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UK-EU Trade and Cooperation Agreement

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Last updated 1st January 2021 (part update 3rd April 2021).

Is this agreement likely to have an effect on the Equality Act 2010 as regards disability discrimination? The agreement deals with the relationship of the UK with the EU after Brexit, from 1st January 2021.

Summary

  • The UK-EU Trade and Cooperation Agreement (TCA) has a ‘non-regression’ clause requiring the parties not to reduce discrimination protection below 2020 levels if the reduction would affect trade or investment. It also has a clause allowing ‘rebalancing’ – eg proportionate tariffs – if significant divergences in levels of discrimination protection develop. Below Summary of relevant provisions.
  • In both cases, the clauses only bite if the difference in protection affects trade or investment.
  • The TCA may deter a UK government from proposing at least really major reductions in Equality Act protection: below Effect on future amendments of Equality Act.
  • However I doubt that even the non-regression clause will significantly impact decisions of UK courts in interpreting the Equality Act: below Effect on UK court decisions?

The Agreement

The UK-EU Trade and Cooperation Agreement (pdf, gov.uk) (TCA) was agreed on 24th December 2020. It applies provisionally from 1st January 2021, but is subject to final agreement by the European Parliament (Brexit deal won’t be fully approved until end of April after UK agrees to EU request for delay (independent.co.uk), 23 Feb 2021, Council requests European Parliament’s consent (consilium.europa.eu), 26 Feb 2021). The UK government has also published a summary of the Agreement (pdf, gov.uk).

I haven’t studied the Agreement in any depth but the following is from what I can see at the moment.

The TCA can be terminated by either the UK or EU on 12 months notice (Article FINPROV.8). The text is still subject to final legal revision, or ‘scrubbing’ (Article FINPROV.9).

Summary of relevant provisions

There appear to be two main provisions relevant to disability discrimination law, both in Title XI, ‘Level Playing Field’, of Part Two Heading One:

  • a requirement not to weaken labour and social levels of protection in a manner affecting trade or investment between the UK and EU: Non-regression (below); and
  • an ability for either the EU or UK to take rebalancing measures (below) if material impacts on trade or investment between them arise as a result of significant divergences between them in labour and social protection. This could apply if, for example, the EU increases protection but the UK does not.

In both cases the provisions only apply if there is an impact on trade or investment between the UK and EU (a “material” impact in the case of rebalancing).

Also in both cases, any dispute between the UK and EU not resolved by consultation is decided by a separate body, an expert panel or arbitration tribunal. It seems that whether a change in the Equality Act is consistent with the non-regression clause, or whether there should be any tariff consequences from the UK not “keeping up” with a future increase in EU protection, will be a matter to be resolved between the UK and EU, not a matter for the UK courts.

Effect on future amendments of Equality Act

It remains to be seen how far the UK government sees these two provisions as relevant to any decisions on future Equality Act amendments, and wishes to risk action by the EU under them. However the possible consequences of these provisions may well deter a UK government from proposing at least really major reductions in Equality Act protection.

Article 6.3 (below under Non-regression) deals with enforcement. This Article:

Effect on UK court decisions?

I can’t see that the rebalancing clause will affect UK court decisions. This clause does not impose an obligation to avoid significant divergences materially affecting trade. It just says that such divergences may lead to tariffs.

Might the non-regression clause impact decisions of UK courts interpreting the Equality Act? I doubt it will do so significantly – though the approach of the courts remains to be seen. I particularly feel that a UK court may be reluctant to consider whether trade or investment is affected by any reduction in legal protection. Possibly it might be different if there is a settled decision on the issue by the Panel of Experts? See below Could UK courts give effect to the non-regression clause?

Looking at the two provisions in the Trade Agreement in more detail:

Non-regression

Article 6.2 of Title XI on page 200 of the UK-EU Trade Agreement (pdf, gov.uk) states that the Parties may determine their own labour and social levels of protection in a manner consistent with international commitments (including these provisions), but says:

6.2(2) A Party shall not weaken or reduce, in a manner affecting trade or investment between the Parties, its labour and social levels of protection below the levels in place at the end of the transition period [ie the end of 2020], including by failing to effectively enforce its law and standards. …

6.2(4) The Parties shall continue to strive to increase their respective labour and social levels of protection referred to in this Chapter.

