The Trade and Cooperation Agreement (TCA), concluded on Christmas Eve 2020 between the EU and the UK, is a unique trade agreement in that its objective is divergence, instead of convergence. It represents the culmination, but by no means the end of four years of Brexit turmoil. To what extent such turmoil will continue to dominate EU-UK relations will partly depend on the extent to which Parties use the TCA as a floor or a ceiling.
To help comprehend the 1,400 page Agreement, five experts provided their guidance to the TCA in the Webinar ‘The UK & the EU Relationship: What Next?’ on January 27, 2021. This event was the first in a promising cooperation between the Jean Monnet Chair in EU Law, City, University of London and the Senior European Experts Group (SEE). The event was moderated by Sir Alan Dashwood, barrister and Professor Emeritus of European Law at University of Cambridge and Professor Emeritus of Law at City, University of London. This blog post revisits key points raised during the Webinar and summarizes its conclusions. Drawing on the expertise and experience of the experts, the blog post discusses five different aspects of the TCA: respectively, the legal aspects, trade and internal market regulation, agriculture and fisheries, the EU perspective and the political dimension.
The first speaker was Professor Panos Koutrakos, Jean Monnet Chair in EU law at City, University of London, who focused on the legal aspects. Overall, Professor Koutrakos remarks that the sheer speed at which the negotiations were concluded comes at a price. This results in several ironic contrasts. First, despite the emphasis on transparency and parliamentary scrutiny in the Brexit campaign, the UK Parliament had very limited time – one day – to approve the lengthy and complex Agreement. Second, by extension, the dense and distinctly technocratic institutional framework is ‘no ray of sunshine for open governance.’ The established Partnership Council holds wide powers, including the amendment of the Agreement itself, and its decisions are binding on the Parties and all bodies set up under the Agreement (including Dispute Settlement) and any supplementing agreements. Third, given the debate on UK membership of the European Convention of Human Rights (ECHR), it is interesting that denunciation of the ECHR and its Protocols can lead to fast-track termination of Part 3 of the TCA (Law Enforcement and Judicial Cooperation in Criminal Matters).
More specifically, Professor Koutrakos notes that the Agreement is aimed at separation, instead of rapprochement, and therefore unique amongst the EU’s Association Agreements. This ties in with the centrality of autonomy: Professor Koutrakos observes that the Agreement essentially is more about autonomy than the economy. Furthermore, he highlights that Brexit has happened, but is far from over. Many more negotiations and developments will follow: on the various supplementary arrangements envisaged, the five-year review point of the Agreement as a whole, several rebalancing provisions and minor to large gaps not covered. Finally, Professor Koutrakos points to the significant power of the notably complex and dense Dispute Settlement system: non-compliance with its decisions justifies retaliatory measures. The use thereof will depend on the overall development of the UK-EU relationship.
The second speaker was Anne Lambert, SEE member and former UK Deputy Permanent Representative to the EU, focusing on trade and regulation. Regarding trade in goods, Anne Lambert suspects some barriers will indeed fade with time as businesses adapt, but others will remain. The necessary changes will mean extra costs for businesses. Overall, she expects EU-UK trade to continue, but at a slower pace and higher cost. For example, in chemicals, the envisaged cost of the dual regulatory burden pursuant to the UK’s departure from the EU REACH registration system is £1 billion. Regarding trade in services, Anne Lambert emphasises how little services are covered by the TCA. This is remarkable given the UK’s trade surplus in services with the EU – as opposed to a trade deficit in goods. UK businesses now need licenses to perform services in all individual Member States in which they are active. For example, in civil aviation, EasyJet set up a subsidiary in 2017 to allow it to continue to fly to EU Member States and then onto third countries. Regarding the level playing field, Anne Lambert highlights that the 38 pages on standards in the TCA, complemented with extensive Dispute Settlement provisions, are unprecedented in an agreement like this. She attributes this to the EU’s fear that the UK would undercut standards pursuant to the “take back control” narrative. She concludes that the TCA envisages future development in the UK-EU relationship: whether that opportunity is taken is another question. Asked about similarity between the UK and Switzerland, Anne Lambert notes that a key difference is the Swiss intention to remain close to the EU internal market, currently absent in the UK. Professor Dashwood adds that the EU Court of Justice has characterized the bundle of EU-Switzerland Agreements as ‘tantamount’ to membership of the European Economic Area (EEA), which certainly cannot be said of the TCA.
The third speaker was Andy Lebrecht, SEE member and former UK Deputy Permanent Representative to the EU, focusing on agriculture and fisheries. Regarding agriculture, Andy Lebrecht points to the absence of the Common Agricultural Policy (CAP) from the Agreement. The UK will set up its own scheme of subsidies and, with ‘racing certainty,’ he expects this to be less generous than the CAP. Overall, Andy Lebrecht considers the absence of tariffs provided by the TCA a great relief for trade in agrigoods. However, significantly absent are any provisions on Sanitary and Phytosanitary Measures (SPS). Due to the high nature and rigorous policing of EU SPS standards, the UK agrigoods sector now faces the highest regulatory hurdle of all UK exports. The additional costs of bureaucracy and delay have already led to businesses suspending exports to the EU, including to Northern Ireland. Andy Lebrecht is sceptical of the temporary nature of such “teething problems”, noting many are simply the result of new rules.
