Level playing field solution can end UK-EU trade deal stalemate

Out-Law News | 14 Dec 2020 | 3:29 pm | 1 min. read

A solution that recognises UK sovereignty and protects against the risk of unfair competition in EU markets is available to officials negotiating a new UK-EU trade agreement, according to a competition, EU and trade law expert.

Talks over a new UK-EU trade agreement have taken place throughout 2020 but a resolution on some issues has yet to be found. Agreement and ratification of the deal over the coming days is seen as pivotal by main commentators and business groups in light of the fact that the end of the Brexit transition period is approaching. Should the transition period expire without a new trade agreement being in place between the UK and EU, trade between the territories will be on World Trade Organisation terms from 1 January 2021, which, among other things, would see the introduction of new tariffs on trade in many areas where none existed previously.

A remaining issue to be resolved is how to reconcile the EU27's desire for 'level playing field' (LPF) provisions to be written into the new trade agreement with the UK's insistence of sovereignty. Level playing field provisions would require the UK to maintain regulatory convergence in areas such as state aid, competition, social and environmental standards.

Kotsonis Totis_March 2020

Dr. Totis Kotsonis

Partner, Head of Subsidies, Procurement, Trade Agreements and Trade Remedies

Finding an acceptable compromise solution to the level playing field commitments issue would ultimately remove a key, if not the key, stumbling block to concluding a post-Brexit UK-EU trade deal

Dr. Totis Kotsonisof Pinsent Masons, the law firm behind Out-Law, explained earlier this year how the two sides might draw up an agreement to address their contrasting positions to mutual satisfaction.

"The UK’s aim of sovereignty and EU’s need to protect against the potential harm of unfair competitions can co-exist and, while the positions may currently appear poles apart, they can be reconciled with a unique agreement," Kotsonis said.

"The key to any agreement is ensuring that both parties commit to meeting common high standards in certain regulatory areas but crucially, without the two sides being obliged to maintain the same legislation. This would give the freedom the UK seeks to write its own rulebook, while the commitments can be underpinned by a robust dispute resolution mechanism that would give the EU27 confidence that acts on the UK side that are harmful to open and fair competition can be fairly redressed. To be clear, such arrangements would need to be reciprocal so that if the UK considers that the EU itself is lowering its regulatory standards in a way which harms fair competition, it should also be in a position to take appropriate measures to protect its market from unfair EU competition," he said.

"Ultimately, any solution is dependent upon both parties’ willingness to compromise and with 31 December looming it is a positive sign that the two sides continue to talk. Finding an acceptable compromise solution to the LPF commitments issue would ultimately remove a key, if not the key, stumbling block to concluding a post-Brexit UK-EU trade deal," he said.