The UK may dislike such provisions but it could find itself unable to avoid themby George Peretz / September 9, 2019 / Leave a comment
In the swirl of political chaos it is easy to miss important developments. Although no announcement has been made, there have been persistent and well-sourced rumours that the Johnson government wishes to row back on the May government’s agreement to “level playing field” (LPF) commitments in the final UK/EU relationship. That agreement is incorporated in the political declaration setting out the bare bones of the envisaged final relationship: paragraph 79 records that:
“The future relationship must ensure open and fair competition. Provisions to ensure this should cover state aid, competition, social and employment standards, environmental standards, climate change, and relevant tax matters, building on the level playing field arrangements provided for in the Withdrawal Agreement and commensurate with the overall economic relationship.”
The headlines have focused on the Northern Ireland backstop and on Johnson’s “do or die” fight to keep the 31st October Brexit date, but the LPF issue is a contentious one which could yet come to a head. It is therefore worth exploring in some detail.
The basis for the LPF commitments is “open and fair competition.” The EU’s anxieties on that score are set out in the March 2018 European Council negotiating mandate: “Given the UK’s geographic proximity and economic interdependence with the EU27, the future relationship will only deliver in a mutually satisfactory way if it includes robust guarantees which ensure a level playing field. The aim should be to prevent unfair competitive advantage that the UK could enjoy through undercutting of levels of protection with respect to, inter alia, competition and state aid, tax, social, environment and regulatory measures and practices.”
In other words, whatever the position might be for third countries such as Canada or Japan, the UK is too big and too close to be allowed privileged access to the EU market, over and above what is required by World Trade Organisation rules, if it does not meet EU standards or, at least, something broadly equivalent. The brute political reality is that, given the size of the UK and the volume of trade at stake, the EU27 cannot sell a deal to their own public if it appears to allow the UK to compete freely in the EU while being able to subsidise, or lower the regulatory costs of, its own suppliers in a way not open to EU member states.