Brexit Deal: EU-UK Trade and Cooperation Agreement

12 Gennaio 2021

On DECEMBER 24, 2020, the European Commission reached an agreement with the United Kingdom on the terms of its future cooperation with the European Union.

The EU-UK Trade and Cooperation Agreement (TCA), provisionally applicable as of January 1, 2021, rests on three main pillars, which are a) a free trade agreement; b) a new partnership for citizens’ security; and c) a horizontal agreement on governance designed to ensure legal certainty for businesses, consumers, and citizens and created by several joint governance bodies, notably the Partnership Council, the Trade Partnership Committee, and various specialized committees.

The TCA consists of six main parts:

  1. institutional arrangements
  2. economic arrangements, including those covering trade, transport ,and fisheries
  3. arrangements for law enforcement and judicial cooperation in criminal matters
  4. cooperation in the areas of health and cyber security
  5. participation in EU programs, sound financial management, and financial provisions
  6. provisions on dispute settlement and safeguard measures.

The free trade agreement regulated under part 2 of the TCA covers not just trade in goods and services, but also a broad range of other areas in the EU’s interest, such as investment, competition, State aid, tax transparency, air and road transport, energy and sustainability, fisheries, data protection, and social security coordination.

In terms of trade in goods, the TCA provides for free trade with zero tariffs and quotas, making it the most favorable free trade agreement between the European Union and another country, including Canada and Japan. However, since the UK is not part of the customs union, it must comply with what are known as the “rules of origin” to benefit from such treatment.

The TCA also provides for the further development of customs cooperation between the EU and the UK in the future, in order to facilitate cross-border trade and the handling of customs procedures in view of the high volume of sea-crossings and, in particular, the high volume of roll-on/roll-off traffic between their respective customs territories. This cooperation includes, among other things, a “single window” that allows traders to submit documentation or data required for importation, exportation, or transit of goods through a single entry point to the participating authorities or agencies and fosters close cooperation between their respective customs authorities on bilateral sea-crossing routes, information exchange on the functioning of ports handling traffic, and applicable rules and procedures so as to keep operators informed about the measures in place and the processes established by ports to facilitate such traffic.

A specific protocol is also dedicated to mutual administrative assistance in customs matters.

The TCA also provides a new framework for the joint management of fish stocks in EU and UK waters and for continued and sustainable air, road, rail, and maritime connectivity, though market access falls below what the Single Market offers. It includes provisions to ensure that competition between EU and UK operators takes place on a level playing field, so that passengers’ rights, workers’ rights, and transport safety are not undermined.

In terms of services, the TCA ensures that an offer of UK services in the EU will not be treated less favorably than those coming from EU countries, provided that the operator meets all applicable EU regulatory requirements, and vice versa. UK investors could also establish legal entities in the EU in order to offer services across the EU, and the same will be true for EU countries within the UK. Specific provisions of the TCA are also dedicated to “digital trade,” applying to all measures affecting trade enabled by electronic means with the objective of facilitating digital trade, addressing unjustified barriers to trade enabled by electronic means, and ensuring an open, secure, and trustworthy online environment for businesses and consumers.

Furthermore, both parties have committed to ensuring a solid level playing field for preserving the longstanding friendship and cooperation between them by maintaining high levels of protection in areas such as environmental protection, the fight against climate change and carbon pricing, social and labor rights, tax transparency and State aid with effective domestic enforcement, a binding dispute settlement mechanism, and the opportunity for both parties to employ remedial measures.

The TCA therefore goes far beyond traditional free trade agreements and provides a solid basis for fruitful future cooperation between the EU and the UK.

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