With the publication of both the EU and the UK‘s final negotiation directives earlier this week, we now have an opportunity to compare the two starting positions and move beyond the political rhetoric. While the level of detail is not great in these public documents and the mandates are certainly not without political and tactical posturing, they offer some fascinating insights into what is to come. The table below compares the language of the EU and the UK across various areas of the envisioned trade agreement, laying out some surprisingly coherent language as well as pointing to likely stumbling blocks. As these are initial positions, it should be clear that some of the more obvious disagreements represent bargaining chips that might later be withdrawn to secure agreement. Naturally, the table does not cover all aspects but focuses on parts where the language is different and/or tensions are visible.
General Aspects of the EU-UK Trade Agreement
| EU Mandate | UK Mandate | |
|---|---|---|
| Objective / Precedent | “an ambitious, wide-ranging and balanced economic partnership, insofar as there are sufficient guarantees for a level playing field so as to uphold corresponding high levels of protection over time” (para. 17) “respecting the integrity of the Union’s Single Market and of its Customs Union” (para. 17) | “This Agreement should be on the lines of the FTAs already agreed by the EU in recent years with Canada and with other friendly countries” (para. 6) “we will not agree to any obligations for our laws to be aligned with the EU’s, or for the EU’s institutions, including the Court of Justice, to have any jurisdiction in the UK” (para. 5) |
| Envisioned Timeline and Sequencing | “ensuring that those [envisioned] agreements apply, to the extent possible, as from the end of the transition period. … best endeavours to conclude and ratify their new fisheries agreement by 1 July 2020.” (para. 4) “The terms on access to waters and [fisheries] quota shares shall guide the conditions set out in regard of other aspects of the economic part of the envisaged partnership, in particular of [market] access conditions under the free trade area” (para. 90) | “The Government would hope that, by [the June high-level meeting] the broad outline of an agreement would be clear and be capable of being rapidly finalised by September. If that does not seem to be the case at the June meeting, the Government will need to decide whether the UK’s attention should move away from negotiations” (para. 9) |
| Transition Period | “transition period will end on 31 December 2020, unless the Joint Committee established by the Withdrawal Agreement adopts, before 1 July 2020, a single decision extending the transition period for up to 1 or 2 years” | “The Government will not extend the transition period” (para. 9) |
| Territorial Scope & Northern Ireland | “Any agreement between the Union and the United Kingdom negotiated on the basis of these negotiating directives should be without prejudice to the Protocol on Ireland/Northern Ireland …” (para 166) “Any agreement … negotiated on the basis of these negotiating directives will not include Gibraltar.” (para 167) | “The Government will act in these negotiations on behalf of all the territories for whose international relations the UK is responsible.” (para. 11) |
| Transparency | The Commission will inform the European Parliament in accordance with Article 218(10) TFEU. (para. 171, also 169) | “the Government intends to invite contributions about the economic implications of the future relationship from a wide range of stakeholders via a public consultation. That process will begin later this spring.” (para. 12) |
Trade in Goods and Rules of Origin
| EU Mandate | UK Mandate | |
|---|---|---|
| Market Access | “ensuring no tariffs, fees, charges having equivalent effect or quantitative restrictions across all sectors provided that a level playing field is ensured” (para. 20) | “ensure there are no tariffs, fees, charges and quantitative restrictions on trade in manufactured and agricultural goods” (part 1, para. 3) |
| Rules of Origin (incl. cumulation) | “appropriate rules of origin based on the standard preferential rules of origin of the Union” (para. 21) | “detailed product-specific rules of origin” which “should reflect the requirements of UK and EU industry” (part 1, para. 5) “provide for cumulation between the UK and the EU, allowing EU inputs and processing to be counted as UK input in UK products exported to the EU and vice versa. It would also be appropriate to include measures that support trade and integrated supply chains with partners with which both the UK and the EU have free trade agreements or other preferential trade arrangements (diagonal cumulation)” (part 1, para. 6) |
