The environmental implications of the Brexit deal

18 January 2021 by David Hart KC

Most UK people’s 2020 Christmas eves were cheered by the news that we had some sort of Brexit deal – here, in all its majesty. Given the deadline for no deal, some deal, however thin, was a good deal better than nothing, with the ill-tempered chaos between the UK and a major trading partner which would have followed from the latter.

News in the last few weeks has concentrated on some of the immediate supply chain issues (notably fishing) which affect businesses, and whether those issues are long-term and intrinsic in any non-single-market Brexit (my view), or can be ironed out in time (as Leavers say).

But there are other long term issues such as environmental protection which are potentially affected by the deal. These have not really picked up in the media. One exception is the very helpful briefing by Greener UK (a group of the major UK environmental NGOs) – here.

The prism for any analysis of the deal is that it is a Trade and Cooperation deal, and the environmental commitments, such as they are, are tied into trade implications – to retain a level playing field for that trade.

The other thing to remember is that it is a public international law agreement, full of the terminology of such agreements, well trodden by the EU in terms of external agreements, and more generally. Put the other way, don’t read it like an EU directive, let alone a UK statute.

To a seasoned follower of environmental policy in Europe, its terms are like winding the clock back 40-odd years. The initial environmental directives (notably on water and waste in the mid-1970s) had no express Treaty hook on which to be hung. The hook only arrived with effect from the end of 1992, when the Treaty was amended. So environmental policy measures in those early days were couched essentially in trade terms.

So what does the deal (a.k.a the Trade and Cooperation Agreement or TCA) tell us? Here are my first thoughts.

The “obligations“

Our TCA level playing field arises in substantive form in Title XI, entitled Level Playing Field for Open and Fair Competition and Sustainable Development. As we shall see, we get a specifically environmental bit later in the Title , but Art.1 of this title applies more generally: p.180 of the TCA. Sustainable development in Title XI (Art.1.1(2)) is stated to encompass economic development, social development and environmental protection “all three being interdependent and mutually reinforcing”. So these provisions apply to a good deal more than environmental measures. But Art.1.1(4) swiftly reminds us that the purpose of the TCA is not to harmonise the applicable standards of the Parties; that provision continues by saying that “the Parties are determined to maintain and improve their respective high standards” in the areas covered by Title XI. Not exactly the words of precise obligation, but capable of being read in support of the non-regression principle to which I will come.

Art. 1.2(1) of these general measures reaffirms the rights of each Party to set its policy and priorities, to determine the levels of protection it deems appropriate, and to adopt or modify its law and policies “in a manner consistent with each Party’s international commitments…”.

But the environmental/public health precautionary approach or principle is embedded in a rather more prescriptive way: at Art 1.2(2), where there are reasonable grounds for concern that there are potential threats of serious or irreversible damage to the environment or human health, “the lack of full scientific certainty shall not be used as a reason for preventing a Party from adopting appropriate measures to prevent such damage”. And this principle is given extra heft by enhanced sanctions for its breach – see Enforcement below.

Under Art.1.2(3), Parties in these fields, when preparing or implementing measures, “shall” take into account relevant, available scientific information, international standards, guidelines and recommendations. This sounds reassuring, but the extent to which it stops one Party following a bit of maverick science, if it suits that Party politically, must be questionable.

Now to Chapter 7 of Title XI (p.201). Art.7(1) defines “environmental levels of protection” in wide EU terms, and “climate level of protection” as meaning greenhouse gases and ozone depleting substances.

Art.7.2 sets out the important non-regression principle. Whilst Party autonomy is stated per Art.7.2(1), there is at least some grit in Art.7.2(2). “A Party shall not weaken or reduce, in a manner affecting trade or investment between the parties, its environmental levels of protection or its climate levels of protection below the levels that are in place at the end of the transition period, including by failing to effectively enforce its environmental law or climate level of protection”. So freeze-frame environmental protection laws in December 2020, when the transition period ended. Parties have a reasonable discretion within the environmental/climate change context, but may not act inconsistently with the more general obligations in this Chapter: Art. 7.2(3).

Lack of enforcement falling within this definition of breach includes (Art.7.5) not giving domestic authorities sufficient remedies to enforce breaches, and not enabling persons to seek effective remedies – including the Aarhus-like obligation that proceedings are not prohibitively costly.

There is also an obligation that the EU Commission and UK regulatory bodies regularly meet and cooperate on the effective monitoring and enforcement on non-regression issues: Art.7(6). Teeth in respect of this obligation? Probably none, but wilful obstruction on this score may feed into the other Party’s willingness to invoke other remedies.

Art.7.4 commits the Parties to “respecting” the environmental principles found in the Rio Declaration and Convention on Biodiversity, and the UN Framework Convention on Climate Change – the former including the integration of environmental protection into policies, preventative action, precautionary approach, rectification of damage at source, and polluter pays. It will be interesting to reflect on this obligation as compared with that in the current UK Environment Bill, limited to the Secretary of State’s obligation to prepare a “policy statement” about the same principles: cl.16.

