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Tag: Dispute Settlement

  • Rishi Sunak to sign UK-India trade deal without binding worker or environment pledges

    Rishi Sunak to sign UK-India trade deal without binding worker or environment pledges

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    LONDON — Prime Minister Rishi Sunak’s trade deal with India will not include legally enforceable commitments on labor rights or environmental standards, five people briefed on the text have told POLITICO.

    British businesses and unions now fear the deal’s already-finalized labor and environment chapters will undercut U.K. workers’ rights and efforts to combat climate change.

    Sunak’s government is racing to score a win with the booming South Asian economy ahead of the 2024 election. His plans for a return trip to India in October with the aim of sealing the pact are still on track.

    Sunak and Indian Prime Minister Narendra Modi added impetus to negotiations when they met on the sidelines of the G20 in New Delhi early this month. The 13th round of talks continues in London this week.

    Just days after Sunak’s meeting with Modi, Badenoch’s team shared the deal’s labor and environment chapters with businesses, unions and trade experts on a September 13 briefing call.

    Key enforceable dispute resolution powers which the U.K. set out to negotiate are missing from those chapters, said the five people briefed on the text. It means neither London nor New Delhi can hold the other to their climate, environmental and workers’ rights commitments.

    Businesses, unions and NGOs now fear the deal could undercut British firms because Indian firms operate to less stringent and expensive environmental and labor standards. Firms and unions say their access to the negotiations was curtailed earlier this year as talks progressed.

    “Industry also wants binding commitments — partly for greater certainty, partly because businesses are made up of people who themselves want to be properly treated and to avoid climate catastrophe,” said a senior British businessperson from the services sector briefed on the chapters. They were granted anonymity to speak candidly about the negotiations.

    “Suppression of trade unions, child labor and forced labor are all widespread in India,” said Rosa Crawford, trade lead at the Trades Union Congress (TUC) — the largest coalition of unions in Britain. “But the labor chapter that the U.K. government has negotiated cannot be used to clamp down on these abuses and could lead to more good jobs being offshored to exploitative jobs in India.”

    The Department for Business and Trade said it does not comment on live negotiations and that it will only sign a deal that benefits the U.K. and its economy.

    ‘Everyone was deeply unhappy’

    At the outset of the talks, the British government committed to negotiating enforceable labor and environment chapters as it laid out its strategic approach. “We remain committed to upholding our high environmental, labour, food safety and animal welfare standards in our trade agreement with India,” the government said in January 2022.

    Indian and British officials say the labor and environment chapters are now closed and are not up for discussion. The U.K.’s first post-Brexit trade pacts with Australia and New Zealand have dispute settlement mechanisms in both these chapters. Three people POLITICO spoke to for this piece said it was an achievement in itself that Britain was able to get such chapters in a deal with India.

    Businesses, unions and NGOs have all been concerned after Kemi Badenoch closed the key forums in February to carry out a required review of their activities | Dan Kitwood/Getty Images

    But, as the U.K.-India deal stands, if either country were to weaken its environmental standards or workers’ rights “the other party would not have recourse to initiate consultations on changes in laws,” said a person familiar with the content of the chapters. “There is no dispute settlement in the environment and labor chapters.”

    British firms and unions are also concerned that the pact the EU is negotiating with India has enforceable chapters “bound by sanctions in case the parties don’t comply,” the same person said. Those EU-India chapters are not yet finalized.

    British stakeholders “are totally up in arms,” said a former trade department official familiar with the briefing. “Everyone was deeply unhappy.”

    India has changed its labor laws to deprive workers of the right to strike. Over the past year several Indian states, including Karnataka, Tamil Nadu and Uttar Pradesh, have weakened their workers’ rights laws making 12-hour daily shifts and overnight shifts for women legal as Apple iPhone maker Foxconn sets up multiple semiconductor factories and assembly plants throughout India.  

    Adding enforceable chapters would only slow down negotiations, said an Indian government official. “If you put in too much of these things into a trade deal, then it delays the process.” The U.K. and India are already “bound by” their international commitments on labor and climate, they added.

    The deal “is dire for working people because trade unions were excluded from the trade talks,” said the TUC’s Crawford. Nearly three years ago, ministers pitched the idea of involving unions in 11 influential Trade Advisory Groups (TAGs) that gave input on ongoing trade negotiations.  

    Businesses, unions and NGOs have all been concerned after Britain’s trade chief Kemi Badenoch closed the key forums in February to carry out a required review of their activities. International Trade Minister Nigel Huddleston received officials’ recommendations to restructure the groups in mid-August. A final decision is expected before the end of the year.

    With 40-50 people on the U.K. government’s current briefing calls about the India trade deal there’s little businesses or unions can do to feed into negotiations. Officials can “only really be in transmit mode,” said a business representative familiar with the briefings.