Technical Barriers to Trade
| EU Mandate | UK Mandate | |
| International Standards | “The TBT provisions should include a definition of international standards, based on the shared current practice of the two Parties, and should aim at promoting the use of relevant international standards” (para. 29) | “should encourage the use of relevant international standards and cooperation between standardising bodies” (part 1, para. 12) |
| Equivalence | “promote avoidance of unnecessary barriers to trade in goods and are compatible to the extent possible.” (para. 28) | “It should establish a framework for either party to request that the other consider its technical regulation to be equivalent to its own regulation.” (part 1, para. 11) |
| Dispute prevention | “should also establish a mechanism to address expeditiously any specific trade concern related to TBT measures and include provisions aiming to ensure the timely dissemination of information about applicable TBT measures to importers and exporters in both Parties.” (para. 29) | – |
| Testing, certification, conformity assessment | “streamlined testing and certification requirements through, for example, the application of a risk-based approach to conformity assessment” | Cross-cutting “Protocol on the mutual recognition of conformity assessment results” (part 1, para. 14) |
| Sectoral annexes | – | Annex on chemicals, medicinal products, motor vehicles and parts, and organic products in line with recent EU FTAs (CETA, EU-Japan, EU-Chile) (part 1, paras. 16-20) |
Sanitary and Phytosanitary Measures
| EU Mandate | UK Mandate | |
|---|---|---|
| Precautionary Principle | “should uphold the application of the precautionary principle in the Union as” (para. 30) | “The UK will maintain a robust SPS regime reflecting our existing high standards” (part 1, para. 21) “The Agreement should reflect SPS chapters in other EU preferential trade agreements, including preserving each party’s autonomy over their own SPS regimes.” (part 1, para. 22) |
| Equivalence | – | “should include an equivalence mechanism for SPS measures” (part 1, para. 24) |
| Dispute prevention | “the creation of a mechanism to address expeditiously specific trade concerns related to SPS measures or any relevant issues” (para. 30) | – |
Trade in Services (incl. temporary movement of persons and mutual recognition of professional qualifications)
| EU Mandate | UK Mandate | |
|---|---|---|
| Market access | “should aim to deliver a level of liberalisation in trade in services beyond the Parties’ WTO commitments and taking into account existing Union free trade agreements.” (para. 34) “substantial sectoral coverage, covering all modes of supply” (para. 35) | “should be based on recent EU FTAs, such as CETA and the EU-Japan EPA, and could draw on precedent from trade negotiations where the EU has made offers to other third-country partners” (part 1, para. 35) “should have substantial sectoral coverage and cover all four modes of supply” (part 1, para. 36) “baseline … should be both parties’ best offer to date” (part 1, para. 38) |
| National Treatment and MFN | Only National Treatment (para. 36) | Both (part 1, para. 37) |
| Sectoral Exemptions | Public services (para. 35) “Audiovisual services” (para. 18) | “The Agreement could promote trade in audio-visual services” (part 1, para. 52) |
| Temporal stay of natural persons | “should include provisions that would allow for the entry and temporary stay of natural persons for business purposes in defined areas” (para. 37) | “could build on the Mode 4 commitments in CETA and the EU-Japan EPA” (part 1, para. 43) “The provisions of the Agreement will be without prejudice to, and consistent with, the UK’s recently announced points-based immigration system.” (part 1, para. 45) |
| Professional qualifications | “include a framework for negotiations on the conditions for the competent domestic authorities to recognise professional qualifications” (para. 43) | “should provide a pathway for the mutual recognition of professional qualifications” (part 1, para. 48) “should explore how competent authorities could recognise applicants who demonstrate that they meet the host states’ standards.” (part 1, para. 49) |
