The authoritative source for independent research on UK-EU relations

12 Jan 2021

Relationship with the EU

As the EU and the UK finally found a post-Brexit agreement (officially called Trade and Cooperation Agreement (TCA)) on Christmas eve, after a year of torturous negotiations, a significant chapter ended in Westminster and Brussels.

The agreement came provisionally into force and the European Parliament still needs to give its consent. A disruptive no-deal has thus been avoided and a working relationship with the UK’s closest economic partner has been maintained, notwithstanding the ‘hard’ nature of Johnson’s deal.

However, this is not the end of the road, and Britain’s future relationship with the EU is not entirely settled yet. Many rounds of negotiations between European and British officials – under less media attention but without disappearing entirely – will need to take place over the coming years.

Looking at the overarching governance structure, it is clear that the areas of trade and cooperation of this dynamic agreement will evolve over time.

A partnership council, compromising representatives of the EU and the UK, is responsible for the implementation of the agreement, assisted by specialised committees and working groups.

There are also numerous provisions referring to periodic reviews. New bilateral agreements that will be concluded between the UK and the EU could supplement the existing agreement and could therefore become part of the overall bilateral relations governed by this agreement.

Not only the EU itself, but also the EU member states, may conclude bilateral agreements with the UK in the areas of national and mixed competence, for instance in the area of aviation.

It is also worth focusing on the areas in which there is unsettled business and where further discussions need to take place to work things out.

As regards fisheries, the EU’s current fishing quota will gradually decrease by 25% of the value of its catch in UK waters over a five-and-a-half-year period.

After this adjustment period, further access will depend on annual negotiations. Given the political sensitivities at both sides of the channel, it is expected that negotiations will again be difficult.

Apart from the provisions covering data flows in specific areas of law enforcement and police cooperation (relating to DNA, fingerprints, passenger records) between European and British authorities, the TCA does not contain a section on the free flow of personal data, which is key for both digital economies.

A maximum six-month grace period is provided, allowing data flows to continue until the European Commission unilaterally grants an ‘adequacy’ decision.

This is not part of further negotiations between the EU and the UK, but this decision will definitively have a major impact on their relationship, and it will shape both economies.

The same goes for financial services, where we have to wait until the Memorandum of Understanding due in March this year to understand how regulatory cooperation will work.

Additionally, it still unclear if the European Commission will unilaterally grant equivalence to the UK in the 28 outstanding areas. The EU has the stronger hand and will only consider equivalence when it is in its own long-term interest.

Since the deal does little for British service providers in terms of access to the European market, the UK could technically push for greater liberalisation of trade in services over the coming years.

A big gap in the agreed future framework between the EU and the UK is foreign policy and external security, as Lord Frost’s Task Force Europe made clear from the beginning that the UK was not interested in setting up a joint framework with the EU. Instead, the UK would look to cooperate bilaterally with some member states.

At this moment, there is therefore no EU-UK framework in place to develop and coordinate joint responses to foreign policy challenges, for instance efforts needed for the imposition of sanctions on third country nationals or economies.

Any participation of the UK in the EU Common Foreign and Security Policy (CFSP) and the Common Security and Defence Policy (CSDP) will be subject to strict rules applicable to third countries.

The essential question hereby is how this will further evolve and whether both sides will be able to find an agreement on this crucial issue.

The European External Action Service has always been in favour of an agreement with the UK, one of the permanent members of the UN Security Council and a global military power.

Furthermore, the UK no longer participates in the EU’s Emissions Trading System (ETS) and so the UK will need to decide whether to link its own domestic carbon-pricing scheme with ETS. This would be subject to an agreement to be negotiated separately in the future.

We need to add all these issues to the ongoing discussions on the implementation of the Withdrawal Agreement, where we could think about some future decisions both on the functioning of the Northern Ireland Protocol and the position of Northern Ireland vis-à-vis the EU and the rest of the UK that will need to be taken.

The following conclusion could be drawn from this: the deal will function as a platform that both sides will use to develop their relationship over the coming years.

Building closer economic cooperation in the near future seems highly unlikely, not before the next elections in the UK in 2024. Boris Johnson’s intention to diverge will definitively put pressure on the strained relations, although we haven’t seen any concrete plans yet how the UK will use its acclaimed regulatory freedom.

Brexit will be an ongoing negotiation and will never disappear from the British political arena in the short-term. A first important political moment will be the upcoming Scottish elections, where Brexit will be an important part of the SNP campaign.

By Bryan Bille, former Belgian MFA official and former member of the Belgian Brexit Taskforce and Noé Morin, geopolitical consultant and founder of CRISICO.

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