EU-UK flags cooperation

On 8 January 2021, Lord True, Minister of State at the Cabinet Office, is due to move that “this House takes note of the Trade and Cooperation Agreement reached between the United Kingdom and the European Union”. This article briefly outlines key aspects of the TCA and provides links to further material summarising its provisions. It also sets out how the parties are currently provisionally applying the TCA, what else needs to happen before it can be ratified by both sides and formally enter into force, and what parliamentary scrutiny there has been.

What does the agreement cover?

The UK-EU Trade and Cooperation Agreement (the TCA) consists of seven parts, a number of annexes and three protocols. It provides for a new trading relationship between the UK and the EU now that the transition period provided for by the withdrawal agreement has ended. It also includes articles governing cooperation in areas outside of trade such as law enforcement and social security coordination. The annexes to the TCA also include joint declarations concerning the principality of Andorra and the republic of San Marino. The UK and the EU made several other declarations alongside the agreement, for example a joint declaration on financial services regulatory cooperation between the EU and the UK.

Alongside the TCA, the UK also reached agreement with the European Atomic Energy Community on nuclear cooperation and with the EU on security procedures for exchanging and protecting classified information. Separately, on 31 December 2020, the UK announced it had reached agreement on a political framework with Spain to form the basis of a treaty between the UK and the EU concerning Gibraltar.

Trade and Cooperation Agreement: Key aspects

The TCA is a complex and extensive agreement. Key themes and provisions include:

  • Tariff-free and quota-free trade in goods: The TCA is the first EU trade agreement with a third country to provide for tariff-free and quota-free trade in goods. Provisions are made for rules of origin which must be met for goods to qualify for preferential trade terms under the agreement. The agreement provides for ‘bilateral cumulation’. This allows for “EU inputs and processing to be counted as UK input in UK products exported to the EU and vice versa”.
  • Services: The TCA includes provisions related to services. This includes non-discrimination obligations to ensure “suppliers or investors from the EU will be treated no less favourably than UK operators in the UK, and vice-versa” but UK service suppliers will no longer benefit from the ‘‘‘country-of-origin’ principle, mutual recognition or ‘passporting”.
  • Fisheries: The UK has left the Common Fisheries Policy. The TCA provides a framework for the future relationship between the UK and the EU on fisheries. The TCA provides for an increase in quota for UK fishers equal to 25% of the value of the EU catch in UK waters. New quota arrangements will be phased in over a five-year period to enable fleets to adjust. Access to waters will be covered by an ‘adjustment period’ which will “provide stable access for 5 1⁄2 years”. After this period, annual consultations will be held “to establish the level and conditions of reciprocal access to each party’s exclusive economic zones and territorial waters”.
  • Transport: The TCA includes provisions for quota-free point-to-point access for hauliers transporting goods by road. This includes movements within each party’s territories but limits would be placed on the number of permitted movements. UK airlines will be able to continue to fly to destinations in the EU but would be restricted from transporting passengers or cargo between two points in the EU, and from “perform[ing] onwards carriage services between the UK and two other member states (e.g. Manchester-Munich-Warsaw)”.
  • Law enforcement cooperation: The TCA includes provisions for a new relationship between the UK and the EU on law enforcement and judicial cooperation. It allows the UK to maintain different levels of access to certain EU databases, for example DNA and fingerprint data can continue to be exchanged through the Prüm system subject to restrictions and preconditions. As a third country, the UK will lose access to the Schengen Information System (SIS) and will not be a member of Europol. However, the TCA does enable UK liaison officers to be present in Europol’s headquarters to facilitate cross-border cooperation. The UK’s access to the European Arrest Warrant is replaced under the TCA by extradition arrangements “akin to the EU’s Surrender Agreement with Norway and Iceland”.
  • Participation in EU programmes: The UK will continue to participate in certain EU programmes including Horizon Europe, the Euratom Research and Training programme, the International Thermonuclear Experimental Reactor (ITER) programme, and Copernicus (an Earth-monitoring satellite system). The UK will not be participating in Erasmus. Instead the Government has stated it will establish its own scheme named after Alan Turing.
  • Governance structures: The TCA creates a number of governance structures. The agreement will be overseen and managed by a joint body called the Partnership Council assisted by specialised committees and in some areas by technical working groups. Decisions by the Partnership Council would be by mutual consent of the parties.
  • Level-playing field: The agreement includes certain ‘level-playing field’ provisions to prevent distortions to trade and investment, for example, through subsidies or reductions in labour or environmental standards. Where a party believes that the other has taken action that could distort trade and investment they may be able to take ‘rebalancing measures’ subject to certain consultation and arbitration procedures. These measures could include the imposition of tariffs, for example.
  • Reviews: The TCA includes provisions for a review every five years. Either party may decide to terminate the agreement with 12 months’ notice. Certain areas of the TCA have separate termination clauses “meaning that either Party can decide to cease cooperation in these areas without the whole agreement being terminated”.

The UK Government and the European Commission have published documents which provide further detailed summary of the TCA:

Summaries have also been produced by the House of Commons Library and the Institute for Government:

Implementation

The UK and the EU have agreed to apply the TCA provisionally from 1 January 2021. This is set out in article FINPROV 11(2) of the TCA. Treaties can be provisionally applied if the treaty itself allows for this or if the negotiating states have agreed to provisional application. The International Law Commission defines provisional application as “a mechanism available to states and international organisations to give immediate effect to all or some provisions of a treaty prior to the completion of all internal and international requirements for its entry into force”.

