Brexit has led to the most onerous and extensive level playing field provisions between the UK and the EU, the parliamentary committee on international trade heard on Thursday.
A level playing field refers to a set of standards used primarily to prevent businesses in one country undercutting their rivals in other countries. It includes workers' rights and environmental protections.
The Trade and Cooperation Agreement (TCA) between the UK and EU has level playing field provisions which are "the most extensive that have ever occurred in such agreements anywhere in the world between two sovereign entities," said James Webber, partner at law firm, Shearman and Sterling.
Webber was giving evidence on UK-EU trading relations. He said the arrangements were “much more extensive" than the EU has ever obtained.
"The EU wants to prevent UK from competing with it too assertively and wants to export its regulatory norms to the UK," Webber said.
He explained that when it came to subsidy control specifically, the bloc's starting position in terms of international law was that the EU’s rules should be applied to the UK.
“This was a very surprising position for anyone to take in an international treaty. You, the other party, are going to use my rules. This was genuinely extraordinary,” he said.
However, he said the EU didn’t achieve that objective in the TCA itself as the UK did join in reframing rules to make them more equitable.
“But unfortunately it's achieved it indirectly through the Northern Ireland Protocol,” he said.
“Nothing is much yet being made of it but provisions of that protocol are extraordinary when it comes to subsidy control terms and will require UK to follow EU rules in their entirety,” said Webber.
Both Webber and Damian Raess, professor at the World Trade Institute, University of Bern, agreed that the UK's main objective was to take back regulatory autonomy.
"It agreed to high standards in labour and social affairs in order to get near frictionless trade," said Raess.
He also noted that the agreement looks to evolve the level playing field so that standards can be improved with time, rather than having to be renegotiated from scratch.
Meanwhile, Emir Lydgate, deputy director, UK Trade Policy Observatory, said level playing field provisions were at the heart of the most contentious issue in the TCA and the compromises made “build that contention element into the agreement” giving it “an element of instability.”
She also commented on the agreement's environmental clauses, where she said the EU wanted more control, and wanted to lock down common standards, whereas the UK wanted a more "light touch approach", with each side agreeing to maintain domestic standards.
"I do think there was a genuine compromise in what came out at the end, in that the core of the approach is what the UK wanted, but it comes with much stronger enforcements mechanisms than the UK was after."
She also said what the TCA does in terms of climate and climate tax "is pretty groundbreaking."
She explained it obligated both parties to maintain effective carbon pricing and to work towards linking emissions trading system schemes.
"This could be a model for other countries in terms of forming the basis for exempting each other from border carbon adjustment."
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