On New Year’s Eve at 23:00 GMT, the UK completed its separation from the EU, left the Single European Market and Customs Union and became a “third country”. The EU-UK Trade and Cooperation Agreement (TCA) was concluded on 24 December and contains new rules for living, working and trading with the EU. From cars to chemicals and fish, the new treaty will govern £650bn worth of trade between UK and EU. The deal covers technical aspects of trade for key sectors, including autos, chemicals, pharmaceutical and professional services as well as a governance mechanism to resolve disputes that may arise between the two sides.
Some of the key points of the TCA include:
Trade:
Customs Declarations, VAT, Tariffs and Quotas
- Customs Declarations will be required for both export and import, both here in the UK and in the EU.
- At the very minimum a commercial invoice will be required with a Packing list for road freight. The Commercial invoice will be required with all the necessary customs data. Commodity code, Country of Origin values, Incoterms etc.
- Import VAT will apply and will be payable based on the rules of the member state in the EU.
- The agreement does not affect arrangements on trade between Great Britain and Northern Ireland which are covered under a separate protocol.
- There will be no tariffs on goods exported or imported between the UK and EU 27 but there are major caveats (see the details of the trade deal for these).
- NB: if you export/Import goods that are not originating in the UK/EU i.e. you import USA /Chinese/ products – add no value or undertake minimal processes – then export to the EU, these products will be subject to the MFN standard tariffs and duties may apply. This is the same for goods coming from the EU to the UK.
Conformity
- The agreement avoids technical barriers to trade with the EU on low risk products, more specifically information is provided on automotive products, wine, organics, pharmaceuticals and chemicals.
- All goods exported to the EU must meet their regulatory standard including food safety.
- Products of animal origin must carry veterinary certificates.
- Products that are required to display the CE mark must conform to EU standards.
- The UK will begin to introduce the new UKCA conformance Mark, but importers of CE marked goods from the EU will have 12 months to comply to the new requirements.
Travel:
UK nationals will need a visa for stays of longer than 90 days in the EU in a 180-day period. EU pet passports will no longer be valid. European Health Insurance Cards, (EHIC) cards will remain valid until they expire.
The UK is no longer subject to the ban on additional roaming charges, although both sides will encourage operators to have “transparent and reasonable rates” for roaming.
The deal allows flying rights between the EU and UK to continue but UK carriers will not be able to fly between two points within the EU. This was expected, and airlines on both sides have set up foreign subsidiaries to continue current routes, allowing easyJet, for example, to fly between France and Italy.
Food and Drink:
Stringent new checks on agri-food products will applied immediately. While food and farming businesses broadly welcomed the deal, they warned that leaving the Customs Union and Single Market could still disrupt the food supply chain.
Professional Services:
Professional services providers will lose their ability to automatically work in the EU – there is no pan-EU mutual recognition of professional qualifications. This means that professions from doctors and vets to engineers and architects must have their qualifications recognised in each EU member state where they want to work. There will, however, be provisions for short-term business trips and temporary secondments of highly skilled employees.
Financial Services:
The deal does not cover financial services access to EU markets, which is still to be determined by a separate process under which the bloc will either unilaterally grant “equivalence” to the UK and its regulated companies or leave firms to seek permissions from individual member states. The UK government did claim two “wins” for the City of London: preventing a measure that could have restricted EU firms from outsourcing lucrative work to the UK and excluding financial services from “cross retaliation” measures if other parts of the trade agreement were breached.
Fishing:
The UK could choose to ban EU fishing boats from 2026 but the EU would be allowed to introduce taxes on British fish in response to this. EU fishing fleets will have a five and a half-year transition period with guaranteed access to UK waters. Access will depend on annual negotiations
EU fishing rights in UK waters — currently worth about €650m per year — will be reduced by one quarter, with British quotas increased by a corresponding amount. The shift will boost UK boats’ current share of fishing rights in British waters from about a half to two-thirds.
Automotive:
The automotive industry warned that the deal would introduce “much more red tape and regulatory burden for the industry”. Cross-Channel trade in automotive parts accounts for almost €14bn.
The UK has already conceded that the EU would not agree to taking a more flexible approach when it came to assess whether UK cars manufactured with large amounts of non-UK components could qualify for zero-tariff access to the bloc under a trade deal. As a result, some cars may still incur tariffs on entering the EU. However, the UK government won concessions for batteries and electric vehicles that would ensure that British-made electric vehicles were at least eligible for preferential tariff rates in the immediate term.
Security and Data:
The trade agreement does not contain a section covering the flow of personal data between the UK and EU which will be concluded in a separate “adequacy” decision due in early 2021. But the trade deal does cover data flows in specific areas of law enforcement and police co-operation between the two sides. The agreement also provides a maximum six-month grace period to allow EU and UK businesses to continue data flows until the decision is granted.
The adequacy decision would mean that the EU effectively recognises UK data protection standards as equivalent to its own to allow for the free flow of personal information of EU and UK citizens that underpins the digital economy.
The UK will not be a member of the EU’s law enforcement agency, Europol, but it will have a presence at its headquarters. The UK’s arrangement with Europol will be like the one the US currently has.
UK police and intelligence agencies are to be isolated from the EU’s most sensitive real-time crime databases. British security services will still be able to obtain crucial air passenger data, criminal record information, and DNA, fingerprint and vehicle registration data.
Education:
The UK will no longer participate in the Erasmus exchange programme – an EU scheme that helps students’ study in other countries. Students at universities in Northern Ireland will continue to participate in Erasmus as part of an arrangement with the Irish government. Students that have already started courses in the EU will continue to receive support for fees.
Logistics and Supply Chain:
For British hauliers the deal contained mixed blessings. The two sides recognised the validity of each other’s licences and permits and included full transit rights, allowing drivers to cross multiple countries in order to drop a load. This will enable Irish lorries to use the UK as a “land bridge” to deliver goods into the EU. However, the agreement limits British truckers to a single drop-off and a single pick-up from inside an EU member state and two pick-ups and drop-offs when crossing EU member states.
Chemicals:
The chemicals industry is among the most exposed to costs of new trading arrangements, with products that enter many cross-border supply chains, from car paint to haircare products, food to pharmaceuticals. The “zero-tariff” element of the deal will save the industry up to £1bn in feared tariff costs, but concerns remain about UK plans to duplicate the EU’s Reach safety regime.
Pharmaceuticals:
A key pharma industry goal — that tests and inspections for medicines carried out on one side of the English Channel should be considered valid on the other — has been only partially achieved.
The agreement included “mutual recognition” clauses that should mean UK manufacturing facilities will “not need to undergo separate UK and EU inspections”. Initial indications are that the deal does not appear to embrace another key industry demand: mutual recognition of the safety and quality tests. This would mean presale safety tests carried out on medicines in the UK will now need to be duplicated in the EU, causing delays for patients and additional costs.
Manufacturing:
The UK manufacturing sector welcomed the fact tariffs had been avoided that risked wiping out profits in the sector but warned that companies still faced border delays and the loss of mutual conformity assessment. This could mean two lots of certification and testing to meet both EU and UK standards. A so-called ‘trusted trader scheme’ — where qualified companies can move through customs more quickly — has been agreed although companies said they would need to see details given the costs of participating in the system.
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