September 08, 2020 9:57 AM

UK-EU Negotiations: Are we getting what we were promised?

These are seventeen* issues the UK government promised to resolve before the end of the Brexit transition period on 31st December 2020. These issues are being discussed right now in EU-UK negotiations.

We have given our verdict, based on what we know right now, on whether the UK Government has lived up to each of these promises. In making our verdicts, we took into account three key points:

Click on each promise below for a full explanation of practical implications, international best practices and evaluation questions. Our evaluation and verdicts are Best for Britain's analysis of publicly-available statements and publications using the evaluation framework set out in the report The UK’s Negotiations with the EU on a New Trading Future - Aspirations, Benchmarks and Measures of Success.

*The below table treats tariffs and quotas as a single issue.

TRADE OF GOODS

goods

noun [plural]
/gudz/

things for sale, or the things that you own

things, but not people, that are transported by railway or road

Source: Cambridge English Dictionary

 

The trade of goods is the most talked about element of negotiations, and the UK has made clear commitments. 

  • The UK is seeking the complete elimination of tariffs. But this usually takes years to negotiate.
  • Even without tariffs, UK businesses will be faced with added administrative burdens, and extra costs in a new customs regime.
  • 'Non-tariff barriers' like customs rules could make the free trade of goods even harder - stifling business and causing huge delays at the border.
  • The only way round is to seek a close alignment with the EU's regulatory regimes, and keep our standards high.

The promise

What's happening

Tariffs and Quotas
[Click for more detail]

The Political Declaration promised no tariffs, fees or charges for any amount of any goods coming into the UK from Europe.

A tariff is a tax on goods being imported into a country - sometimes this includes a 'quota', a tax that only applies on a certain amount of goods.

Neither side has released its proposals for tariffs or quotas in negotiations. The UK has published its UK Global Tariffs regime, which places tariffs on goods imported to the UK.

These form the default position on 1st January.

Our verdict: UNLIKELY 

Rules of Origin

The Political Declaration and Withdrawal Agreement promised appropriate rules of origin that would not stifle trade.

These rules determine the national source of a product, and therefore the fees that might need to be paid. 'Cumulation' allows a product to change its origin if it is altered in a new nation. 

It is unlikely that the EU will accept the UK’s proposals on cumulation in their present form. Nor has the UK agreed to join the EU's Revised Convention on Pan-Euro-Mediterranean rules of origin.

Our verdict: UNLIKELY

Technical Barriers to Trade

Prime Minister's Statement promised to address regulatory barriers while preserving each party’s right to make its own regulations.

These are regulatory barriers to trade between the UK and EU, like differences in labelling or standards, that must be resolved at the border.

An agreement on transparency and co-operation at the border is possible. But what happens if regulations in the EU and UK diverge over time?

Our verdict: HOPEFUL

Sanitary and Phytosanitary Measures (SPS)

The Withdrawal Agreement stated they should protect health, and the environment, while facilitating trade.

The Political Declaration would also consider co-operation with EU agencies like the European Medicines Agency (EMA), the European Chemicals Agency (ECHA), and the European Aviation Safety Agency (EASA).

These are rules on the trade of organic material, designed to stop contamination and the spread of pests and diseases. 

Proposals in the UK and EU draft texts on SPS are similar, which means agreement can be reached. But will the UK have capacity to certify if products meet EU requirements?

Any future divergence from common standards is likely to be met with very close scrutiny by the EU, particularly if the EU changes its SPS requirements in future.

The UK has ruled out membership of several EU agencies.

Our verdict: UNCERTAIN

Customs Measures

Prime Minister's Statement promised an Agreement should provide for streamlined customs arrangements covering all trade in goods.

There must not be a hard border on the island of Ireland.

These are measures to control the flow of goods in and out of a nation.

Both the UK and EU are committed to cooperation and transparency in customs procedures, despite major differences in how these are set out. Traders can expect streamlined customs procedures.

However, there will inevitably be significant friction at the border compared to what we enjoy now and significant new infrastructure and documentation at borders.

Our verdict: UNCERTAIN

 

TRADE OF SERVICES

service

noun
/ˈsɜːvɪs/

the particular skills that someone can offer to others

business activity that involves doing things for customers rather than producing goods, or a single act of doing something for a customer

Source: Cambridge English Dictionary
  • The UK economy relies on the trade of services, like banking or digital services - 40% of our services are traded to the EU.
  • While UK financial services are still set to have access to the EU, we need to establish an equivalent regulatory alignment, and even then, not all services will qualify.
  • Freedom of movement will end, meaning it will not be so easy for EU and UK citizens to live and work side by side, and it will be harder to exchange services.

The promise

What's happening

General provisions
[Click for more detail]

The UK promised a level of openness in services trade above and beyond the baseline level under World Trade Organisation allowances.

This is the overall approach to trading services.

The EU will only offer what has previously been offered to other third country markets in FTAs. This will result in significant barriers to UK services exports into the EU. 

Both the WTO allowances and any existing EU FTA provision give a lower level to service trade than what we currently enjoy.

Our verdict: UNLIKELY

Cross-border services

The Agreement should include measures to minimise barriers to the cross-border supply of services on the basis of existing FTAs, such as CETA and the EU-Japan EPA, and could draw on precedent from trade negotiations where the EU has made offers to other third-country partners.

In areas of key interest, such as professional and business services, there may be scope to go beyond these commitments.

There will be a number of new restrictions on accessing the EU market from the UK in each sector, including due to limitations on discriminating in favour of local suppliers (national treatment).

The UK has limited scope to negotiate much access on cross border services within its limits of standard FTAs and without a significant trade off on the UK’s part.