The most important provision here seems to be 6.2(2). It is important that the UK or EU is allowed to reduce protection below 2020 levels if it does not affect trade or investment between the UK and EU. What effect 6.2(4) has is not clear.

Also Article 6.3 says that “for the purposes of enforcement as referred to in Article 6.2” the Parties shall have in place effective domestic enforcement “and provide for appropriate and effective remedies, including interim relief, as well as proportionate and dissuasive sanctions.” Perhaps – though this is not as clear as it might be – Article 6.3 too is limited to reductions below 2020 levels of protection which affect trade and investment.

Article 6.1(1) defines “labour and social levels of protection” to include “fundamental rights at work”, which is likely to include disability discrimination law.

The mechanism for enforcing Articles 6.2 and 6.3 is set out in Articles 9.1 to 9.3 (from page 212). This involves consultation between the UK and EU, and if necessary a decision by Panel of Experts to decide whether there has been a breach and what measures are sufficient to remedy it. Non-compliance could lead to the other Party suspending parts of the Agreement under Article INST.24 (‘Temporary remedies’, starting on page 389), which is applied by Article 9.3 of Title XI.

Article 1.1(4) of Title XI says the purpose of this Title “is not to harmonise the standards of the Parties.”

The UK government summarises these provisions as follows:

Chapter 6: Labour and social standards
91. The Agreement includes reciprocal commitments not to reduce the level of protection for workers or fail to enforce employment rights in a manner that has an effect on trade. This is very much in line with similar “non-regression” clauses in other FTAs and with international norms. The provisions are clear that both Parties have the freedom and ability to make their own decisions on how they regulate – meaning that retained EU law will not have a special place on the UK’s statute books. This Chapter is not subject to the Agreements main dispute resolution mechanism but will instead be governed by a bespoke Panel of Experts procedure.
UK-EU Trade and Cooperation Agreement: Summary (pdf, gov.uk)

Rebalancing

Article 9.4 of Title XI (starting on page 214 of the draft agreement) says that if “material impacts on trade or investment between the Parties are arising as a result of significant divergences between the Parties in [various areas including labour and social protection], either Party may take appropriate rebalancing measures to address the situation”, such as tariffs. Measures must be restricted to what is strictly necessary and proportionate to remedy the situation. If consultation between the Parties fails to produce a mutually acceptable solution, disputes can be resolved through an arbitration tribunal. A Q&A (ec.europa.eu) from the EU says

“This might be relevant, for example in a situation where one Party would significantly increase its levels of protection related to labour or social standards, the environment or climate above the levels of the other Party. This may entail an increase in the costs of production and hence a competitive disadvantage.”

So if the EU increases its discrimination law protections, the UK does not have to increase its own. However if the difference gives rise to material impacts on trade or investment, the EU could seek to apply rebalancing measures such as proportionate tariffs under this provision. A summary by the UK government says:

Title XI: Level playing field for open and fair competition and sustainable development
81. The Agreement’s provisions in this area, implementing commitments made in the 2019 Political Declaration, were the subject of considerable controversy during the negotiations. The EU was forced to drop its ambitious demands for dynamic alignment and for the UK to be legally required to maintain equivalent legislative systems to the EU’s in some areas. The system that has been agreed upon does not compromise the UK’s sovereignty in any area, does not involve the European Court of Justice in any way, and is reciprocal. Both sides have the right to set their own laws, subject to the broad constraints of this Agreement in this area as in any other. And both sides have the right, in certain constrained ways, and subject to arbitration, to take countermeasures if they believe they are being damaged by measures taken by the other Party in subsidy policy, labour and social policy, or climate and environment policy. If such measures are used too frequently either side can trigger a review of these provisions and the trade aspects of the Treaty more broadly, aiming to end with a different balance of rights and obligations.
UK-EU Trade and Cooperation Agreement: Summary (pdf, gov.uk)

Could UK courts give effect to the non-regression clause?

