 31 March 2022”.

The Commission has also committed itself to review the scope and implementation of the regulation after five years, “to ensure that this Regulation remains fit for purpose”.

MPs sound alarm over new EU legislation for Northern Ireland

At least 29 pieces of legislation to be adopted by the EU this year will have direct effect in Northern Ireland – a situation which gives added urgency to the push for reform or withdrawal of the Northern Ireland protocol, in the view of a UK parliamentary committee.

In a report published on Tuesday (15 March), the House of Commons’ European scrutiny committee examined the plans for new legislation in 2022 which were set out by European Commission president Ursula von der Leyen in her State of the Union speech last September.

The fact that under the terms of the protocol any pieces of legislation which relate to the operation of the EU single market are directly applicable in Northern Ireland is seen by the committee as being “untenable”, and “a stark illustration of the damage that the Protocol is having on democracy in the UK”.

The European scrutiny committee is chaired by Bill Cash, a longstanding Eurosceptic who has made no secret of his desire for the protocol to be abolished.

Operation of Protocol ‘will only grow more problematic’

“Unless meaningful outcomes are secured in talks with the EU on the future of the Protocol, its operation will only grow more problematic,” the report’s conclusions warned.

Negotiations on the implementation of the protocol – and in particular on the border formalities which the protocol imposes for goods being moved from Great Britain to Northern Ireland – have been underway almost since the protocol took legal effect at the start of 2021.

However, talks are currently on the backburner pending elections to the Northern Ireland assembly at the beginning of May.

Court of Appeal throws out challenge to Protocol’s legality

Meanwhile, the committee’s chair desire for the protocol to be overthrown became a rather more distant prospect this week, after the UK Court of Appeal threw out a legal challenge against it.

A group of pro-unionist political leaders had brought a legal challenge against the protocol, on the grounds that it contravened the UK’s 1801 Act of Union by requiring the application of different legislation in Northern Ireland from that of Great Britain.

But in a ruling on Monday (14 March) the court rejected the challenge on the grounds that the legislation giving force to the protocol effectively superseded older legislation.

“[The UK] Parliament was clearly sighted on the protocol which was the end result of a protracted, transparent, debated, informed and fully democratic process which decided arrangements for Northern Ireland post Brexit,” said Chief Justice Siobhan Keegan, in a ruling which will have resonance for the UK government’s campaign to have the protocol amended

“The terms were settled and made law after a long parliamentary process, and it cannot be seriously suggested that Parliament was unaware of the changes that may be wrought.”

UK-NZ FTA ‘marks the ceiling’ for sustainability provisions in an FTA

The UK-New Zealand free trade agreement “probably represents the ceiling” of what can be achieved in terms of environmental provisions in the framework of an FTA, a UK parliamentary committee heard this week.

There has been criticism in some quarters that the UK-NZ FTA, which was signed at the end of February did not go as far as it might have done in this area.

But Sam Lowe, Director of Trade at Flint Global, told members of the House of Lords’ International Agreement Committee on Thursday (17 March) that it was highly unlikely that any bilateral FTA could go further in terms of cementing governments’ commitments to action in the areas of environment and climate policy.

“This agreement with New Zealand is probably the ceiling of what can be achieved realistically in context of an FTA, taking into account domestic policy constraints,” Lowe said at the hearing to examine the newly-signed agreement.

‘We won’t see this level of ambition in other FTAs’

Because both the UK and New Zealand had shared ambitions in terms of the provisions in this area, the FTA was able to include “unique” provisions in terms of the elimination of fossil fuel subsidies, and commitments to specific temperature reduction targets, he commented.

“So there are two countries committing to do things that they were going to do anyway,” Lowe pointed out.

“But I really think this is the ceiling [for international FTAs]. We certainly won’t see these levels of ambition around these commitments in the UK’s agreements with India or the Gulf states.”

The UK launched FTA negotiations with India in January of this year and has set the wheels in motion towards FTA talks with the Gulf Cooperation Council.

The UK-New Zealand FTA goes rather further than does the UK’s comparable deal with Australia it commits both sides to non-regression clauses on environment and climate legislation, and also gives either side the right to take action in this area under the FTA’s dispute settlement mechanism.

Differences between Australia and NZ agreements on labour movement

At the same hearing, Professor Michael Gasiorek of the University of Sussex drew attention to the differences between the New Zealand and Australia FTAs in terms of their respective provisions on temporary movement of business persons.

“In the UK-New Zealand FTA, providers of medical services, midwives and nurses are included, but not in the UK-Australia FTA,” he pointed out.

“But in the Australia agreement, some sectors have been included that are not in New Zealand – including engineering, computer services, and environmental services.”

Gasiorek said that in qualitative terms the Australia FTA was better in the services sector “because it removes the need for an economic needs test”.

This would exempt the local contractor from the need to demonstrate that the job could not be performed with local labour.

CPTPP will require ‘drastic’ changes in UK position on conformity assessment’

Lowe commented that the two FTAs pointed towards a likely shift in the way the UK will carry out conformity assessment tests for goods in the future, especially when Britain becomes a member of the Comprehensive and Progressive Agreement on Trans-Pacific Partnership..

“When we accede to CPTPP our general approach to conformity assessment might have to change quite drastically,” he told the committee.

“At the moment there is quite a large emphasis on conformity assessment taking place in our own territory – with the exception of the EU and countries which with we have mutual recognition agreements.

“But in CPTPP, allowing conformity assessment to be done in the producer’s own country is the default – unless there is good reason to do otherwise.”

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