EU-UK Trade Cooperation Agreement: Protecting European Interests, Ensuring Fair Competition, and Continued Cooperation in Areas of Mutual Interest

On January 1, 2021, the UK and the EU entered a new phase in their relationship. Brexit came into full effect, officially establishing the UK as a non-EU State. Consequently, the basis of the new relationship, have been summed up into one document: The EU-UK Trade and Cooperation Agreement. This agreement has already been ratified by the UK and is being provisionally applied from January 1, 2021. But what is it about?


One Agreement, Three Areas

With the intention of constructing a new long-term relationship between the UK and the EU, the Agreement is built around three main pillars (European Commission, 2020):

  • An economic and social partnership, established on The Free Trade Agreement;
  • A security partnership;
  • A commonly agreed framework of governance.

Leaving the security partnership aside, we can deduct several key points that any company wishing to operate in both the EU and the UK must consider.

The Free Trade Agreement in a Nutshell: The Same as Before, but not Quite

As the European Commission (2020) states, The Free Trade Agreement provides “zero tariffs and zero quotas” on any good, given that they comply with each party’s rules. In this regard, the EC (2020) has agreed with the UK to establish the much repeated “level playing field” in areas as varied as social and labor rights, tax transparency, etc. This has been done in order to reach the minimum possible level of disruption when it comes to the free movement of goods.

Nevertheless, companies wishing to operate in the UK and the EU markets will still have to comply with different requirements in each of them.

The Framework of Governance: A Structure of Understanding

This is related to the second main part of the Trade and Cooperation Agreement, which concerns the dispute settlement rules and mechanisms that will govern the EU-UK relationship from now on. In short, this aims to provide greater certainty to businesses and consumers operating in both the UK and the EU.

Additionally, the UK will continue to cooperate with EU Member States by participating in programs such as Horizon during the period 2021-2027.

What’s Missing?

It is worth mentioning that this Agreement does not cover important areas such as foreign policy, security and defense, as requested by the UK. Moreover, no direct references are made to regulating goods such as medical devices or cosmetics. For more information on the regulatory aspects of what changes the UK became a non-EU State, click here.


Key points

To sum up, from this Agreement we can draw the following main conclusions (European Commission, 2020):

  1. European Union’s freedoms of persons, services, capitals and goods (established in articles 32 TEU and 21, 26, 28-37 and 49-63 TFEU (European Union, 2012)) are jeopardized when dealing with UK elements. This includes the “country of origin principle” by which any product from the UK is automatically recognized in the EU, and vice versa. However, it is yet to be seen how this matter evolves in the future;
  2. The EU’s 4 freedoms (person, services, capitals and goods) have come to an end in the UK since January 1, 2021.
  3. Therefore, the trade of goods between the UK and the EU will be subject to custom controls and to the adherence to each party’s standards and regulations;
  4. There are different rules for Northern Ireland, as they will continue to be part of the EU’s single market for goods where EU custom rules will apply.

All in all, what is important to consider is that both the EU and the UK become two “distinct regulatory and legal spaces” (European Commission, 2020). Moreover, this regulatory difference between the EU and the UK can only be expected to increase. In this sense, we have addressed the UK´s future scenario regarding IP Rights, Cosmetic products and  Regulating medical devices, amongst other topics.


Pablo DE MINGO MONGE

22.01.2021

Regulatory Affairs Department


If you are interested in selling your goods in the EU and/or the UK and want to be updated of future changes in standards and regulations, do not hesitate to contact us, Obelis can help you.

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