Jeff Kenner, Professor of European Law, University of Nottingham*

The COVID-19 pandemic has taken center stage, demanding an urgent worldwide response that is yet to materialize. In light of this global crisis, the issue of Brexit, particularly its self-serving nature and political maneuvering, has understandably faded from the minds of both policymakers and the public. However, despite the pandemic’s onset in mid-March 2020, which coincided with the start of negotiations for a new EU-UK partnership and led to widespread lockdowns across Europe, the UK government remains steadfast in its refusal to extend the post-Brexit transition period beyond the December 31, 2020, deadline established in the October 2019 EU-UK Withdrawal Agreement. This Agreement mandates that any mutually agreed extension must be decided upon by July 1, 2020, likely before the pandemic subsides and a semblance of normalcy returns. As global GDP plummets, businesses remain closed, and worker layoffs continue to rise, Brexit proponents seem intent on pushing the limits of chaos theory. Their plan: to sever the UK from the EU’s regulatory framework at the start of 2021, ushering in an era of renewed borders, regulatory divergence, and economic shock therapy.

A key factor in understanding the rationale behind this approach is the question of social and labor standards. Assuming the UK remains firm in its stance, rejecting a mutually agreed extension of the transition period for a year or two as allowed by Article 132 of the Withdrawal Agreement, there is a narrow window of less than six months to determine the UK’s willingness to compromise. The crucial question is whether the UK will agree to non-regression, or maintaining existing social and labor standards aligned with those of the EU, by the end of the transition period. Should the UK commit to this “static alignment” to ensure a “level playing field” (LPF), thereby preventing undercutting or social dumping, and maintain similar standards in areas such as environment, climate change, tax, and state aids, it may surprise skeptics and reach an agreement with the EU within the given timeframe.

Conversely, the UK could choose a path of labor market and social deregulation. This move, potentially motivated by ideology and a desire to secure a trade agreement with the United States, would see the UK pursuing a Singapore-type economic model. Such a strategy, with its inherent divergence from EU standards, could significantly disrupt the Single Market and possibly impact the future of the European Social Model. This “no deal” or “disorderly Brexit” scenario would force the EU to impose its Common Customs Tariff on UK goods under World Trade Organization rules. This situation presents immense short-to-medium-term economic challenges for the UK, which currently exports 45% of its goods to the EU (House of Commons Library, 2018). Predictions point to a 5.5% decline in the UK’s GDP and a doubling of unemployment to 7% (Bank of England, September 2019). These problems are further compounded by COVID-19 and its aftermath. EU Member States, already grappling with pandemic recovery, would face a second wave of disruption as the UK, which imports 53% of its goods from the Union, implements its own tariffs. The EU’s response to this situation would be a true test of its commitment to Social Europe and its unity, especially in a period where European solidarity is likely to be strained following the failure to share the burden of the socio-economic crisis triggered by COVID-19.

The UK’s departure from the EU on January 31, 2020, marked a pivotal moment – the first instance of a Member State withdrawing from the Union to become a “third country.” Three and a half years after the closely contested referendum, and on their second attempt, the parties agreed on the basic framework of their separation, including a revised Protocol on Ireland and Northern Ireland annexed to the Withdrawal Agreement. This Protocol addresses the unique situation of Northern Ireland, which, while part of the UK, shares a land border with the EU and carries a history of conflict. The Protocol essentially tethers Northern Ireland, potentially indefinitely, to EU regulations on customs and related areas deemed crucial to avoid a hard border on the island of Ireland and safeguard peace. Notably, however, the revised Protocol, unlike the original version which included an Annex promoting the non-regression of labor standards, omits the issue of labor standards. This critical matter is now relegated to the future relationship negotiations.

Article 50 of the Treaty on European Union mandated that the parties consider the framework of their future relationship during the Brexit negotiations, almost as an afterthought. This loosely defined requirement was addressed through a non-binding Political Declaration accompanying the Withdrawal Agreement. The Political Declaration outlines a commitment to establish “the parameters of an ambitious, broad, deep and flexible partnership across trade and economic cooperation with a comprehensive and balanced Free Trade Agreement at its core” (para. 3). While the Political Declaration’s affirmation of safeguarding “high standards of free and fair trade and workers’ rights” (para. 2) offers some comfort, it’s crucial to remember the context. Back in October 2019, finding a solution to prevent a regulatory border in Ireland took precedence. Consequently, the Political Declaration received less attention, with much of its content, including the worker-friendly language, remaining unchanged from the November 2018 version negotiated between the European Commission and the UK government under former Prime Minister Theresa May.

