15. LEVEL PLAYING FIELD AND SUSTAINABILITY

A. General

89. Given the Union and the United Kingdom’s geographic proximity and economic interdependence, the envisaged partnership must ensure open and fair competition, encompassing robust commitments to ensure a level playing field. These commitments should be commensurate with the scope and depth of the overall envisaged partnership and the economic connectedness of the Parties. These commitments should prevent distortions of trade and unfair competitive advantages. To that end, the envisaged agreement should uphold the common high standards in the areas of State aid, competition, state-owned enterprises, social and employment standards, environmental standards, climate change, and relevant tax matters. In so doing, the agreement should rely on appropriate and relevant Union and international standards. It should include adequate mechanisms to ensure effective implementation domestically, enforcement and dispute settlement, including appropriate remedies. The Union should also have the possibility to apply autonomous interim measures to react quickly to disruptions of the equal conditions of competition in relevant areas.

90. The envisaged partnership should commit the Parties to continue improving their respective levels of protection with the goal of ensuring high levels of protection in the areas referred to in paragraph 89. The governing body should be empowered to modify the level playing field commitments in order to include additional areas or to lay down higher standards over time.

B. Competition

91. The envisaged partnership should ensure the application of Union State aid rules to and in the United Kingdom. For aid granted by the United Kingdom affecting trade between Great Britain and the Union, the United Kingdom should set up an independent and adequately resourced enforcement authority with effective powers to enforce the applicable rules, which should work in close cooperation with the Commission. Disputes about the application of State aid rules in the United Kingdom should be subject to dispute settlement.

92. The envisaged partnership should provide that anticompetitive agreements, abuses of dominant position and concentrations of undertakings that threaten to distort competition are prohibited, unless remedied, in so far as they affect trade between the Union and the United Kingdom. The Parties should also commit to effective enforcement via a competition law and domestic administrative and judicial proceedings, permitting the effective and timely action against violations of competition rules, and to effective remedies.

C. State-owned enterprises

93. The envisaged partnership should include provisions on state-owned enterprises, designated monopolies and enterprises granted special rights or privileges to ensure that they do not distort competition or create barriers to trade and investment.

D. Taxation

94. The envisaged partnership should recognise and commit the Parties to implementing the principles of good governance in the area of taxation, including the global standards on transparency and exchange of information, fair taxation, and the OECD standards against Base Erosion and Profit Shifting (BEPS). It should ensure that the United Kingdom applies the common standards applicable within the Union and the United Kingdom at the end of the transition period in relation to at least the following areas: exchange of information on income, financial accounts, tax rulings, country-by-country reports, beneficial ownership and potential cross-border taxplanning arrangements. It should also ensure that the United Kingdom applies the common standards applicable within the Union and the United Kingdom at the end of the transition period in relation to the fight against tax avoidance practices and public country-by-country reporting by credit-institutions and investment firms.

95. The envisaged partnership should reaffirm the Parties’ commitment to curb harmful tax measures, taking into account the G20-OECD BEPS Action Plan. They should also ensure that the United Kingdom reaffirms its commitment to the Code of Conduct for Business Taxation.

E. Labour and social protection

96. The envisaged partnership should ensure that the level of labour and social protection provided by laws, regulations and practices is not reduced below the level provided by the common standards applicable within the Union and the United Kingdom at the end of the transition period in relation to at least the following areas: fundamental rights at work; occupational health and safety, including the precautionary principle; fair working conditions and employment standards; and information and consultation rights at company level and restructuring. It should also protect and promote social dialogue on labour matters among workers and employers, and their respective organisations, and governments.

97. The envisaged partnership should ensure the United Kingdom’s effective enforcement of its commitments and of its laws, regulations and practices reflecting those commitments, through adequately resourced domestic authorities, an effective system of labour inspections and effective administrative and judicial proceedings.

F. Environment

98. The envisaged partnership should ensure that the common level of environmental protection provided by laws, regulations and practices is not reduced below the level provided by the common standards applicable within the Union and the United Kingdom at the end of the transition period in relation to at least the following areas: access to environmental information; public participation and access to justice in environmental matters; environmental impact assessment and strategic environmental assessment; industrial emissions; air emissions and air quality targets and ceilings; nature and biodiversity conservation; waste management; the protection and preservation of the aquatic environment; the protection and preservation of the marine environment; the prevention, reduction and elimination of risks to human health or the environment arising from the production, use, release and disposal of chemical substances; and climate change. This should take into account the fact that the Union and the United Kingdom share a common biosphere in respect of crossborder pollution. The envisaged partnership should lay down minimum commitments reflecting standards, including targets, in place at the end of the transition period in those areas, where relevant. The envisaged partnership should ensure the Parties respect the precautionary principle and the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay.