The TCA specifies that provisional application will end on the earlier of the following dates:

  • 28 February 2021 or another date as decided by the Partnership Council, the joint UK-EU body established to oversee the TCA; or
  • The date on which the TCA enters into force. This would be the first day of the month following the month in which both sides have notified each other they have completed their respective internal requirements and procedures for establishing their consent to be bound.

On the UK side, Parliament passed the European Union (Future Relationship) Act 2020 in one day on 30 December 2020. No amendments were made to the bill as it went through Parliament. The act allows for the TCA and the other two agreements to be implemented in domestic law. Legislation was required because the UK is a dualist state. That means international treaties do not automatically become part of domestic law. UK courts have no power to enforce treaty rights and obligations unless legislation is passed to implement the relevant treaty provisions into domestic law. The explanatory notes to the bill explained how implementation in domestic law will work:

This is primarily done by way of detailed, specific provisions and amendments to existing legislation to meet the UK’s commitments under the agreements. The bill also includes a general provision requiring existing domestic law to be modified to give effect to the agreements, but only so far as necessary to implement the agreements. The bill also provides a delegated power to be used to make further provision to give effect to the agreements. In the event that the agreements are not ratified and provisional application comes to an end, the bill enables the termination or suspension of domestic legal provisions that give effect to the agreements.

The Government has explained that, because of the UK’s dualist nature, this legislation had to be passed to enable provisional application of the TCA in the UK. Passing the act was also a “necessary precondition” for the UK to be able to ratify the TCA and for it to enter fully into force.

Usually, the requirements of the Constitutional Reform and Governance Act 2010 (CRAG) must be fulfilled before the UK can ratify an international agreement. This involves laying a treaty before Parliament for 21 sitting days without either House resolving it should not be ratified. However, section 36 of the European Union (Future Relationship) Act 2020 says that the CRAG requirements do not apply to the TCA and the other two agreements.

The EU still has some procedures to complete before it can ratify the TCA and it can formally enter into force. The European Parliament needs to give its consent to the deal before it can be ratified. Once that has happened, the Council of the European Union would need to adopt a formal decision on the conclusion of the TCA. The European Commission proposed provisional application until 28 February 2021 to ensure that the “late timing” of the negotiations being finalised would “not jeopardise the European Parliament’s democratic right of scrutiny”.

However, the European Parliament has proposed extending the provisional application period to allow it to hold its consent vote during its March plenary session. Plenary sessions are scheduled for 8 to 11 and 24 to 25 March 2021. Prior to the vote, the European Parliament’s committees on Foreign Affairs and International Trade will scrutinise the agreement.

Parliamentary scrutiny

Unlike the European Parliament, there is no requirement for the UK Parliament to hold a consent vote on the TCA. The main role for the UK Parliament in the ratification process was passing the European Union (Future Relationship) Act 2020 (the 2020 act). This is explored in more detail in the House of Lords Library article on ‘Ratifying a deal with the EU: Role of the House of Lords’.

Parliamentary approval may be required if the Government uses the regulation-making powers in the act to make statutory instruments to implement aspects of the TCA. The Government’s delegated powers memorandum sets out the powers conferred in the act and which parliamentary procedure applies. Affirmative instruments cannot come into force unless they are approved by both Houses (or by the House of Commons alone if the instrument relates only to financial matters). Negative instruments do not require parliamentary approval before coming into force. However, the act establishes a sifting procedure (similar to the one created by the European Union (Withdrawal Agreement) Act 2018) that enables each House to make a non-binding recommendation that negative instruments made under certain powers in the 2020 act should be upgraded to the affirmative procedure.

The House of Commons Future Relationship with the European Union Committee published a report on the TCA on 30 December 2020. The committee welcomed the fact the UK and the EU had managed to reach agreement, arguing that “having an agreed deal in place will make it much easier to build the kind of relationship the UK and the EU will need, in the coming years”. The committee called on both sides to “move ahead swiftly with implementation, establishing the agreements’ institutional arrangements and reducing or eliminating any remaining areas of uncertainty, for example: data adequacy and equivalence for financial services”. The committee also urged the Government to communicate the terms of the deal and its implications quickly and clearly, to help businesses prepare in the “very short amount of time available”.

The committee expressed its regrets that “there is not enough time for our committee to scrutinise the deal more fully”. It said it would report again in January 2021 with more analysis once it had had time to take evidence. The committee judged it “a matter of deep concern” that the Government and the European Commission had left so little time for parliamentary scrutiny before provisional application of the TCA was due to start.

The House of Lords Constitution Committee published a report on the European Union (Future Relationship) Bill on 29 December 2020. It too was critical of the lack of opportunity for parliamentary scrutiny, describing it as “regrettable” that the bill was published less than 24 hours before it was due to be debated in Parliament. The committee disagreed with the Government’s assertion that the bill was not suitable for post-legislative scrutiny. The committee acknowledged that Parliament cannot amend the terms of the TCA, but argued that “the form in which it is given effect is of considerable significance and warrants careful scrutiny”. It recommended the House should undertake post-legislative scrutiny of the bill at the earliest opportunity. It also said it would report further on the constitutional implications of the bill after it had received royal assent.

An editorial update was made to this article on 6 January 2021.

Cover image by starline on freepik.