There are ways, outlined below, in which the non-regression clause (above) might be applied by UK courts, or influence their decision. However that would involve the court deciding whether trade or investment is affected by any reduction in legal protection, and I feel that a UK court or tribunal may be reluctant to decide this. Possibly it might be different if there is a settled decision on the issue by the Panel of Experts?

Equality Act as at 1st January 2021 – s.29 EU (Future Relationship) Act 2020

The UK has chosen to give the UK courts a wide-ranging duty to give effect to the TCA in applying UK law existing at 1st January 2021. S.29 EU (Future Relationship) Act 2020 says that domestic law of the UK existing at that date has effect with such modifications (including amendment or repeal) as are required to implement the UK-EU Trade and Cooperation Agreement in that law, so far as the Agreement is not otherwise so implemented and such implementation is necessary for the purposes of complying with the UK’s international obligations. An early case considering s.29 gives an inkling of how important it may become:

Lipton v BA City Flyer (bailii.org), Court of Appeal, 2021.
This was a claim under the EU regulation giving passengers a right to compensation for cancelled or delayed flights. The airline would have a defence if it could show “extraordinary circumstances”. The airline sought to argue a staff illness was extraordinary, but the court decided it was not, so compensation was payable.

From paragraph 77 of its judgment, the court considered whether (under s.29) its conclusion was consistent with the TCA, and decided that it was. The Court of Appeal said (at para 78) “[Section 29] does not lay down a principle of purposive interpretation (such as is found in section 3 Human Rights Act) but amounts to a generic mechanism to achieve full implementation. It transposes the TCA into domestic law, implicitly changing domestic law in the process. Applying section 29 to domestic law on a particular issue now means what the TCA says it means, regardless of the language used.”

What effect might s.29 have as regards disability discrimination in the Equality Act?

Since s.29 is limited to UK law at 1st January 2021, it does not seem to apply to future amendments of the Equality Act, even if they breach the non-regression clause. On those see below Post-2020 amendments to the Equality Act.

Could s.29 be relevant when the Supreme Court or Court of Appeal is deciding whether to depart from a pre-2021 EU Court decision, in interpreting the Equality Act after 2020. Perhaps it could if the departure would reduce protection in the UK. But is such a departure likely to impact trade or investment? Probably not. Also how would the Court of Appeal or Supreme Court decide whether the reduction in protection is likely to impact trade or investment (at least in the absence of a Panel of Experts decision)? Would the appeal court be expected to become a fact-finding tribunal and have to take evidence on whether there is such an impact?

Post-2020 amendments to the Equality Act

Say there is an issue whether a future amendment to the Equality Act is in breach of the non-regression clause. Here s.29 (above) does not apply.

Article COMPROV.16 of the TCA, “Private rights”, says that normally nothing in the TCA is to be interpreted as conferring rights or imposing obligations on persons other than those created between the UK and EU under public international law (so it does not confer rights or impose obligations on eg individuals or companies), nor as permitting the TCA to be directly invoked in the domestic legal systems of the UK.

So it seems the UK courts must apply the amendment. But what if the amendment is ambiguous, and one possible interpretation reduces protection more than the other and is more likely to breach the non-regression clause? Perhaps the tribunal might be influenced by the TCA here, to choose the smaller reduction in protection? That remains to be seen. On another treaty, the UN Convention, being potentially relevant in interpreting ambiguous UK law, see UN Convention on the Rights of Persons with Disabilities (CRPD)>Interpreting UK law.

However I doubt employment tribunals would want to fully consider whether there is a breach of the non-regression clause, given that this depends on whether the reduction in protection affects trade or investment. That is in part a question of fact for the employment tribunal to decide (would it be different if there was a decision by the Panel of Experts?). This would lead to all sorts of odd results: each employment tribunal needing to take evidence and decide whether trade or investment is affected, with potentially different decisions on this factual issue in different cases; the issue being dealt with by employment lawyers and judges (and litigants in person!) who are not familiar with issues of international trade and investment; and the expense and complication of all this.

Further links

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