Open and fair competition
The UK has been a leading advocate of the development of the EU state aid and competition regime and has much to gain from maintaining disciplines on subsidies and anti-competitive practices.
Some horizontal rules are not primarily designed to ensure open and fair markets. Nonetheless, it is usual to include commitments on these areas in FTAs. The UK has made strong domestic commitments to maintaining high standards on the environment, climate change, social and employment, and consumer protection, and will continue to meet its international obligations in these areas.
The UK’s proposals include:
- committing to a common rulebook on state aid, to be enforced and supervised in the UK by the Competition and Markets Authority (CMA);
- maintaining current antitrust prohibitions and the merger control system with rigorous UK enforcement of competition law alongside strong cooperation with EU authorities;
- committing to high regulatory environmental standards through a non-regression requirement;
- maintaining high standards on climate change, noting the UK’s world-leading ambitions;
- committing to high levels of social and employment protections through a non-regression requirement for domestic labour standards; and
- committing to high levels of consumer protection.
The UK has long been a proponent of a rigorous state aid system – this is good for taxpayers and consumers and ensures an efficient allocation of resources. The UK has an excellent record on compliance and has been among the lowest granters of state aid as a proportion of Gross Domestic Product (GDP) in the EU. In 2016 the UK gave 0.3 percent of GDP as state aid, half the EU average of 0.7 percent.
The Government has made clear that it is committed to continuing the control of anti-competitive subsidies by creating a UK-wide subsidy control framework. The CMA, which is a world-leading competition authority, will take on the role of enforcement and supervision for the whole of the UK. The Government will continue working with the Scottish Government, Welsh Government and Northern Ireland Executive, when in place, to ensure the new framework for state aid works for the whole of the UK.
To support the depth and breadth of the future UK-EU economic partnership, the UK would propose to incorporate its domestic choice to maintain a robust state aid regime into its future economic relationship with the EU. In light of this, the UK would make an upfront commitment to maintain a common rulebook with the EU on state aid, enforced by the CMA. This is without prejudice to the UK’s intention to develop new tailored arrangements in relation to payments to farmers and other land managers for environmental benefits and the UK’s future public procurement policy.
The UK’s proposal for its future economic partnership with the EU would not fetter its sovereign discretion on tax, including to set direct or indirect tax rates, and to set its own minimum tax rates.
The CMA is a highly regarded competition authority with significant powers and resources at its disposal to ensure open and fair competition and a proven record of effective competition enforcement. It has a statutory duty to seek to promote competition, both within and outside the UK, for the benefit of consumers.
After the UK leaves the EU, the CMA will want to continue to work together with DG Competition, building on their existing highly effective relationship, to provide certainty for business.
There are currently no strict requirements that apply to national competition regimes or requirements to have the same procedural rules. Instead, the UK has kept in step with the EU’s competition regime and has gone further than EU minimum standards.
The UK legal system already has the key components the EU expects: it has a robust framework for merger control and prohibits abuse of a dominant position and anti-competitive agreements. The UK’s markets regime contains significant powers to investigate the potential market failure and prevent, remedy or mitigate any adverse effects on competition.
It will be important to ensure that competition decisions are compatible. The UK will seek to work with the EU to build on established cooperative arrangements, such as those found in existing FTAs, to manage parallel merger and antitrust investigations. This should include provisions on sharing confidential information and working together on live cases, and ensuring that the UK and the EU continue to take a robust approach in enforcing competition rules.
Intellectual property (IP) rights play an essential part in encouraging the universal benefits of innovation and creativity, as well as protecting the reputation of products and services and helping prevent consumers from being misled about the quality or provenance of goods. The high-quality service offered by the UK’s rights-granting bodies and courts system help to make the UK one of the best places in the world to protect and enforce IP rights.
There is a long history of European cooperation on patents, which can be costly to enforce in multiple jurisdictions. Most recently, this includes the agreement on a Unified Patent Court to provide businesses with a streamlined process for enforcing patents through a single court, rather than through multiple courts.
The UK has ratified the Unified Patent Court Agreement and intends to explore staying in the Court and the unitary patent system after the UK leaves the EU. The Unified Patent Court has a unique structure as an international court that is a dispute forum for the EU’s unitary patent and for European patents, both of which will be administered by the European Patent Office. The UK will, therefore, work with other contracting states to make sure the Unified Patent Court Agreement can continue on a firm legal basis.
