A new era: Examining the EU-UK Trade and Cooperation Agreement

On 1 January 2021, the EU-UK Trade and Cooperation Agreement (TCA) entered into force.

Businesses engaged in EU-UK cross-border trade face a range of new requirements, and potential obstacles to exporting and importing manufactured goods and supplying services. The extent of the operational challenges for business will become clearer as new restrictions are being rolled out, but the outline is already in focus.

Crucially, there is no phase-in or grace period. Businesses need to understand the new trading relationship and implement any changes necessary to meet the new requirements and continue to trade effectively across the Channel.

This is not business as usual – far from it. Changes include new customs documentation and formalities, border checks, immigration changes, and reduced services market access.

ZERO TARIFFS
The agreement provides for tariff-free, quota-free access for products traded between the UK and EU as long as exporters can meet ‘rules of origin’ requirements. Preferential treatment will not be granted unless businesses prove that their products qualify.

CUSTOMS PROCEDURES
Businesses need to comply with new customs procedures and formalities including risk-based checks. While administrative simplification and flexibilities are envisaged, exact details have yet to be confirmed. In the UK, requirements will be phased in over the first six months of 2021. In any case, businesses face significant new customs-related risk.

TECHNICAL BARRIERS TO TRADE
Sectoral annexes have been agreed for medical products, automobiles, chemical products, organic products, and wine. These address specific non-tariff barriers, and some provide for joint collaboration and mutual recognition.

SERVICES
The Agreement contains limited provisions on services. These include principles, e.g. on local presence and national treatment, to prevent discrimination against service suppliers from the other party. However, exemptions and a patchwork of national rules, together with the continued uncertainty surrounding EU ‘equivalence’ decisions on financial services, entails significant new obstacles for UK exporters in particular.

GOVERNMENT PROCUREMENT
The UK and EU agreed to continue to allow access for their respective businesses to bid for each other’s government procurement contracts, going beyond the obligations set out in the WTO Government Procurement Agreement.

MOBILITY
Freedom of movement between the EU and the UK has come to an end, and the UK has introduced a new ‘points-based’ immigration system. Arrangements have been made to facilitate short-term business trips and temporary secondments of highly-skilled employees. These provisions only cover specific sectors, activities, and categories of personnel, however. Exact rules and requirements vary between EU member states.

DATA TRANSFERS
A temporary arrangement of four months (extendable to six months) has been put in place that allows transmissions of personal data to continue unimpeded pending an EU decision on the adequacy of the UK data protection regime.

AIR TRANSPORT
EU and UK carriers can continue to perform unlimited carriage of passengers and cargo between points in the EU and points in the UK. UK airlines are no longer considered as EU carriers and have lost traffic rights in the EU, however. With regards to aviation safety, both sides recognise the validity of each other’s safety certificates and licenses.

ROAD HAULAGE
Hauliers can continue to operate between the UK and EU, and to transit through UK or EU territory provided they meet agreed standards on safety and working conditions.

EU PROGRAMMES
The UK continues to have access to a number of EU funding programmes including: Horizon Europe, the Euratom Research and Training Programme, the fusion test facility ITER, Copernicus, and access to the EU’s Satellite Surveillance & Tracking (SST) services. However, this does not include the Erasmus student programme.