The situation has significantly changed with Boris Johnson’s rise to Conservative Party Leader and UK Prime Minister in July 2019, followed by a decisive election victory five months later. While May championed close alignment with EU labor standards, promising “full protection and maintenance” of workers’ rights post-Brexit at least at EU levels, if not exceeding them (Lancaster House speech, January 2017), Johnson’s approach appears markedly different. In March 2019, after the first Withdrawal Agreement was adopted, May proposed safeguards for EU-derived labor rights and a report to the UK Parliament on new EU worker rights, suggesting potential dynamic alignment with EU labor standards to prevent social dumping. However, May’s failure to get the Withdrawal Agreement through Parliament led to her resignation. In contrast, Johnson, now with a parliamentary majority, withdrew May’s labor rights proposals from the Withdrawal Agreement implementation legislation. Instead, his government announced a new Employment Bill. However, this bill is yet to be published, and its ambitions remain unclear (House of Commons Library, 20 December 2019).

The Political Declaration states that the proposed Free Trade Agreement (FTA) “will be underpinned by provisions ensuring a level playing field for open and fair competition” (para. 17). More directly, European Commission President Ursula von der Leyen has emphasized that an FTA depends on a “level playing field” guarantee of “zero tariffs, zero quotas, zero dumping” (London School of Economics speech, 8 January 2020). Concerning labor standards, the Political Declaration clarifies that LPF provisions must include “robust commitments” to “uphold the common high standards applicable in the Union and the United Kingdom at the end of the transition period in … social and employment standards … and include appropriate mechanisms to ensure effective implementation domestically, enforcement and dispute settlement” (para. 77, emphasis added). While not explicitly mentioning the ILO, the LPF references Union and international standards. Furthermore, both parties commit to “promote adherence to and effective implementation of internationally agreed principles and rules” (para. 77).

However, much has changed since the Political Declaration’s release. A leaked UK government document quickly revealed its stance: “the interpretation of these [LPF] commitments will be very different” and binding arbitration was deemed “inappropriate” (Financial Times, 25 October 2019). The UK maintained it had “no intention of lowering the standards of workers’ rights.” However, following the election, Johnson’s government has signaled that such commitments are primarily symbolic, not prerequisites for an FTA. This position became evident in February 2020 when the UK published its approach to negotiations (Command Paper 211), underlining its refusal to accept any arrangement where the UK “does not have control of its own laws and political life” (para. 5). The UK government has seized upon EU chief negotiator Michel Barnier’s earlier suggestion that, given the UK’s post-referendum decision to leave the EU Customs Union and Single Market, the EU would seek an FTA similar to the EU-Canada agreement (CETA). It’s crucial to note that Barnier’s presentation of this illustrative “Canada option,” using a single slide, occurred in December 2017, at a very different stage in the process.

The UK sees the CETA reference as an opportunity to argue that labor standards should be solely promotional. Its negotiating strategy document states: “In line with precedent, such as CETA, the Agreement should recognise the right of each party to set its own labour priorities and adopt or modify its labour laws” (para. 76). There’s no mention of an LPF. At best, the UK might agree to “reciprocal commitments not to weaken or reduce the level of protection afforded by labour law and standards in order to encourage trade and investment,” but these provisions “should not be subject to the Agreement’s dispute resolution mechanism” (paras. 76-77). This suggests the UK’s preference for self-regulating its labor standards, potentially decoupling any domestic labor law reductions from EU trade relations. In return, the UK expects the EU to accept its commitment to reaffirm existing ILO principles and rights. This assurance is limited, considering the UK has only ratified 88 ILO Conventions, including the eight “core” conventions, significantly fewer than several EU Member States like Spain (133), France (127), and Italy (113) (ILO, NORMLEX, April 2020).

Unsurprisingly, key Member States, especially France and Belgium, have demanded stricter LPF provisions in response to the UK’s stance to prevent the undercutting of labor standards, even if it jeopardizes a 2020 agreement (Financial Times, 23 February 2020). The EU’s “Negotiating Directives” (Council of the EU, 25 February 2020), essentially the “negotiating mandate,” outline the framework for the Commission’s negotiations with the UK. Despite some internal compromise, the language used is noticeably tougher than in the Political Declaration. Part 15 of the Negotiating Directives outlines several LPF conditions. Specifically, “the envisaged agreement should uphold common high standards, and corresponding high standards over time with Union standards as a reference point, in the areas of [inter alia] social and employment standards” (para. 94, emphasis added). This signifies a shift in the EU’s position from static alignment at the end of transition to a form of dynamic alignment without demanding full convergence. Regarding enforcement, the document reiterates the Political Declaration’s language on effective domestic implementation, enforcement, and dispute settlement. However, it adds the need for “appropriate remedies” and seeks to reserve the Union’s right “to apply autonomous, including interim, measures to react quickly to disruptions of the equal conditions of competition in relevant areas, with Union standards as a reference point” (para. 94). Such Union intervention is unacceptable to the UK, which explicitly states in its negotiating document that the “Court of Justice” should have “no role” in the governance arrangements (para. 6).

