4. The UK-EU Trade and Cooperation Agreement

The UK-EU agreement focuses on tariff removal and fair competition, not non-tariff barriers

The centrepiece of the UK-EU Trade and Cooperation Agreement is the absence of tariffs and quotas for products traded between the parties, so long as these meet the specific rules to demonstrate they originate within the UK or EU (rules of origin). The 100 per cent elimination of tariffs is unusual in a trade agreement, since sensitive agricultural products are typically excluded. In the case of the UK and EU, this reflects the lack of time available to discuss every product, and the existing absence of tariffs.

Tariff elimination is always accompanied in trade agreements by rules to ensure fair competition and, in the case of the UK-EU agreement, these go further than any previous example for any country. The UK and EU have agreed to non-regression of existing labour and environmental commitments, strong rules on state aid, and potential action to be taken against future divergence, known as the rebalancing clause. This will provide strong incentives for the UK in particular not to diverge significantly from the EU in these areas.

If the agreement goes beyond normal practice in goods tariffs and level playing field conditions, it is slightly weaker than normal in terms of addressing regulatory differences (which result in what are known as non-tariff barriers) and services. There is no significant mutual recognition, whether of goods or professional qualifications, between UK and EU. In theory, the services provisions allow considerable UK market access but, in practice, these are heavily caveated by member state reservations of varying types. There are similarly weak provisions in public procurement, though these at least go beyond the WTO Government Procurement Agreement.

Many other subjects are covered within the agreement, as befits such a broad economic relationship. These include energy, fisheries, aviation, haulage, other land transport, social security and justice. There is also a section on UK participation in EU programmes, though the specifics of the UK choosing to participate in the Horizon science research programme as well as some others are covered elsewhere.  

As is normal, the agreement establishes a governance structure including committees and dispute mechanisms. It is interesting to note that, while dispute provisions are common in previous agreements, these have in the past hardly been used. A trade agreement is very much a framework for future cooperation rather than a detailed manual, and typically issues have been resolved informally. We must wait to see whether this will change for the UK-EU agreement.

There has been considerable interest in how the UK and EU reached this agreement, and who were the winners and losers. The negotiators may have opinions but, for the rest of us, this is impossible to say. However, thanks to statements and draft texts from both parties, we do know that both had to compromise in different areas, and there were areas in which both had wanted to go further. Whether because of time or politics this was not possible; but this desire to go further on the part of both parties provides a good basis for developing further agreements to support the modern trade relationship. This is likely to come in the form of new stand-alone agreements that in some way link into this one, based on relationships that officials will now start to develop in implementing this UK-EU Trade and Cooperation Agreement.

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