    “What this means in real terms is that decisions are being made about the future of people’s livelihoods, people’s health, and the environment we all depend on without any input from those who will be impacted,” said Hannah Conway, trade and agriculture policy advisor at the NGO Transform Trade.

    “It’s crucial,” she said, “that the government addresses its democratic deficit on trade policy by undertaking meaningful consultation with civil society and businesses.”

    “It’s high time the government rethinks its approach,” said the TUC’s Crawford, “and includes unions in trade talks — that’s how you get trade deals that work for working people.”

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    Graham Lanktree

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  • The EU and UK have a Northern Ireland deal — so what’s in it?

    The EU and UK have a Northern Ireland deal — so what’s in it?

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    LONDON — After four months of intense talks (and plenty of squabbling before that), the EU and U.K. have a deal to resolve their long-running post-Brexit trade row over Northern Ireland.

    But as U.K. Prime Minister Rishi Sunak works to sell the so-called “Windsor framework” on the Northern Ireland protocol to Brexiteers and unionists, lawmakers on both sides of the English Channel and of the Irish Sea are getting to grips with the details.

    From paperwork to plants, let POLITICO walk you through the new agreement, asking: Who has given ground, and how exactly will the deal thrashed out by EU and U.K. negotiators aim to keep the bloc’s prized single market secure?

    Customs paperwork and checks

    For businesses taking part in an expanded “trusted trader scheme,” the Windsor framework aims to considerably cut customs paperwork and checks on goods moving from Great Britain but destined to stay in Northern Ireland. 

    These goods will pass through a “green lane” requiring minimal paperwork and be labeled “Not for EU,” while those heading for the EU single market in the Republic of Ireland will undergo full EU customs checks in Northern Ireland’s ports under a “red lane.”

    Traders in the green lane will only need to complete a single, digitized certificate per truck movement, rather than multiple forms per load.

    Sunak has already claimed that this means “any sense of a border in the Irish Sea” — deeply controversial among Northern Ireland’s unionist politicians — has now been “removed.”

    However, it’s by no means a total end to Irish Sea red tape. An EU official said that although the deal delivers a “dramatic reduction” in the number of physical food safety checks, for example, there will still be some — those seen as “essential” to avoid the risk of goods entering the single market.

    These checks will be based on risk assessments and intelligence, and aimed at preventing smuggling and criminality.

    U.K. public health and safety standards will meanwhile apply to all retail food and drink within the U.K. internal market. British rules on public health, marketing, organics, labeling, genetic modification, and drinks such as wines, spirits and mineral waters will apply in Northern Ireland. This will remove more than 60 EU food and drink rules in the original protocol, which were detailed in more than 1,000 pages of legislation.

    Supermarkets, wholesalers, hospitality and food producers are likely to welcome the new arrangements. Many had stopped supplying to Northern Ireland because the cost of filling out hundreds of certificates for each consignment was deemed too high for a market as small as Northern Ireland. 

    Export declarations have been removed for the vast majority of goods moving from Northern Ireland to Great Britain.

    The EU’s safeguards: While offering to drastically reduce the volume of checks carried out, the EU has toughened its criteria to become a trusted trader under the expanded scheme. The EU will now have access to databases tracking shipments of goods between Great Britain and Northern Ireland in real time. The system was tested through the winter, helping build trust in Brussels, and is being fed with data from traders and U.K. authorities. The European Commission will be able to suspend part or all of these trade easements if the U.K. fails to comply with the new rules.

    The timeline: The U.K. government said it will consult with businesses in the “coming months” before implementing the new rules. The green lane will come into force this fall. Labels for meat, meat products and minimally-processed dairy products such as fresh milk will come into force from October 1, 2024. All relevant products will be marked by July 1, 2025. “Shelf-stable” products like bread and pasta will not be labeled.

    Governance

    A key plank of the deal is the bid to address complaints by Northern Ireland’s Democratic Unionist Party (DUP) — currently boycotting the power-sharing assembly in the region in opposition to the protocol — that lawmakers there did not have a say in the imposition of new EU rules in the region.

    Under the terms of the new agreement, the Commission will have to give the U.K. government notice of future EU regulations intended to apply in Northern Ireland. According to Sunak, Stormont will be given a new power to “pull an emergency brake on changes to EU goods rules” based on “cross-community consent.”

    Under this mechanism, the U.K. government will be able to suspend the application in Northern Ireland of an incoming piece of EU law at the request of at least 30 members of the assembly — a third of them. But if unionist parties in Northern Ireland want to trigger the new “Stormont brake,” they must first return to the power-sharing institutions which they abandoned last May. The EU and the U.K. could subsequently agree to apply such a rule in a meeting of the Joint Committee, which oversees the protocol.