| Financial services (The UK and the EU have committed to carrying out unilateral equivalence assessments for financial services, distinct from the trade agreement.) | “respecting Parties’ … ability to take equivalence decisions in their own interest. … The key instrument the Parties will use to regulate interactions between their financial systems will be their respective unilateral equivalence frameworks.” (para. 44) “Equivalence mechanisms and decisions remain defined and implemented on a unilateral basis by the European Union.” (para. 46) | “could include appropriate consultation and structured processes for the withdrawal of equivalence findings, to facilitate the enduring confidence which underpins trade in financial services” (part 1, para. 55) |
Digital trade
| EU Mandate | UK Mandate | |
|---|---|---|
| Data protection | “should affirm the Parties’ commitment to ensuring a high level of personal data protection, and fully respect the Union’s personal data protection rules, including the Union’s decision-making process as regards adequacy decisions.” (para. 13) | “To maintain the continued free flow of personal data from the EU to the UK, the UK will seek ‘adequacy decisions’ from the EU … before the end of the transition period” (part 3, para. 60) |
| Regulatory governance of digital trade | – | “This should lock in regulatory certainty, while preserving the UK’s regulatory autonomy.” (part 1, para 57) |
Level-playing Field Concerns and Trade Remedies
| EU Mandate | UK Mandate | |
|---|---|---|
| Level playing field concern and relevant benchmark | “partnership must ensure open and fair competition, encompassing robust commitments to ensure a level playing field.” “with Union standards as a reference point, in the areas of State aid, competition, state-owned enterprises, social and employment standards, environmental standards, climate change, relevant tax matters …” (para. 94) | No mention of term ‘level playing field’. |
| Subsidies | “should ensure the application of Union State aid rules to and in the United Kingdom.” “Disputes about the application of State aid rules in the United Kingdom should be subject to dispute settlement.” (para. 96) | “The UK will have its own regime of subsidy control. The Agreement should include reciprocal commitments to transparency. … include the right to request consultations on any subsidy” (part 1, para. 64) “should not be subject to the Agreement’s dispute resolution mechanism” (part 1, para. 65) |
| Competition Policy | “should provide that anticompetitive agreements, abuses of dominant position and concentrations of undertakings that threaten to distort competition are prohibited … should also commit to effective [domestic] enforcement” (para. 97) | “should commit the parties to maintain effective competition laws, covering …. This does not require legal or regulatory alignment.” (part 1, para. 66) “should not be subject to the Agreement’s dispute resolution” (part 1, para. 68) |
| State-owned enterprises | “should include provisions on state-owned enterprises, designated monopolies and enterprises granted special rights or privileges to ensure that they do not distort competition” (para. 98) | “should ensure that the UK and EU’s State Owned Enterprises operate in a fair and transparent manner and do not discriminate” (part 1, para. 69) |
| Carbon Pricing | “should ensure that the United Kingdom maintains a system of carbon pricing of at least the same effectiveness and scope as … the Union” (para. 106) | “In the context of our approach to carbon pricing, the UK would be open to considering a link between any future UK Emissions Trading System (ETS) and the EU ETS (as Switzerland has done with its ETS), if it suited both sides’ interests.” (part 2, para 14) |
| Trade Remedies | “should include provisions on antidumping, countervailing and safeguard measures” (para. 23) | “should ensure that the parties follow appropriate procedures for conducting fair and transparent anti-dumping and countervailing investigations” (part 1, para. 9) |
| Agricultural Safeguards | – | “ensure that Special Agricultural Safeguards are not applied” (part 1, para. 3) |
| Dispute settlement | “It should include for each of those areas adequate mechanisms to ensure effective implementation domestically, enforcement and dispute settlement, including appropriate remedies. The Union should also have the possibility to apply autonomous, including interim, measures to react quickly to disruptions of the equal conditions of competition in relevant areas, with Union standards as a reference point.” (para. 94) | – |
Labour and Environment (and sustainable development)
| EU Mandate | UK Mandate | |
|---|---|---|
