The authoritative source for independent research on UK-EU relations

20 Jan 2021

Relationship with the EU

What is the Brexit deal?

The Trade and Co-operation Agreement (TCA) reached between the UK and the EU establishes arrangements for future co-operation across a range of areas including trade, aviation, road haulage, fisheries, police and security, health insurance and continued UK participation in some EU programmes.

The TCA comes in addition to the Withdrawal Agreement, which came into force on 31 January 2020 and includes the arrangements for trade between Northern Ireland, the EU and Great Britain in the Ireland/Northern Ireland protocol.

Combined, these two agreements form the basis of UK-EU relations going forward.

Is the agreement now in force?

Yes.

The UK has formally ratified the agreement, following Royal Assent of the implementing legislation – the European Union (Future Relationship) Act 2020 – on 30 December 2020.

The legislation passed with the overwhelming support of members of Parliament, with the House of Commons voting in support by 521-73.

The EU has provisionally applied the agreement until the European Parliament formally approves it. This may not be until April 2021.

What is in the agreement?

The TCA covers arrangements for the trade in goods and services, and other areas such as aviation, road transport, energy, social security coordination and fisheries.

It also sets out conditions to ensure a level playing field and the processes for resolving disputes between the UK and the EU.

It contains arrangements for police cooperation and UK participation in EU programmes, including the EU’s Horizon research programme. There are two additional agreements on nuclear cooperation and the exchange of confidential information.

Market access for UK financial services firms is not covered, as this is subject to a separate ‘autonomous’ EU process. There is a temporary agreement on data adequacy and the EU will make a permanent decision within six months. Data adequacy is necessary to underpin the police cooperation part of the agreement.

The agreement also sets up governance arrangements to oversee its implementation and functioning.

How far did each side meet its negotiating objectives?

United Kingdom

The UK got the ‘Canada-style’ free trade agreement that Boris Johnson’s government had always said that it wanted. It negotiated a zero tariff/zero quota trade deal (subject to goods having enough UK or EU content to meet rules of origin requirements).

The UK did this while retaining the freedom to diverge from EU regulation and eliminating almost all jurisdiction of the European Court of Justice (ECJ). However, if the UK changes its domestic regulation in a way that distorts UK-EU trade then it could face sanctions, such as tariffs, to rebalance the playing field.

The UK also secured an increase in quotas for UK fishing boats, equivalent to around 25% of the value of fish previously caught by the EU fleet by the end of a five-and-a-half-year adjustment period. From 2026, there will be annual negotiations, but if the UK wishes to reduce EU access further, it may face restrictions in market access.

fishing

The UK also managed to negotiate more advanced police and judicial cooperation than the EU has conceded to any non-Schengen third country. In addition, the UK managed to achieve unlimited road haulage movements between the UK and the EU, albeit with limitations on the number of stops they can make within each other’s territory.

However, there were a number of ‘asks’ that the UK did not get in the negotiations.

One that is potentially crucial relates to rules of origin requirements. They are much stricter than the UK wanted and mean fewer goods will qualify for zero tariffs than the UK hoped.

For instance, retailers that previously used the UK as a distribution hub for the EU (and used Great Britain to supply Northern Ireland) now face tariffs when re-exporting goods into the EU, such as clothes, that originally came from other countries and thus have insufficient UK or EU content.

The UK also failed to get a favourable deal on sanitary and phytosanitary checks, meaning that animal and food products are subject to the full battery of border checks when they cross into the EU (including, after a three- to six-month grace period, depending on the product, into Northern Ireland).

The UK had referenced New Zealand’s arrangements with the EU in this area, which includes a veterinary agreement, to reduce border checks. The UK did not achieve such arrangements.

Brexit deal

The UK also failed to secure significant easements for access to the EU market for services. The agreement includes a vast list of exceptions where services access is conditional on meeting certain requirements.

For instance, EU countries enforce different economic needs tests – such as only granting access where there is a domestic skills shortage – and the rules vary by country and sector. There is no automatic route for the recognition of professional qualifications in future.

Instead, regulators in the UK and EU can jointly recommend the terms of the mutual recognition of qualifications in their sectors to the Partnership Council, which then rules on whether to adopt such arrangements.

The UK originally wanted a series of separate agreements for the different headings of the TCA, with no ability to cross-retaliate between different parts of the agreement. However, all the headings come under a single agreement and cross-retaliation is possible in a number of areas.

European Union

The EU achieved its main objectives of a zero tariff/zero quota deal while protecting the integrity of the single market. The EU has secured this through the level playing field provisions and ultimately the potential for ‘rebalancing’ if measures taken by either side mean the agreement is no longer equitable.

On fisheries, the EU ended with a five-and-a-half-year adjustment period for quota reductions and tough sanctions, up to termination of most of the agreement, if the UK removes or reduces future access for EU fishers.

The EU’s original fisheries ask was extremely ambitious, essentially seeking a continuation of the status quo. However, the EU gave up around 25% of its catch by value in UK waters as part of the negotiations.

The EU had initially wanted the UK to sign up to its rules on managing subsidies, but quickly abandoned this position in negotiations. More broadly, it wanted the ability to retaliate autonomously in response to any perceived disruption of the level playing field.

The agreement allows for retaliation only where distortions to UK-EU trade as a result of a change in regulation can be shown to have had an impact. It involves a much more convoluted and less autonomous system than originally envisaged by the EU.

The EU also wanted to negotiate an agreement with the UK on foreign policy cooperation, but the UK did not want any formal agreement in that area.

Has the UK ended all jurisdiction by the European Court of Justice?