Another important reaffirmation of Parties’ commitments is contained in Art.7.4(2) and (3), namely the requirement to evaluate the likely effect of a proposed activity on the environment, and do so where specified projects, plans and programmes are likely to have a significant environmental effects, the requirement for an environmental impact assessment (strategic or otherwise). So a wholesale retreat from EIA or SEA would be in breach of this obligation – if it affected trade or investment. I suppose this might occur if it became suddenly a good deal cheaper and quicker for industry or housebuilders to develop here rather than in the EU because EIA/SEA here was a dead letter.

So drawing this together, there is a non-regression principle both in terms of black-letter law and the enforcement of the same, but to give rise to TCA complaint the weakening or reduction of the same must affect “trade or investment”. You can see why this requirement may be met in areas like waste (particularly producer responsibility and designing against waste) or industrial emissions. The arguments would get more interesting if, say, the UK sought to derogate from the standards of the Bathing Water Directive, but, given the interconnectedness of utilities and waste operators, it would not be too difficult to say that a UK sewerage undertaker was getting a disguised subsidy if it was allowed to treat waste water to a lesser standard than hitherto. That said, this is an area where international law principles, particularly in terms of decisions on investment treaties, will play an important part.

Art.8 (p.204ff) contains provisions about multilateral agreements (the TCA is of course a bilateral agreement). At Art.8.4, Parties must continue effectively to implement multilateral agreements as they have ratified, with similar provisions (Art.8.5) concerning trade and climate change (notably Paris), trade and biological diversity (Art.8.6), trade and forests (Art.8.7), trade and sustainable management of marine biological resource and aquaculture (Art.8.8).

Climate Change

Art. COMPROV.12 says that the fight against climate change is an “essential element” of the TCA. And “materially defeating the object and purpose of the Paris Agreement” is specified in Art INST.35 as constituting a serious and substantial failure to ensure an essential element of the TCA. This sounds rock solid, until one reflects on the debate about what are the irreducible minima imposed by the Paris Agreement on those who have ratified it. If you are not sure what those minima are, then it may be difficult to decide what “materially defeating” its object and purpose means.

Enforcement

Were the UK Government so inclined, could it pursue whatever trade and economic policies it wanted to, in a race to the environmental bottom, and ignore these provisions?

In my view, the answer is No, mainly for soft law/political reasons, but there are ultimately sanctions for regression of current EU environmental legislation if the UK were to be particularly egregious in its breach of the letter or spirit of the TCA.

There are two principal ways of enforcing this agreement, the first and general contained in Part 6 of the TCA, and the second and specific to labour, social standards and the environment under Part 9.

The first involves a formal reference to arbitration. This procedure has teeth. A ruling by the arbitral tribunal that a Party is in breach must be complied with by that Party: Art.INST.21, at p.388. The only environmental element for which this arbitral ruling is a direct remedy is a breach of the duty under Art.1.2(2) to apply the precautionary approach concerning threats of serious or irreversible damage – in effect, dragging your feet on action because you say that the science is not sufficiently certain. It is interesting that this has been singled out for enhanced enforceability, but enforcement does require the “serious or irreversible” threshold to be met as well.

The second applies to all other potential environmental breaches, which are dealt with under Article 9: p.212 (and are excluded from the arbitral process). Parties must consult about potential breaches (Art.9.1), they may refer to a panel of experts of 3 – with a non-EU non-UK chair – for an opinion. The panel must produce a final report within 195 days, at most. But, when all that is done, the Party in breach does not have to comply with its recommendations. This is clear not only from the wording of Art.9, but also as the process has been specifically carved out of the arbitral process which applies to most of the disputes which may arise under the TCA.

But the corrective may come in “re-balancing” for which see Art.9.4 (p.214). Yes, there is Party autonomy to determine future policies, within the terms of their international commitments. But the Parties acknowledge that “significant divergences in these areas can be capable of impacting trade or investment…in a manner that changes the circumstances that have formed the basis for the conclusion of this Agreement.” (ibid). If these divergences occur, either Party may take appropriate re-balancing “measures”, if strictly necessary: Art.9.2. There is a set procedure in respect of these measures, and scope for arbitration about them if a dispute arises: Art.9.3. There is also provision for a more long-term and profound re-balancing, namely a review of the whole of the Trade part of the TCA as from December 2024.

I hazard a guess that all these sanctions are more likely to operate politically, than by following these procedures through the letter of the TCA. If the UK Government were to be subject to future influence from extreme deregulators (perish the thought), it could ultimately respond at the political level to them – yes, all very well, but that will cost us when we enter into the next round of negotiations. So short-term gain (e.g. housebuilders don’t have to do EIA at all, certainly no newt-counting needed) may be offset by long-term loss.

Conclusion

As I said at the outset, the deal sends us back to the mentality of the 1970s and 1980s, as and when we are considering breaches of it. Happily, our (well, most people’s) environmental thinking has moved on. A measure potentially leading to a better environment is a good in itself, and does not need to operate on trade terms. But, given that the TCA principally deals with trade (and for the most part with trade in goods), its obligations and enforcement has to be tailored to that.

The relevant parts of the TCA are nuanced (if not left deliberately vague) but I think it would be wrong to regard the environmental elements of the requirement for a level playing field as without any practical effect. But its pull may not be evident on the surface. The TCA is just the starting point for a long-term economic relationship between the UK and the EU, and it stands in many regards to be up for debate not long after the dust has settled on the UK’s exit.