Latest news, UK-EU negotiations

London and Brussels seek ‘step-by-step’ TCA improvements  

The United Kingdom is continuing to press for improvements to its trade relationship with the European Union – its closest neighbour and most important trading partner. 

There is limited scope for the kinds of big changes that many British businesses would like to see given that UK re-integration with the EU single market is off the table – and will remain so for the foreseeable future. 

Some smaller, incremental changes have already been achieved under the radar of political controversy – and others look set to follow. 

Since January 2021, their trade relationship has been governed primarily by the EU-UK trade and cooperation agreement.  

Hastily negotiated during the course of 2020 the TCA is widely considered to be relatively ‘thin’, especially considering how closely integrated the UK and EU economies are.  

The TCA created an ‘eco-system’ of committees devoted to overseeing the functioning of the agreement and where some of the lacunae created by the agreement can be addressed. 

There are no fewer than 18 specialised committees of this type operating under the auspices of the TCA – mostly with minimal publicity. 

Ten are designated as ‘trade specialised committees’ – or TSCs – covering issues which typically feature in most free trade agreements. 

They cover goods, customs cooperation and rules of origin, SPS issues, technical barriers to trade, services and investment, intellectual property, public procurement, regulatory cooperation, VAT cooperation and the portentously named committee on the ‘level playing field for open and fair competition and sustainable development’. 

Eight further committees cover broader topics which are specific to the TCA, such as energy, road transport, aviation safety and fisheries. 

Improvements not necessary contingent on treaty change 

Experts point out that treaty adjustments are not always necessary to improve the bilateral relationship. 

In June the shallow relationship between London and Brussels was booted with the signing of a memorandum of understanding which created “an ongoing forum for the UK and the EU to discuss voluntary regulatory cooperation on financial services issues”. 

London rejoined the Horizon programme for European cooperation on science and research – albeit only after a lengthy squabble over the size of the UK financial contribution. 

“There is a huge amount that you can do without changing the TCA at all,” said Peter Holmes, Emeritus Reader in Economics at the University of Sussex. 

“In any cases where the TCA already makes provision for adjustments via the partnership council [the committee set up to oversee the agreement], these changes only need to be approved by EU member state officials in the relevant specialised committees.”  

“But any changes to the TCA itself would have to be approved by member state governments, which is a much higher bar to clear.” 

In-built deadlines within the TCA 

A number of elements within the agreement have their own implicit or explicit deadlines for review – these are under review by the relevant committees. 

The expiry of a bilateral agreement on mutual acceptance of organic food certifications, scheduled for 31 December 2023, is one example. Observers expect a deal to be announced soon to extend this deadline.  

There is also high-profile controversy over whether to delay the next phase of the agreed schedule of changes for rules of origin for electric car batteries. 

Producers on both sides have been lobbying for the current looser rules on qualifying content to be extended beyond the end-2023 deadline. Both the European Parliament and UK government are supportive of a delay.  

The commission is more reluctant to act as it would mean amending part of the TCA. 

A recent meeting of the TSC on rules of origin featured a discussion on the “definition of cathode active materials within the product specific rules on batteries”.  

This hints at the commission’s preferred solution to the problem – a technical redefinition to make it easier for carmakers and battery suppliers to comply with the agreed percentages for qualifying content. 

A solution to this dilemma is not expected until close to the year-end. 

Continuing arguments over SPS trade barriers  

Another key body in the ongoing EU-UK trade dialogue is the TSC on sanitary and phytosanitary measures. 

The UK Labour party which is currently set to form the next government, has made much of its desire to deliver ‘improvements’ in the existing SPS agreement, with a bilateral veterinary agreement as a longer-term aim. 

In the meantime, discussions at committee level continue to revolve around less headline-grabbing issues such as trade in seed potatoes and live bivalve molluscs.  

The EU is still banning imports of seed potatoes from Great Britain – although it has now conceded that these products may be sold in Northern Ireland.  

Brussels is only allowing live bivalve molluscs to be imported from ‘Class A’ waters.  

This is a classification which excludes much of the UK’s coastal waters – although northern Scotland, where much of the UK’s exported seafood originates, does in have Class A status. 

London claims that these bans are disproportionate and not based on a proper risk assessment.  

The commission maintains that it has not changed its rules in this area and that the UK’s loss of market access is an automatic consequence of leaving the single market. 

UK de-regulatory initiative sparks data adequacy fears 

Brussels’ recurring concern is the powers that London has given itself to revoke items of legacy EU law under the retained EU law act which was passed by the UK parliament earlier this year. 

The commission is especially vigilant for future changes to the UK’s data protection regime. A bill is currently passing through the House of Commons which would replace the EU’s GDPR system with a slightly less onerous scheme. 

Any significant weakening of key data privacy provisions may lead to a revocation of the EU’s data ‘adequacy’ determination for the UK which expires in June 2025 – although London insists that there should be no cause for EU-UK data flows to be disrupted. 

‘Atmospherics’ of EU-UK relationship are key 

More broadly, the key to any more substantial change in the EU-UK trade relationship is seen as lying with the levels of trust between the two sides. 

This is something which was in short supply during the turbulent early years of the TCA’s existence under Boris Johnson’s premiership, but which has been slowly rebuilt over the past 12 months. 

The fruits of that new relationship were seen most clearly in the ‘Windsor framework’ agreement, reached in February this year, which has removed much of the bureaucracy from movements of goods from Great Britain to Northern Ireland. 

“What is key is atmospherics: ‘good faith, trust being restored, which basically boils down to implementation of what has been agreed,” said one senior commission official.  

“As long as implementation of past agreement is there by the UK, the EU is willing to consider improvements.” 

The official noted that a step-by-step approach to TCA adjustment was most probable, because the UK was unlikely to support any improvement to the TCA that would result in a “high regulatory alignment model”. 

“The bottom line is that step-by-step improvements are taking place, and will continue if UK politics allows it.” 

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