99. The envisaged partnership should ensure that the United Kingdom implements a transparent system for the effective domestic monitoring, reporting, oversight and enforcement of its obligations by an independent and adequately resourced body or bodies.

G. Fight against climate change

100. The envisaged partnership should reaffirm the Parties’ commitments to effectively implement international agreements to tackle climate change, including those established under the United Nations Framework Conventions on Climate Change (UNFCCC), such as the Paris Agreement.

101. The envisaged partnership should ensure that the United Kingdom maintains a system of carbon pricing of at least the same effectiveness and scope as provided by the common standards, including targets, agreed within the Union before the end of the transition period and applicable for the period thereafter. The Parties should consider linking a United Kingdom national greenhouse gas emissions trading system with the Union’s Emissions Trading System (ETS). Such linking of systems should be based on the conditions agreed within the Union, ensure the integrity of the Union’s ETS and a level playing field, and provide for the possibility to increase the level of ambition over time.

102. The envisaged partnership should also ensure that in areas not covered by a system of carbon pricing, the United Kingdom does not reduce the level of protection below the level provided by the common standards, including targets, agreed within the Union by the end of the transition period and applicable for the period thereafter.

103. The envisaged partnership should ensure the United Kingdom implements a transparent system for the effective domestic monitoring, reporting, oversight and enforcement of its obligations by an independent and adequately resourced body or bodies.

H. Other instruments for sustainable development

104. In line with the Parties’ objective of ensuring sustainable development, the envisaged partnership should promote the implementation of the United Nations 2030 Agenda for sustainable development. It should include provisions on adherence to and effective implementation of relevant internationally agreed principles and rules. This should include conventions of the International Labour Organisation (ILO) and the Council of Europe European Social Charter. The envisaged partnership should also cover multilateral environmental agreements including those related to climate change, in particular the Paris Agreement, and climate change mitigation-related multilateral initiatives, such as in the International Maritime Organization (IMO).

105. In addition, where the Parties increase their level of environmental, social and labour and climate protection beyond the commitments in paragraphs 96, 98 and 100 to 102, the envisaged partnership should prevent them from lowering those additional levels in order to encourage trade and investment

106. To this end, the envisaged partnership should promote a greater contribution of trade and investment to sustainable development, including by addressing through bilateral cooperation and in international fora, and other means, areas such as the facilitation of trade in environmental and climate-friendly goods and services and the promotion of voluntary sustainability assurance schemes and of corporate social responsibility. It should in particular envisage cooperation in international fora, such as the UNFCCC, the G7 and the G20, and bilaterally to increase the level of ambition on sustainable development and in the fight against climate change. It should also promote trade favouring low-emission, climate resilient development. The envisaged partnership should furthermore promote trade in legally obtained and sustainably managed natural resources, in particular in relation to biodiversity, fauna and flora, aquatic ecosystem, forestry products, and cover relevant international instruments and practices.

107. The envisaged partnership should provide for civil society participation and dialogue.

108. The envisaged partnership should provide for the monitoring of the implementation of the commitments and of the social and environmental impacts of the envisaged partnership through inter alia public review, public scrutiny and mechanisms to address disputes as well as instruments of encouragement and trade related cooperation activities, including in relevant international fora.

16. GENERAL EXCEPTIONS

109. The envisaged partnership should include general exceptions, applicable to the relevant parts of the envisaged partnership, including regarding security, balance of payments, prudential supervision and taxation based on the relevant articles of WTO agreements.

4. EXCEPTIONS AND SAFEGUARDS

159. The envisaged partnership should provide for appropriate exceptions. These should include the disclosure of information related to the Parties’ security interests.

160. The envisaged partnership should address the possibility for a Party to activate temporary safeguard measures that would otherwise be in breach of its commitments in case of circumstances of significant economic, societal or environmental difficulties. This should be subject to strict conditions and include the right for the other Party to rebalancing measures. The measures taken should be subject to independent arbitration.

IV. TERRITORIAL SCOPE

161. Any agreement between the Union and the United Kingdom negotiated on the basis of these negotiating directives should be without prejudice to the Protocol on Ireland/Northern Ireland and to the Protocol relating to the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus.

162. Any agreement between the Union and the United Kingdom negotiated on the basis of these negotiating directives will not include Gibraltar.