| Labour Provisions | “should ensure that the level of labour and social protection provided by laws, regulations and practices is not reduced below the level provided by the common standards applicable within the Union and the United Kingdom at the end of the transition period in relation to at least the following areas: …” (para. 101) | “should include reciprocal commitments not to weaken or reduce the level of protection afforded by labour laws and standards” (part 1, para. 75) “should not be subject to the Agreement’s dispute resolution mechanism” (part 1, para. 76) |
| Environment | “should ensure that the common level of environmental protection provided by laws, regulations and practices is not reduced below the level provided by the common standards applicable within the Union and the United Kingdom at the end of the transition period in relation to at least the following areas: … health and product sanitary quality in the agricultural and food sector …. The envisaged partnership should lay down minimum commitments” (para. 103) | “should include reciprocal commitments not to weaken or reduce the level of protection afforded by environmental laws” (part 1, para.77) “should not be subject to the Agreement’s dispute resolution mechanism” (part 1, para. 78) |
| Ratchet Clause | “where the Parties increase their level of environmental, social and labour and climate protection beyond the commitments in paragraphs 101, 103 and 105 to 107, the envisaged partnership should prevent them from lowering those additional levels in order to encourage trade and investment.” (para. 110) | “the Agreement should recognise the right of each party to set its environmental priorities and adopt or modify its environmental laws” (part 1, para. 75 for labour + 77) |
| Sustainable Development | paras. 109-113 | part 1, para.74 |
Intellectual Property
| EU Mandate | UK Mandate | |
|---|---|---|
| Ambition | “should preserve the Parties’ current high levels of protection of intellectual property” (para. 51) | “secures mutual assurances to provide high standards of protection for IP rights” (part 1, para. 71) |
| Geographical Indications (GIs) | “The envisaged partnership should confirm the protection of existing geographical indications as provided for in the Withdrawal Agreement and establish a mechanism for the protection of future geographical indications ensuring the same level of protection as that provided for by the Withdrawal Agreement.” para. (51) | “There are different ways of proceeding on Geographical Indications (GIs) and the UK will keep its approach under review as negotiations with the EU and other trading partners progress. Any agreement on GIs must respect the rights of both parties to set their own rules on GIs and the future directions of their respective schemes.” (part 1, para. 72) |
Governance of the agreement and dispute resolution mechanism
| EU Mandate | UK Mandate | |
|---|---|---|
| Governing Body | An overarching governing body “covering all areas of economic and security cooperation, and, as appropriate, agreements and arrangements supplementing the envisaged partnership.” (para. 147) | Trade agreement “should include provisions for governance arrangements that are appropriate to a relationship of sovereign equals, drawn from existing Free Trade Agreements, such as those the EU has with Japan and Canada. These should be based on a Joint Committee” (part 1, para. 83) |
| Dispute resolution and the Interpretation of Union law | “The governing body may, where applicable, agree to refer the dispute to an independent arbitration panel … The decisions of the independent arbitration panel should be binding on the Parties.” (para. 159) “Should a dispute raise a question of interpretation of Union law, which may also be indicated by either Party, the arbitration panel should refer the question to the CJEU as the sole arbiter of Union law, for a binding ruling.” (para. 160) | “The arrangements will reflect the regulatory and judicial autonomy of the UK and accordingly there will be no role for the Court of Justice of the European Union in the dispute resolution mechanism.” (part 1, para. 83) |
| Remedies | “financial compensation or take proportionate and temporary measures, including suspension of its obligations within the scope of the envisaged partnership as well as any supplementing agreements.” (para. 161) |
Other
| EU Mandate | UK Mandate | |
|---|---|---|
| Cultural Objects | “The Parties should, consistently with Union rules, address issues relating to the return or restitution of unlawfully removed cultural objects to their countries of origin.” (para. 33) | – |
More areas:
- Public Procurement
- Fisheries
- Customs Cooperation and Trade Facilitation
- International Road Transport
- Taxation
- Customs Cooperation and Trade Facilitation
Fabian Bohnenberger 