Our verdict: UNLIKELY

Temporary entry and stay for business purposes

The UK and EU should both offer reciprocal commitments on the temporary entry and stay of individuals to allow short-term business trips and to supply services.

These arrangements would likely be separate to the UK’s future points-based immigration system.

In practice, UK businesses will have to obtain the visa appropriate to whatever EU country they want to operate in and which service they are providing. This will be a significant restriction to trade in services even if special visas and work permits for skilled professionals are agreed.

Our verdict: UNLIKELY

Financial services

Committed to preserving financial stability and fair competition, while respecting both sides' regulatory autonomy.

The Agreement should include legally binding obligations on market access and fair competition, in line with recent CETA and EU-Japan EPA precedent.

Equivalence means to a decision by one state to recognise another state’s legal requirements for regulating a service, even though they may not be exactly the same.

The UK will have to push for an equivalence plus system to ensure financial services can be traded.  

However there appears to be no sign of agreement to this from the EU side. Without this, significant barriers will result for the provision of financial services.

Our verdict: UNLIKELY

Digital services

The agreement should support digital trade, going beyond the WTO's Joint Statement Initiative on E-Commerce.

A major sticking point between the EU and UK is the cross-border transfer of electronic information. 

While significant agreement could be reached on this chapter, it will hinge on a data adequacy arrangement being agreed to allow the free flow of data which supports numerous UK services exports.

Our verdict: UNCERTAIN

Transport

Calling for reciprocal commitments allowing any number of commercial transport vehicles to provide services in each other's nations. The parties should agree how to cooperate on monitoring and enforcement.

The UK wants access similar to the EC/Switzerland agreement.

The EU stands by its position that after leaving the EU, the UK should have lesser levels of access than it currently enjoys. Without concessions from the UK on regulatory alignment there’s a real risk that the EU will resort to numerical quotas for haulage operators and treat the UK as a third country.

The UK faces high and immediate costs if road transport is disrupted. 

Our verdict: UNCERTAIN

Recognition of Professional Qualifications

Comprehensive coverage would ensure that qualification requirements do not become an unnecessary barrier to trade in services. It should explore how authorities could recognise applicants who demonstrate that they meet the host states’ standards.

The EU has no blanket system of recognising professional qualifications from third countries across all member states in a uniform way as states tend to recognise qualifications individually.

While there is potential for agreement and the UK is open to a mutual recognition of UK EU qualifications, underpinned by regulatory cooperation, the UK will need more than just a framework of discussions to guarantee comprehensive coverage. This will require trade-offs from the UK.

Our verdict: UNCERTAIN

Audio visual

Should promote frictionless trade in these services by ensuring fair access and treatments.

Given the importance of the UK in this sector in Europe, freedom of workforce movement and access to the Digital Single Market should be high priorities.

The EU wants to exclude audio-visual services from the agreement as it has done in other recent FTAs. The UK will have to consider trade-offs for it to be included.

Our verdict: UNCERTAIN

 

STALEMATE ISSUES

stalemate

noun
/ˈsteɪl.meɪt/

a situation in which neither group involved in an argument can win or get an advantage and no action can be taken

Source: Cambridge English Dictionary
  • Level playing-field: despite the UK and EU both having agreed to negotiating them in the Political Declaration, the UK insists on the benefits of free trade, but refuses to accept the regulatory alignment this requires.
  • Fisheries: the UK has rejected the EU's proposal to jointly mediate on fishing territory disputes, and insists complete control over its surrounding waters.
The promise What's happening

Level Playing Field
[Click for more detail]

Political Declaration promised, there must be open and fair competition to prevent distortions of trade and unfair competitive advantages.

This means neither party disadvantages the other by having lower standards and costs of regulation in their territory.

The UK will not be governed by EU regulations and says it will uphold high standards - it will not allow the EU dispute rules or go beyond standard FTAs. But the EU says this is needed, given the interconnectedness of the EU and UK.

The UK will have to find middle ground in order to secure other key issues such as low tariffs for good, low services barriers and equivalence plus for financial services. 

Our verdict: UNCERTAIN

Regulation

Should be measures that reduce unnecessary barriers to trade in services, while preserving regulatory autonomy.

Parties should establish a framework for voluntary regulatory cooperation in areas of mutual interest.

This means broad regulatory frameworks in different sectors being kept in line with each other in the two territories and one not deregulating out of step with the other.

While voluntary regulatory cooperation could be achieved, the broader issue of regulatory alignment is a major sticking point in the negotiation and the UK may have to find a compromise in order to get a deal.

While voluntary regulatory cooperation could be achieved, the broader issue of regulatory alignment is a major sticking point in the negotiation and the UK may have to find a compromise in order to get a deal.

Our verdict: UNCERTAIN

Fisheries

Political Declaration committed to bilateral cooperation to ensure fishing at sustainable levels, while noting that the UK will be an independent coastal state.

Prime Minister's Statement concurred that the agreement should be “in line with precedent for EU fisheries agreements with other independent coastal states.”

“Bilateral cooperation” could mean a formal structure with both jointly determining catches and management issues for both parties’ waters, to one where each consults before independently determining arrangements for its own exclusive economic zone (EEZ).

The UK is seeking a Norway arrangement with access and quotas negotiated on an annual basis. The EU is seeking to extend its access, to joint management of the waters and reciprocal rights for either party vessels to fish in the other’s waters. 

The new fisheries agreement by 1 July 2020 target was not met. Both parties remain divided.

Our verdict: UNLIKELY

 

These tables show the promises made by the UK Government, or contained in the October 2019 Political Declaration, which accompanied the Withdrawal Agreement. We compare these promises to international standards of best practice, and to progress made on these issues so far. As the final columns show, many questions still need to be evaluated and answered in regards to these issues.

 

 

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