05 January 2021
On 24 December 2020, with a certain political theatricality, agreement on a UK-EU Trade and Co-operation (the “TCA”) was announced. In the opening paragraph of his foreword to the Summary Explainer of the TCA (the “Summary Explainer”), issued by the UK government on 27 December 2020, the Prime Minister, Mr Johnson, confirmed:
“This Agreement with the European Union is designed to honour the instruction of the British people – expressed in the referendum of 2016 and the general election last year – to take back control of our laws, borders, money, trade and fisheries. It changes the basis of our relationship with our European neighbours from EU law to free trade and friendly cooperation”.
That summary is intended to clarify, in political terms, that by agreeing the TCA the UK Government carried into effect what it was mandated to do by the British people.
Positive Statements and Normative Statements
The passage quoted above can be viewed simply as a general introductory statement but, given its importance, it may be subject to further analysis. Many readers will recall that a distinction is drawn in economics between positive and normative statements. Positive statements are those that are fact-based and objective, so that they can be proved or disproved against evidence. (‘It’s raining outside’ is a ‘positive’ statement!) Normative statements, on the other hand, are value judgments based on opinion, as such they are inherently subjective and are not capable of proof. (‘It will be better to keep inflation below 3% next year’, is a normative statement.) ‘Positive’ and ‘Normative’ are used with these latter meanings below.
Take back control of:
Laws – general dispute resolution process
The TCA does not mention the Court of Justice of the European Union (“CJEU”). Disputes will initially be subject to a process of consultation between the parties, followed by independent arbitration if there is still disagreement. In those narrow terms therefore a Positive statement. Whether the replacement of a judicial system for dispute resolution, with a consultative system backed by arbitration will prove to be as effective, timely and less costly remains to be seen.
Free movement of persons from the EU is ending and the UK will implement a points-based system that will treat EU citizens in the same way as those from other parts of the world. Therefore, a Positive statement. The price is that equivalent rights in the EU notably mutual recognition of qualifications and freedom to provide services based on ‘home country’ recognition and passporting have been withdrawn.
EU Trade will be tariff free and subject to zero quotas. The UK is free to conclude trade deals on its own terms. In those terms therefore, a Positive statement (as defined). By comparison with the previous situation however trade between the EU and the UK will not be frictionless (not less red-tape but an increase in formalities and documents). The UK TCA does contain provisions (in Chapter 4: Technical barriers to trade of Title 1 on Trade in Goods) intended to prevent unnecessary technical barriers to trade.
Chapter 4 applies to the preparation, adoption and application of all standards, technical regulations and conformity assessment procedures, which may affect trade in goods. Even if there is no mutual recognition of conformity assessment (meaning that all products exported from the EU to the UK will have to comply with UK technical regulations and will be subject to any applicable regulatory compliance checks and controls – and vice-versa for UK exports to the EU) the TCA does include provisions permitting continued self-assesment and certification of conformity by the manufacturer where that procedure is currently available.
The UK leaves the Common Fisheries policy and becomes an independent coastal state. The arrangements are subject to a five-and-a-half-year transition regarding quota shares and access to territorial waters and will be subject to annual re-negotiation thereafter. Therefore, a Normative statement.
The Withdrawal Agreement and TCA are concluded and there is a general sense of relief (from both sides) about that. It should enable both the UK and the EU to concentrate on their own priorities – in the UK’s case showing: “what Global Britain can do” (Summary Explainer, final paragraph). In the EU’s case six priorities including the ‘European Green Deal’ and ‘A Europe fit for the digital age’ (Political Guidelines for the European Commission 2019-2024). The two programmes will publicly coincide for the first time at the UN climate change conference COP26, postponed in April 2020 until November 2021, and due to be hosted by the UK in Glasgow.
As a ‘European Agreement’, the TCA does not require ratification by the twenty-seven member states’ national parliaments. However, the European Parliament needs to ratify the proposed TCA and it is scheduled to do so before 28 February. Ironically perhaps, in terms of sovereignty, the European Parliament, often accused by its detractors of not being fully representational, will therefore have a better opportunity to consider and debate the TCA than their colleagues in Westminster did.
With the arrangements below still to be implemented:
- The institutional arrangements to support the TCA (the Partnership Council, Trade Partnership Committee, Trade Specialised Committees (ten), Specialised Committees (eight), Working Groups (four) and the (potential) Parliamentary Partnership Assembly);
- The consent mechanism in the Ireland-Northern Ireland Protocol (“P-INI”) requires the UK to provide Northern Ireland with the opportunity to decide whether or not those provisions shall remain in place after four years but the Withdrawal Agreement does not say how;
- The interim provisions for continuing transmission of personal data to the United Kingdom until 1 May 2021 (which can be extended until 1 July) if there is no decision on the adequacy of the UK’s data-privacy regime by that date (TCA Final Provisions, Article FINPROV.10A);
Brexit is far from ‘Done’.
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In the medium term, and in-line with the Fixed-term Parliaments Act, the next United Kingdom general election is scheduled to be held on Thursday, 2 May 2024, expect some of the Brexit issues, including the P-INI, to re-surface around that time, if not before.
And finally, there is a five-year review mechanism (also in the TCA Final Provisions, Article FINPROV.3) under which the Parties are to jointly review the implementation of the TCA and its supplementing agreements five years after its entry into force.
Disclaimer: This general memorandum may not deal with every important topic or cover all important aspects of the subject matter. It is not intended, and should not be used, as a substitute for seeking appropriate legal advice on specific questions.