Not quite.

The ECJ has a very limited role in the TCA in relation to the EU programmes that the UK will continue to participate in. These include the EU’s Horizon research programme and Copernicus, the EU’s satellite programme.

The ECJ also has a substantial role in managing the Withdrawal Agreement. In the citizens’ rights part of that agreement, UK courts must pay ‘due regard’ to existing EU case law when ruling on a question of EU law and they may ask the ECJ for an opinion for up to eight years from the end of the transition period (and until 2027 for the issues relating to the EU Settlement Scheme).

Finally, any legal proceedings involving the UK relating to actions before the end of the transition period will continue to be adjudicated by the ECJ.

Under the Withdrawal Agreement, the European Commission can bring infringement proceedings against the UK for up to four years after the end of transition for any perceived breaches of EU rules before transition ended. The ECJ would be the ultimate authority to rule on such cases.

Beyond these, the supremacy of EU law has ended in the UK.

Does the agreement remove tariff and non-tariff barriers to trade as the Prime Minister has said?

In his statement on 24 December 2020, the Prime Minister said that, because of the TCA, ‘there will be no palisade of tariffs on Jan 1. And there will be no non-tariff barriers to trade.’

This is only partly true in relation to tariffs and untrue when it comes non-tariff barriers.

The agreement removes tariffs only on goods that comply with so-called rules of origin requirements, which set out what proportion of a good must originate from either the UK or the EU to qualify for zero tariffs.

The agreement categorically does not remove all non-tariff barriers to trade. In fact, compared to previous arrangements under EU law, it vastly increases them. Both importers and exporters now have to complete substantially more paperwork and are subject to more checks when moving goods to and from the EU.

Is the Home Secretary right that the agreement means we will be safer after Brexit?

Home Secretary Priti Patel has said that the UK will ‘seize this historic opportunity to make the UK safer and more secure through firmer and fairer border controls.’ Yet UK law enforcement agencies now have fewer tools at their disposal as a result of the TCA.

Most significantly, UK law enforcement will no longer have real-time access to the Schengen Information System, which they previously used around 600 million times a year, including to alert other EU agencies about UK arrest warrants.

UK agencies will also lose access to some other EU databases and face more cumbersome arrangements for exchanging information. They have also had to delete many existing alerts relating to European criminals derived from the database.

The UK will now have to rely on the Interpol database, which is used less systematically by many EU countries, for issuing international arrest warrants. The TCA includes an agreement on extradition, but this does not replicate the arrangements of the European Arrest Warrant, although it is better than some had feared.

Several member states will no longer extradite their own citizens to the UK, or will only do so under certain conditions, such as allowing them to serve their sentence in their home country. An offence must also ordinarily exist in both jurisdictions for extradition to take place.

Overall, the UK has more control over its immigration rules now that is outside the EU to determine who can legally live, work and study here.

However, UK law enforcement agencies have less information – and face more cumbersome procedures to access what information is available – and reduced cooperation with EU counterparts to be able to identify, track, arrest and prosecute criminals both across borders and within the UK.

Moreover, the level of access that has been agreed is also dependent on the UK continuing to abide by the European Convention on Human Rights and approval by the European Commission that the UK’s data protection regime is sufficient. A ruling by the Commission is expected by mid-2021.

Does the deal mean negotiations with the EU are over for good?

No.

As Professor Simon Usherwood has pointed out, UK-EU relations will be subject to ongoing negotiations in various areas for the foreseeable future.

This includes issues such as fisheries, which will be subject to annual negotiations between the UK and the EU over the total allowable catch in each other’s waters. The fisheries part of the agreement will also be revisited in 2030.

The TCA established 19 sub-committees and four working groups as part of the Partnership Council to manage different aspects of the agreement in future, in addition to the  committee structure already established as part of the Withdrawal Agreement.

There are also various review dates in the TCA at which the UK and the EU could decide to revisit some aspects of the agreement. Disputes will first come up through the committee system but can ultimately trigger the relevant dispute resolution process.

The big negotiation is over, but the UK and the EU will be talking to each other for years to come.

How much flexibility does the UK have to diverge from EU rules?

The agreement asserts the sovereignty of both parties and the UK has complete freedom to diverge from EU rules, which was a key UK demand.

However, that divergence may come at a price, as the agreement contains mechanisms that allow either side to take counter-measures if such divergence leads to material distortions in the trading relationship.

How high that bar is set depends on the specific area of divergence and will ultimately depend on decisions by the independent oversight mechanisms that the agreement establishes.

How will parliament oversee the implementation of the agreement?

The Future Relationship with the EU Committee in the House of Commons was disbanded on 16 January 2021, less than three weeks after the TCA was ratified. The Committee had requested an extension to its term to allow for a six-month inquiry into the implementation of the agreement. However, the government refused and the committee’s work has now ended.

Brexit deal

Other parliamentary committees could conceivably scrutinise the agreement according to their different remits. No specific plans have yet been set out as to how the House of Commons in particular will be able to scrutinise the implementation of the TCA.

The European Scrutiny Committee and European Statutory Instruments Committee will continue, but their precise role in relation to the agreement is unclear. The Northern Ireland Affairs Committee will also play an important role in scrutinising the implementation of the Northern Ireland protocol in the Withdrawal Agreement.

Other committees will also likely oversee different aspects of the TCA, such as the Home Affairs Committee in relation to the police cooperation arrangements.

There will continue to be several EU scrutiny committees in the House of Lords, which the government does not have the power to close down.

By Matt Bevington, public policy and foreign affairs analyst, UK in a Changing Europe.

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