An analysis by The Progressive Policy Think Tank
Boris Johnson has claimed that the UK would not regress on workers’ rights or environmental standards after Brexit, as Tory MPs in the European Research Group (ERG) pour over the details of his trade deal.
The PM said the deal contains obligations not to regress on standards, but also appeared to downplay the importance of the commitments. “All that’s really saying is the UK won’t immediately send children up chimneys or pour raw sewage all over its beaches,” Mr Johnson said.
It comes as analysis from the IPPR think tank says workers’ rights and environmental protections in the deal are “surprisingly weak”. Chancellor Rishi Sunak, meanwhile, is doing a “big exercise” on changes to business taxes and regulation contained in the deal.
After 11 months of intense negotiations, the UK and the EU have struck a deal on their future relationship at the eleventh hour. This deal is one of the most critical agreements the UK will negotiate in the post-Brexit era, given it comprises the basis of the future economic and security relationship with its nearest trading partner. For this reason, it is important that the deal comes under proper scrutiny. This briefing, published shortly after the text of the agreement has been released, offers a first attempt at assessing the deal and its implications.
We recognise that, given the tight time frames, this is not a complete analysis of the agreement. Instead, this briefing aims to highlight some of the key provisions in the text and their significance for the future UK-EU relationship, as well as for the UK’s own domestic policy. As expected, our assessment finds that the agreement offers clear benefits to the UK and the EU, which would have been lost if no deal had been negotiated. For instance, the agreement provides for:
• Tariff-free and quota-free trade in goods between the UK and the EU
• Continued social security coordination between the UK and the EU, including healthcare coverage for EU and UK visitors
• Continued UK and EU data-sharing for security purposes, including sharing of information on DNA profiles, fingerprints, vehicle registrations, and passenger name records
However, it is clear that under this deal the UK and the EU’s economies will no longer be as integrated as now, which is likely to have a significant impact on trade flows. Due to the UK’s exit from the single market and customs union, there will still be a range of new trade barriers between the UK and the EU, starting from January 1 next year.
There is no agreement on mutual recognition of professional qualifications, equivalence of SPS (sanitary and phytosanitary) measures, or passporting for financial services. Businesses trading into the EU will have to contend with new customs checks and formalities, regulatory barriers, as well as health certificate requirements and systematic checks for food products.
The agreement also has important implications for future UK policy on labour and environmental protections, as well as rules for state aid. A key element of the negotiations was the so-called ‘level playing field’ – the rules for fair competition designed to underpin the trade agreement.
The deal leaves workers’ rights and environmental protections at serious risk of erosion, the analysis finds. This is because the new process agreed for safeguarding a “level playing field” between UK and EU businesses after Brexit sets such a high bar for proof that key elements are likely to be enforced only rarely.
However, the commitments on labour and environmental standards are considerably weaker than expected; there is only a commitment not to lower current levels of protection to the extent that any reductions may affect trade or investment. Given it is notoriously difficult to prove that any lowering of protections affects trade or investment, the deal is unlikely to prevent the UK government from weakening EU-derived labour and environmental policies if it so chooses.
In summary, the agreement secures critical benefits for the UK, most notably through maintaining tariff-free trade. Yet as the foundation for the future relationship between the UK and its closest neighbour and trading partner, this is a strikingly thin deal. In aiming for an agreement which guarantees maximal sovereignty, the UK government has watered down the ‘level playing field’ requirements on areas such as labour and environmental protections and secured only limited benefits in market access. In the short-term, this is likely to lead to disruption to trade flows, including at the border. Over the longer term, the economy will adapt to the new arrangements, but barriers to UK-EU trade will likely lead to slower growth and a more prolonged economic recovery.