Regarding fisheries, Andy Lebrecht explains that fisheries provisions would always very ‘directly, visibly and immediately’ impact the fishery sector. Both parties were adamant to avoid the political cost of such impact. The UK had insisted to omit fisheries from the TCA, leaving it free to dictate access to its waters under international law, potentially in separate agreements. Andy Lebrecht therefore considers the TCA a victory for the EU. The extensive coverage of fishing access and quotas are fixed, in theory, permanently. Because fisheries was one of the few sectors in which the EU was the demandeur and the UK government might have secured a more advantageous trade-off, he concluded that ‘the Government negotiated very badly in fisheries.’
The fourth speaker is Jackie Minor, SEE member and Former Director at the European Commission, focusing on the EU perspective. Jackie Minor recalls the EU strategy in the negotiations, which was staunchly set on negotiating Brexit first and the future relationship, in a single agreement, second. This was to the EU’s benefit, as it reduced the possibility for the UK to use the status of Northern Ireland as leverage in the negotiations on the future relationship. In addition, the EU – contrary to the UK – could draw on a wealth of recent trade negotiations. Jackie Minor also draws attention to the fact that solidarity and unity between EU Member States remained despite the UK’s assumptions and attempts to, among other things, circumvent Michel Barnier, the EU chief negotiator.
A central question to Jackie Minor is whether this agreement is a starting point or an end point. For example, without partly departing from the UK’s rejection of any alignment or some degree supervision by the ECJ, she does not envisage any UK participation in EU agencies. Although the administrative infrastructure offers ample opportunities for it to be a starting point, it remains to be seen whether the Parties will take advantage of these opportunities and how far the UK will seek to push its ‘new-found autonomy.’ When asked, Jackie Minor notes that the narrative of competition used by some members of the UK Government and press, for example in relation to vaccination, might well impact the speed at which crucial equivalence decisions on data protection and financial services might be issued by the EU. Finally, on the central issue of prospective divergence, she contemplates how the Parties will approach inevitable ambiguities. Interestingly, she remarks that the differences between the Parties might well lead to a healthy form of regulatory competition, in which both sides learn more from each other than might be expected.
The fifth and final speaker is Lord David Hannay, chair of the SEE and former UK Permanent Representative to the European Communities and to the United Nations, concluding on the political points of the TCA. In line with previous speakers, Lord Hannay remarks that the key question is whether the TCA will be treated as a floor for the future UK-EU relationship to be built and improved upon, or a ceiling that limits any future cooperation. Decisive moments will be the highly politically sensitive review of the Northern Ireland Protocol in four years, and that of the TCA as a whole in five years. The latter is likely to figure centrally in the next UK election. Lord Hannay furthermore highlights two remarkable omissions from the TCA. First, he considers the cessation of UK participation in the Erasmus scheme on student exchanges an ‘egregious error’ unlikely to be remedied by the proposed UK alternative. When asked, Lord Hannay, as well as Professor Koutrakos and Professor Dashwood, expressed skepticism on the prospect Scottish and Welsh initiatives to establish their own, separate access to Erasmus. Second, Lord Hannay regards the UK’s approach to foreign policy cooperation as an ‘either/or’ – either close bilateral ties with key Member States or structural cooperation with EU institutions – as a fundamental misunderstanding, since the UK will need both. Lord Hannay suspects both these omissions are likely to face continued scrutiny. Brexit will thus remain topical in UK politics. When asked, although Lord Hannay expresses pessimism on the EU-UK political relations in the long term – naming the row on the status of the EU Ambassador to the UK symptomatic of an ‘oddly aggressive’ state of mind within the UK Government – he is more optimistic on the long term. If there were a Government in place with a genuine intention to use the TCA as a ‘flaw’ to build up on, the infrastructure is in place for a further cooperation of the partnership, which is seconded by Anne Lambert with reference to more detailed market-related areas.
This point neatly ties into the overall conclusion of the event. As Professor Dashwood notes, all experts agree that whilst the TCA is a thin agreement, the prospects for deepening it are manifold. The TCA evidently presents a building block, rather than a comprehensive framework for the EU-UK relationship, and a pivotal, but by no means final point in its development. This development and the role of the Agreement therein will be up to the Parties: not only on regulatory divergence and their position in future negotiations, but also on day-to-day political relations. If the current controversy on the status of the EU Ambassador to the UKthe vaccine production and the role of the Northern Ireland Protocol therein are any indication, the EU-UK relationship will continue to raise political upheaval, pressing legal questions and wide societal concern.
This blog post was partly based on live tweets by the SEE. Do also consult the recording of the Webinar and the SEE Paper, providing further background to the Webinar with an excellent analysis of the TCA.
For more information about research related to Brexit and EU Law, visit the Institute for the Study of European Law, the Jean Monnet Chair in European Law and Jean Monnet Chair in Law and Transatlantic Relations.
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