    Commission President Ursula von der Leyen said this new tool remains an emergency mechanism that hopefully will not need to be used. A second EU official said it would be triggered “under the most exceptional circumstances and as a matter of last resort in a well-defined process” set out in a unilateral declaration by the U.K. These include that the rules have a “significant and lasting impact on the everyday lives” of people in the region.

    If the EU disagrees with the U.K.’s trigger of the Stormont brake, the two would resolve the issue through independent arbitration, instead of involving the Court of Justice of the EU.

    Meanwhile, Northern Ireland’s courts will consider disputes over the application of EU rules in the region, and judges could decide whether to consult the CJEU on how to interpret them. In a key concession, the Commission has agreed not to unilaterally refer a case to the CJEU, although it retains the power to do so.

    The EU’s safeguards: The CJEU will remain the “sole and ultimate arbiter of EU law” and will have the “final say” on EU single market disputes, von der Leyen stressed. Whether Brexiteers and the DUP are willing to accept that remains the million-dollar question.

    Tax, state aid and EU rules

    The U.K. government will now be able to set rules in areas such as VAT and state aid that will also apply in Northern Ireland — two major wins for Sunak that were rejected by the Commission in previous rounds of negotiations with other U.K. prime ministers.

    It will, Sunak was at pains to point out Monday, allow Westminster to pass on a cut in alcohol duty that previously passed Northern Ireland by.

    But London has had to give up on its idea of establishing a dual-regulatory mechanism that would have allowed Northern Ireland businesses to choose whether they would follow EU or British rules when manufacturing goods, depending on whether they intended to sell them in the EU single market or in the U.K. The whole idea was deemed by Brussels as impossible to police.

    The EU’s safeguards: Northern Irish businesses producing goods for the U.K. internal market will only have to follow “less than 3 percent” of EU single market rules, a U.K. official said. But the nature of these regulations remains unclear, and there will be increased market surveillance and enforcement by U.K. authorities to try and reassure the EU.

    The timeline: The U.K. government will be able to exercise these powers as soon as the Windsor framework comes into force.

    Parcels

    The EU and the U.K. have agreed to scrap customs processes for parcels being sent between consumers in Great Britain to Northern Ireland.

    The EU’s safeguards: Parcels sent between businesses will now move through the new green lane, as is the case for other goods destined to stay in Northern Ireland. That should allow them to be monitored, but remove the need to undergo international customs procedures. Parcel operators will share commercial data with the U.K.’s tax authority, HMRC, in a bid to reduce risks to the EU single market.

    Timeline: These new arrangements will take effect September 2024.

    Pets

    Residents in Great Britain will be able to take their dogs, cats and ferrets to Northern Ireland without having to fulfill a requirement for a rabies vaccine, tapeworm treatment and other checks.

    Pets traveling from Northern Ireland to Great Britain and back will not be required to have any documentation, declarations, checks or health treatments.

    The EU’s safeguards: Microchipped pets will be able to travel with a life-long pet travel document issued for free by the U.K.’s Department for Environment, Food and Rural Affairs. Pet owners will tick a box in their travel booking acknowledging they accept the scheme rules and will not move their pet into the EU.

    The timeline: The new rules will take effect fall 2023.

    Medicines

    Drugs approved for use by the U.K.’s medicines regulator, the MHRA, will be automatically available in every pharmacy and hospital in Northern Ireland, “at the same time and under the same conditions” as in the U.K., von der Leyen said. 

    Businesses will need to secure approval for a U.K.-wide license from the MHRA to supply medicines to Northern Ireland, rather than having to go through the European Medicines Agency. The agreement removes any EU Falsified Medicines Directive packaging, labeling and barcode requirements for medicines. This means manufacturers will be able to produce a single medicines pack design for the whole of the U.K., including Northern Ireland.

    Drugs being shipped into Northern Ireland from Great Britain will be freed of customs paperwork, checks and duties, with traders only being required to provide ordinary commercial information.

    The EU’s safeguards: Medicines traveling from Great Britain to Northern Ireland will do so via the new green lane, which will have monitoring to protect the single market built in.

    The timeline: The U.K. government said it will engage with the medicines industry soon on these changes.

    Plants

    The deal lifts the protocol’s ban on seed potatoes entering Northern Ireland from Great Britain, and its prohibition on trees and shrubs deemed of “high risk” for the EU single market. This will enable garden centers and other businesses in Northern Ireland to sell 11 native species to Great Britain and some from other regions.

    The Windsor framework also removes sanitary and phytosanitary (SPS) checks on all these plants, and ditches red tape on their shipment into Northern Ireland.

    The EU’s safeguards: Supplying businesses will have to obtain a Northern Ireland plant health label, which will be the same as the plant passport already required within Great Britain, but with the addition of the words “for use in the U.K. only” and a QR code linking to the rules.

    The timeline: The new scheme and the lifting of the bans will all come into force in the fall.

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    Cristina Gallardo

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