The level playing-field for labour and environment in EU-UK relations

The level playing-field (LPF) provisions of the Trade and Cooperation Agreement (TCA) between the European Union (EU) and the United Kingdom (UK) constitute a key part of the agreement, and became a major source of divergence between the negotiators. LPF provisions establish rules to safeguard fair competition between the parties' businesses. A notable component are the rules on social provisions, labour, environment and climate change, often referred to as the 'trade and sustainable development' (TSD) chapters in other free trade agreements (FTAs). The trading relationship between the EU and the UK is fundamentally different from that with other non-EU countries since, on the one hand, EU laws were applicable to the UK until the end of the transition period on 31 December 2020 and, on the other, these two economies neighbour each other and are strongly interconnected. The TCA is therefore designed to maintain sufficiently 'convergent' standards to safeguard fair competition, while providing each party with the freedom to implement its own approach to social and environmental protection. To this end, the TCA requires that parties do not weaken or reduce their levels of social, labour and environmental standards as of the end of 2020 (non-regression); the EU commitments on climate change, in particular on climate neutrality by 2050, will also remain for both parties. In addition, the TCA introduces rebalancing provisions creating a mechanism whereby a party can take 'proportionate measures' in order to offset any (adverse) 'material impacts on trade or investment' resulting from 'significant divergences' between parties. It also allows either party to request a review with a view to amending the agreement, and either party can opt to terminate the trade chapters if the amendment is not satisfactory. Although the TCA LPF provisions on labour and environment are in many respects similar to those in the EU's new generation FTAs, they strengthen the enforcement of non-regression provisions by allowing for remedial measures, and also reinforce the precautionary approach. The TCA also represents a notable innovation with its rebalancing and review provisions.