How is the deal structured?
There are three agreements: the UK-EU trade and co-operation agreement; the UK-EU security of classified information agreement; and the UK-Euratom nuclear co-operation agreement. Most businesses will be concerned with the terms of the first of these, the UK-EU trade and cooperation agreement (Free Trade Agreement).
The Free Trade Agreement covers a range of subjects, including trade in goods and services, digital trade, intellectual property, transport, energy and fisheries. It is divided into seven parts with Annexes and includes several Protocols. The provisions relating to trade, transport and fisheries are contained in Part Two. The Free Trade Agreement does not contain the agreement over trade with Northern Ireland. This is set out in the Protocol forming part of the Withdrawal Agreement.
Trade in Goods
Trade in Goods is mostly dealt with in Part Two, Title I, Heading One of the Free Trade Agreement. Chapters 1 and 2 contain the commitment to tariff and quote free trade on goods originating in the UK or the EU. This is also where the controversial “rules of origin” provisions are found (see “Rules of Origin”), including product-specific rules (including some transitional arrangements) and “origin quotas” under which a specific quantity or a product may be imported using more liberal rules of origin and the documentation requirements for the rules of origin.
Chapter 1 sets out requirements on import and export licensing, with Chapters 3 and 4 addressing product regulations, standards and conformity assessment procedures (the “technical barriers to trade” or “TBT”) and the sanitary and phytosanitary measures (SPS) which relate to food safety, pest and disease control. As the UK and the EU will operate different schemes in relation to TBT and SPS going forward, the Free Trade Agreement contains provisions to try to mitigate the effects of this on future trade – such as providing for reviews and that TBTs to be based on international standards.
Chapter 5 contains provisions aiming to reduce barriers and facilitate trade in goods, such as providing for the mutual recognition of Authorised Economic Operator (AEO) schemes (Trusted Trader) and for co-operation at roll-on roll-off ports.
The fairly limited provisions relating to services are mainly found in Title II, Heading One. Chapters 2 and 3 include commitments on market access and Chapter 4 permits temporary visits for business purposes, contractual service suppliers and professionals amongst others. Chapter 5 includes reference to requirements such as licencing, professional qualifications and financial services (although notably with no declaration of equivalence either here or in the supplementary declaration on financial services regulatory co-operation).
As the EU has not yet adopted an adequacy decision in relation to the transfers of personal data from the EU to the UK, Part Seven makes interim arrangements to last 4 months (with a possible extension to six months) allowing transfers to happen in the same way they were before the end of the Transition Period.
Arrangements for review and potential termination of the Free Trade Agreement
Part Seven also provides that review should happened every 5 years and that the Free Trade Agreement can be terminated by either the UK or the EU on 12 months’ written notice.