The authoritative source for independent research on UK-EU relations

25 Jan 2021

Relationship with the EU

While only full EU membership can guarantee effective enforcement of environmental and climate legislation, the new EU-UK Trade and Cooperation Agreement (TCA) contains a set of radical and broadly beneficial commitments on trade and climate change.

Despite the Political Declaration mandating no more than a discussion about climate cooperation, the resulting set of TCA provisions is innovative in that it constitutes the first trade agreement to make the climate crisis a ‘make-or-break issue.’

Among the most important provisions is Article COMPROV.5, which declares the fight against climate change as a one of the bases for cooperation, alongside democracy, the rule of law, human rights and the non-proliferation of WMDs.

Further, Article COMPROV.12 affirms that Article COMPROV.5(1) is an ‘essential element’ of the partnership established by the TCA as well as ‘any supplementing agreement.’

Essential elements are important when determining suspension or termination of a treaty in international law under the law of treaties.

This language is one of the strongest found in any trade agreement, declaring that ‘climate change represents an existential threat to humanity’.

It requires each party to ‘respect the Paris Agreement and the process set up by the UNFCCC and refrain from acts or omissions that would materially defeat the object and purpose of the Paris Agreement.’

The TCA has become the first instance in which climate change is an ‘essential element’ of a trade treaty.

While the issue might be seen as essential for association agreements leading to EU membership, the TCA could potentially be the first agreement, provisionally in force, to contain such strong climate change language.

Under Title XI (on the ‘Level Playing Field’), environment, climate change, and sustainable development more broadly, play a key role.

The title is a slight misnomer as the obligations in these fields are more akin to non-regression obligations rather than any form of dynamic alignment, or indeed level playing field.

Somewhat controversially the ‘climate level of protection’, defined in Chapter 7 as the reduction and removal of greenhouse gases emissions, signifies: ‘for the Union, the 40% economy-wide 2030 target, including the Union’s system of carbon pricing [and] for the United Kingdom, the UK’s economy-wide share of this 2030 target, including the United Kingdom’s system of carbon pricing.’

In law, that means a 37% reduction by 2030 based on 2005 levels for the UK. Neither of these definitions reflects the new ambitions agreed within the EU of a 55% reduction, nor do they align with the announced 68% reduction from 1990 levels for the UK.

Evidently, this leaves some room for discretion for both trading partners with regard to their 2030 targets.

The 2050 objective in accordance with the Paris Agreement of economy-wide carbon neutrality is contained in Article 1.1.3.

While its language was slightly softened from the EU’s proposed ‘objective’ to now just an ‘ambition’, this too signifies the first time the 2050 target was agreed in an international trade treaty and will aid in the interpretation of other relevant climate provisions.

The agreement contains one of the strictest formulations of a non-regression provision by adopting mandatory language prohibiting the weakening or reduction of levels of environmental or climate protection’, including ‘by failing to effectively enforce’, with the sole caveat that this regression should not occur ‘in a manner affecting trade or investment.’

This is a strong provision, despite the nominal caveat, as WTO panels have repeatedly interpreted ‘affecting trade’ in the GATT and GATS as having an economic impact without any qualitative level beyond de minimis.

Article. 7.3 obliges both parties to ‘have in place an effective system of carbon pricing’ and suggests that they give serious thought on linking their respective carbon pricing systems to preserve the system’s integrity and possibly increase its effectiveness and avoids major differences with Northern Ireland which will still apply the emissions trading scheme for some sectors under the Withdrawal Agreement.

What makes the climate and environmental law provisions particularly significant is their inclusion in what is now called ‘rebalancing’ (Article 9.4).

If ‘material impacts on trade or investment arise as a result of significant divergences between the [p]arties’, Article 9.4.2. gives each party the right to take rebalancing measures that are strictly necessary and proportionate to address such a situation.

Even though this instrument is predominantly relevant for future divergence, it ensures that if one party goes further than the other it could adopt ‘rebalancing’ measures in the future. While these would be adopted unilaterally, they are reviewable by an arbitration process.

The requirement of ‘material impacts’ should be seen as a relatively high threshold, meaning that every future divergence will not necessarily qualify for rebalancing measures.

On the other hand, and given that there is an arbitration process available, any significant departure in the field of climate protection, will qualify for ‘rebalancing measures’.

In sum, the TCA contains the most far-reaching commitments toward sustainable development beyond broad facilitation and cooperation provisions, going considerably further than the more recent EU FTAs.

The combination of elevating climate change to an essential element of the Treaty, strong non-regression provisions and future balancing measures mean that in this field the TCA is trailblazing.

By Dr Markus Gehring, Lecturer in Sustainable Development in European and International Law at the University of Cambridge. 

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