Arrangements on future cooperation on IP would provide important protections for rights holders, giving them a confident and secure basis from which to operate in and between the UK and the EU.
Audit and accounting
UK and EU companies benefit from shared accounting standards and accounting and audit regulatory frameworks. These provide access to capital markets, foster investor confidence, and facilitate the cross-border provision of accounting and audit services.
There are numerous precedents between the EU and third countries for audit equivalence and adequacy, and accounting equivalence. The UK will seek EU equivalence and adequacy decisions under the EU’s third country regimes by the end of the implementation period.
The UK and its constituent parts have long-standing commitments to protecting the environment. The Government has been clear that the UK will maintain high environmental standards once it has left the EU, and has published a 25 Year Environment Plan for England to set out the scale of its future ambitions.Scotland, Wales and Northern Ireland have made clear that they have equally high ambitions.
The UK has also fulfilled the commitment to consult on a new, independent, statutory body to hold the government to account on environmental protections.The UK is party to numerous Multilateral Environmental Agreements, and the UK is committed to upholding its international obligations under these agreements after it leaves the EU.
In the context of a deep economic partnership, the UK proposes reflecting its domestic choice to maintain high regulatory standards for the environment. To that effect, the UK and the EU should commit to the non-regression of environmental standards. There should also be a reciprocal commitment to ongoing environmental cooperation, including in international fora, to solve shared global environmental challenges.
The UK is a global leader in the fight against climate change and was the first country to set out a long-term legally binding target for reducing greenhouse gas (GHG) emissions in domestic law, in the Climate Change Act 2008. Between 1990 and 2016, the UK saw the greatest reduction in total GHG emissions across G7 countries.
The UK recognises the UK’s and the EU’s shared interest in global action on climate change and the mutual benefits of a broad agreement on climate change cooperation. The UK’s world leading climate ambitions are set out in domestic law and are more stretching than those that arise from its current obligations under EU law. The UK will maintain these high standards after withdrawal.
Social and employment
The UK firmly believes in the importance of strong labour protections while also embracing the opportunities arising from the changing world of work. Existing workers’ rights enjoyed under EU law will continue to be available in UK law on the day of withdrawal.
The UK already exceeds EU minimum standards in a number of areas, such as parental leave and flexible working arrangements, and is a leader in many others.
For example, on health and safety, the UK has one of the strongest records in Europe, and in 2015, the UK’s standardised rate of fatal injury was among the lowest in the EU28. The UK is also ensuring employment practices keep pace with rapid technological change in its response to the Taylor Review of Modern Working Practices.
On equalities, the UK ranks third in the International Lesbian, Gay,Bisexual, Trans and Intersex Association (ILGA) Rainbow Europe index and also ranks above the EU28 average on the European Institute for Gender Equality 2017 Index.
The UK has also demonstrated its commitment to tackling modern slavery, for example through the introduction of the Modern Slavery Act 2015, and will continue to lead the global fight against it. Given this strong record, and in the context of the UK’s vision for the future relationship with the EU, the UK proposes that the UK and the EU commit to the non-regression of labour standards. The UK and the EU should also commit to uphold their obligations deriving from their International Labour Organisation commitments.
The UK believes strongly in the importance of consumer protection, and is committed to maintaining high standards. The UK has a strong track record, underpinned by statutory safeguards and enforcement mechanisms, in protecting consumers when they buy goods and services from businesses based in the UK and the EU.
The UK has gone beyond EU minimum requirements in a number of areas, for example UK law offers a 30-day short-term right to reject faulty goods and provides a six-year legal guarantee period (five years in Scotland), well above the two-year EU minimum.
To ensure that open trade between the UK and EU economies is not at the expense of consumers, and in the context of the future economic partnership, the UK proposes to commit to maintain reciprocal high levels of consumer protection.
There should be cooperation on enforcement, including provisions to allow mutual exchange of information and evidence, and a framework to work collectively on areas of wider consumer detriment.
This Article draws on the White Paper The Future Relationship between the United Kingdom and the European Union Presented to Parliament by the Prime Minister July 2018 Cm 9593. UK public sector information is reproduced pursuant to the Open Government Licence The Legal Materials contain UK public sector information licensed under the Open Government Licence v3.0. The Licence is available at http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/ (the UK Licence).