The EU’s LPF proposals target the following areas for alignment with the common standards applicable within the EU and the UK at the end of the transition period: “fundamental rights at work; occupational health and safety, including the precautionary principle; fair working conditions and employment standards; and information, consultation and rights at company level and restructuring” and to “protect and promote social dialogue” (para. 101). In a further challenge to the UK, and perhaps to prevent backsliding within the EU itself, the mandate suggests that if either party raises its social and labor protection levels beyond these commitments, the partnership “should prevent them from lowering those additional levels in order to encourage trade and investment” (para. 110).

Furthermore, drawing upon the parties’ commitment to sustainable development outlined in the Political Declaration, the EU proposes that the partnership “should include provisions on adherence to and effective implementation of relevant internationally agreed principles and rules,” including ILO conventions and the Council of Europe’s European Social Charter (ESC) (para. 109). It’s worth noting that the UK remains a Council of Europe member and has ratified the ESC. Finally, a system for monitoring the implementation of commitments and the partnership’s “social and environmental impacts” would be established (para. 113).

On the surface, the differences between the two sides seem to be widening, potentially leading to an impasse. During the break in negotiations before they resumed on April 20, the Commission released a 440-page “Draft Treaty,” translating its negotiating directives into concrete terms (UKTF (2020) 14). As both sides adapt to virtual platforms like Zoom and Teams, or even face-to-face meetings, compromises will be essential to reach an agreement, requiring a significant degree of goodwill. It’s important to remember that labor standards and the LPF are just one of several potential stumbling blocks, with issues like fishing rights, Gibraltar, and State aid also threatening to derail the negotiations. Adding further complexity, the UK’s key ministerial negotiator, Michael Gove, stated the UK might forgo tariff-free and quota-free access to the Single Market if it means avoiding the EU’s LPF demands (The Independent, 5 May 2020).

A critical juncture will arrive in the fall of 2020, if not sooner. A vaguely defined commitment to an LPF based on static alignment, enforced solely by UK authorities with limited independent dispute settlement mechanisms, is possible. The EU might consider this sufficient to move beyond Brexit and focus on COVID-19 recovery. The tougher provisions in the negotiating mandate could be scaled back, assuming this satisfies all Member States and the European Parliament. However, this presents a bigger challenge for the UK, potentially requiring acceptance of the social acquis and indefinite adherence to converged labor standards. At most, gradual divergence over time might be possible, assuming, optimistically, that worker rights significantly improve at the EU level in the next decade or, perhaps more realistically, evolve through Court of Justice case law. The problem with assuming inevitable convergence is that the UK seems fundamentally inclined towards maintaining the sovereign right to diverge its labor standards, even if it chooses not to exercise this right immediately for domestic political reasons. As German Chancellor Angela Merkel cautioned the German Parliament, the UK aims to be “an economic competitor on [the EU’s] own doorstep” (Politico, 11 September 2019). For Boris Johnson, currently at the peak of his political power, Brexit is fundamentally about “tak[ing] advantage” of “freedoms,” including what he terms “better regulation” in sectors where the UK holds a commercial edge (The Guardian, 23 September 2019).

The EU faces a difficult decision: negotiate a “partnership” allowing the UK enough leeway to accept the status quo temporarily while gradually diverging from common labor standards without effective EU oversight or remedial powers, or accept the likelihood of the UK charting its own course, potentially leading to more rapid divergence. The latter, even if it doesn’t result in a “Singapore on the Thames,” would almost certainly preclude a negotiable FTA in the short to medium term. While an extension of the transition period might delay the economic and social consequences of this choice, it seems unavoidable for both sides of the English Channel. For the EU, accepting divergence might be the lesser evil in the long run. It presents an opportunity to demonstrate that robust social and labor standards offer a better path to economic prosperity and social cohesion in an increasingly fragmented world. For the UK, it might highlight the stark reality of its isolation and the substantial economic and social costs of pursuing alternative “deals” with the United States, China, or Russia. Over time, the negative impacts of diverging from EU standards could prompt a shift in British sentiment, potentially leading to a return to Social Europe’s regulatory sphere, even if it falls short of rejoining the Union. For now, both sides face an urgent question demanding a swift answer: maintain convergence, whether static or dynamic, or embrace divergence.