25 and 27 February 2020
On 25 February and 27 February, the European Union (EU) and the United Kingdom (UK) published respectively their negotiating mandate and approach to negotiations for the future relationship between the two parties. The two documents give an insight into the priorities of each party. This Brexit Insight identifies some key areas where the two documents evidence potential sticking points in the negotiations on the future partnership agreement. In a forthcoming Brexit Insight, we will take a closer look about what the two documents tell us about the EU and UK’s intentions regarding the protection of EU-UK investment.
The EU’s mandate is, formally speaking, the decision by which the European Council authorises the opening of negotiations with the UK for a new partnership agreement. It identifies by way of “core values” the “rule of law”, including the UK’s “continued commitment to respect the European Convention on Human Rights” (EU mandate, para. 12) – a commitment that the UK is unlikely to accept for political reasons. The general “objectives and principles” identified by the EU mandate (para. 17) include the need for the envisaged partnership to include “an ambitious, wide-ranging and balanced economic partnership”, encompassing a “free trade agreement as well as wider sectoral cooperation”. The EU wishes the agreement to be underpinned by “effective management and supervision, dispute settlement and enforcement arrangements, including appropriate remedies” (para. 17). The partnership should, as a whole, recognise “sustainable development” as an “overarching objective” (para. 18). It should also ensure that the parties retain the ability to “regulate economic activity according to the levels of protection each deems appropriate” (para. 18).
The UK’s equivalent to the EU’s mandate is its “Approach to Negotiations” (which is not a “mandate” as such, since the Government, unlike the European Commission, does not require a “mandate” to open negotiations). In general, it is evident that, while the UK accepts that the “parameters for [the] future relationship are set out in the UK/EU Political Declaration”, it places lesser weight on it than the EU.
It is clear from the EU’s mandate and UK’s approach that there are a number of areas where there is potential for friction between the parties in the negotiations. We draw attention to six of the most significant among them:
- The EU’s mandate makes clear that the EU seeks a trade agreement which ensures no tariffs between the parties (EU mandate, para. 20). Like the EU, the UK expresses a desire to have a comprehensive trade deal which ensures there are no tariffs on goods (part 1, paras. 3-4). The UK, however, takes the position that the agreement should be along the lines of other Free Trade Agreements (FTAs) which the EU has agreed with other countries, such as Canada (the EU-Canada Comprehensive Economic and Trade Agreement (CETA)) (UK approach, introduction, para. 6; and part 1, para. 4). This conflicts with the EU’s publicly stated position that the agreement between the UK and EU will need to be unique and that other treaties do not provide suitable models. The UK states that in absence of an agreement the parties should have a relationship “similar to Australia’s” (introduction, para. 7). As Australia does not have an FTA with the EU, this amounts to trading on WTO terms (albeit supplemented by certain specific sectoral agreements).
- The EU mandate contains numerous references to the importance of “a level playing field for open and fair competition” (for example paras. 17-20, 66 and 74), or to definitions and standards “based on the shared current practice of the two Parties” (paras. 29, 39 and 103). The emphasis placed on the level playing field as a negotiating goal reinforces the view that the EU is concerned about the UK reducing levels of regulation to gain a competitive advantage. The UK, in contrast, places considerable emphasis on regulatory autonomy and the freedom to diverge from EU standards (UK approach, introduction, para. 5).
- The EU emphasises that it will prioritise the autonomy of its legal order and the four freedoms, and that the UK will be treated as a non-Schengen third country (for example paras. 10, 73 and 117 of the EU mandate). Such language confirms that the EU is not minded to allow the UK to pick and choose its preferred aspects of different forms of relationships.
- The EU mandate outlines a commitment to a “rules based international order” (para. 10), the “rule of law” (para. 10) and the need for effective “dispute settlement” (para. 19). Where a dispute arises, the EU envisages referral to an “independent arbitration panel”, which should in turn refer any questions of EU law to the Court of Justice of the EU (CJEU) (paras. 158-61). Presumably, such a provision would look much like Article 174 of the Withdrawal Agreement, which foresees a similar role for the CJEU. The UK approach, however, explicitly states that it will not accept the jurisdiction of the CJEU in the UK (part 1, para 83) (a position which sits in apparent contrast with the EU mandate and with the concession the UK already gave on CJEU jurisdiction in the Withdrawal Agreement). It also appears that the UK is less committed to an institutionalised dispute settlement mechanism, since it refers only to a “mechanism” for “dispute resolution”, “if necessary” (UK approach, part 1, para. 83).
- The EU is seeking an agreement on fisheries, which it says needs to be in place by 1 July 2020 (paras. 86-91). In this regard, the mandate states that the agreement should uphold the existing reciprocal access conditions and protect the “traditional activity of the Union fleet” (para. 89). The UK takes a considerably different approach. In contrast with the EU, the UK states that access to UK waters should be negotiated on an annual basis (part 2, paras. 2-5).
- The EU’s mandate indicates that it wants the agreement to cover cooperation in foreign policy (EU mandate, para. 7), including in the form of “cooperation in international fora” like the G7 and G20 (EU mandate, para. 93). This may be unpalatable for the UK, whose negotiating approach emphasises that the end of the transition period marks the UK’s full recovery of “its economic and political independence” (introduction, para. 2) and its statement that areas like “foreign policy […] do not require an institutionalised relationship” (introduction, para. 8).
The EU’s negotiating mandate can be found here.
The UK’s negotiating mandate can be found here.
For further information, please contact Jiries Saadeh or Laura Rees-Evans.