Commons International Trade Committee: oral evidence session on the UK-EU trading relationship with Dr Damian Raess

The session featured a panel of experts to cover the various policy areas. Dr Raess provided public evidence on the TCA’s level field provisions as regards labour and social matters to the International Trade Committee, while Dr Emily Lydgate (University of Sussex) covered the environment and Mr James Webber (Partner at Shearman and Sterling) state subsidies.

The session covered the following questions amongst others:

• Can you explain what “level playing field” provisions are – and summarise this aspect of the TCA?
• What was each side trying to achieve when they were negotiating the level playing field provisions – and how successful were they?
• To what extent do the TCA’s level playing field provisions constrain the domestic policymaking of either the UK or the EU?
• What scope is there for the level playing field provisions in the agreement to evolve over time?
• Can you explain the “rebalancing mechanism” under the Agreement – and say how likely you think it is that this will be triggered by either side in the near future?

Highlights from Dr Raess’s oral evidence:

The TCA provides to date the most extensive level playing field provisions with regard to the effective protection and promotion of labor rights and employment standards. It includes various mechanisms, such as “non-regression” provisions (i.e. commitments not to derogate from existing levels of protection), an “evolving level playing field” and “rebalancing” measures (i.e., unilateral remedial measures), which taken together underpin a logic of a “race to the top” in labor standards.

The TCA presents a genuine compromise between positions that seemed once irreconcilable. Recall that level playing field conditions were one of the major sticking points in the UK-EU trade negotiations. While the agreed high labor and social standards are meant to prevent regulatory divergence between the parties, the parties retain regulatory autonomy. However, significant divergence, for instance if one of the parties were to lower its standards, comes with a hefty price tag: under the TCA’s “rebalancing measures”, there is scope to impose tariffs.

To the question “How much regulatory divergence between the EU and UK do you expect in the short-to-medium term?”, Dr Raess does not expect the EU to budge much in the short-to-medium term. The risk of a lowering of standards by the UK in the medium term does exist, however. Ideas (Manchester capitalism/economic liberalism) and institutions (the absence of strong social institutions that socially embed the markets) explain why some may consider deregulation as an attractive strategy to restore or gain competitiveness. Under what conditions is the UK likely to diverge? Dr Raess emphasizes three factors: 1) declining competitiveness or loss of export markets; 2) government partisanship, with a Conservative government more likely to lower standards; 3) power relations between capital and labor, and cleavages within capital (i.e. different factions of employers). He further argues that such a strategy (the “low road to international competitiveness”) would be self-defeating as it rests on a misconception of the nature of the global economy.

Watch the public evidence session (22 April 2021): https://parliamentlive.tv/event/index/213b582c-f783-4a0a-a833-4fed84a3076a

More information on the inquiry into the UK-EU trading relationship: https://committees.parliament.uk/work/1028/ukeu-trading-rela tionship