David Frost, Boris Johnson, Ursula von der Leyen and Michel Barnier at the Brexit talks in December. unreguser/Xinhua News Agency/PA Images
The Brexit deal agreed between the UK government and European Union over Christmas ‘leaves workers’ rights and environmental protections at serious risk of erosion’ because rules for safeguarding the agreed level playing field for businesses between UK and EU businesses will be difficult to enforce.
A report by the IPPR thinktank, published last week, said that the bar for proof of breaches of the level playing field were too high to be consistently enforceable and left current standards vulnerable.
Author of the report, EU relations expert at the IPPR Marley Morris, warned that the commitment in the deal not to decrease current standards in a bid to gain an unfair competitive advantage was “considerably weaker than expected” and set “a very high bar for proof”.
“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,” the report stated. Morris said: “This leaves protections for workers, climate and the environment at serious risk of being eroded.”
Prime Minister Boris Johnson has insisted that the UK will not reduce workers’ rights and said he was keen to use the “legislative and regulatory freedoms to deliver for people who felt left behind”.
The level playing field commitments apply to policy areas such as labour and social rights, state aid, taxation and environmental protections. On labour rights and environmental standards the EU and UK will sign up to non-regression clauses designed to prevent either party from weakening protections. According to the IPPR the commitments do allow for divergence and do not require the UK to update labour legislation in line with EU developments.
Morris wrote that “the governance arrangements are much weaker than the status quo: the non-regression clauses are enforced primarily at the domestic level”. He added that formal arbitration proceedings were state-to-state procedures that tended to be ineffective in fully protecting rights.
The IPPR predicted that by the UK having “watered down” the level playing field requirements to secure “only limited benefits in market access” there would be a blow to trade. These would “likely lead to slower growth and a more prolonged economic recovery” from the coronavirus pandemic, the analysis says.
However, despite the negative economic impact the “thin deal” was considered by the IPPR to be better than no deal at all.
Since the deal was signed Johnson has denied the UK would regress on workers’ rights telling the Sunday Telegraph: “The UK won’t immediately send children up chimneys or pour raw sewage all over its beaches. We’re not going to regress, and you’d expect that.”
The Prime Minister did, however, acknowledge that the treaty “perhaps does not go as far as we would like” over access to EU markets for financial and other professional services.
This was picked up on by former Prime Minister Theresa May last week during the parliamentary debate on the deal. She told MPs that her failed deal was “a better deal” than Boris Johnson’s and said she was disappointed his trade agreement did not have a wide-ranging services agreement. She said not getting a post-Brexit financial services agreement was a massive blow to the UK economy.
UK firms would have to negotiate a patchwork of individual EU nations’ regulations, she said.
It has also forced major UK-based banks to move assets and jobs to EU financial capitals to avoid disruption.
May said: “We have a deal in trade which benefits the EU, but not a deal in services that would have benefited the UK.
“The arrangement treaty is clear that future negotiation on these points is possible and I hope the government will go to the negotiations with alacrity and vigour, particularly on financial services.”
It is widely recognised that the only way the UK financial services industry could maintain its current EU access would be if Brussels were to grant regulatory equivalence.