The Political Declaration as to the future relationship between the EU and the UK: a focus on trade

Posted in UK and EU legal framework WTO and international trade

The EU and the UK have agreed the wording of a Political Declaration as to the framework of a future trade deal between the UK and the EU. 

As set out previously, the draft Withdrawal Agreement, published on 14 November 2018, was accompanied by a 7-page Political Declaration, which provided only a basic and high level outline of intent. 

This has now been expanded to 26 pages and contains greater, although still limited, detail as to what the future trading relationship might look like. It remains, however, non-binding and will be subject to further negotiation.

The new document, speaks of an “an ambitious, broad, deep and flexible partnership across trade and economic cooperation, law enforcement and criminal justice, foreign policy, security and defence and wider areas of cooperation”. 

It also recognizes that while the new relationship will be based on a balance of rights and obligations which must respect the integrity of the Single Market and Customs Union and the indivisibility of the four freedoms, it will also respect the outcome of the 2016 referendum including “with regard to the development of its independent trade policy and the ending of free movement of people between the Union and the United Kingdom”. It is unclear how these apparently competing visions can be reconciled.

On services, there is little beyond what was contained in the initial 7-page document. The Declaration records an intention that the parties “conclude ambitious, comprehensive and balanced arrangements on trade in services”. In this regard, the parties “should aim at substantial sectoral coverage, covering all modes of supply and providing for the absence of substantially all discrimination in the covered sectors, with exceptions and limitations as appropriate”.

On trade, the Declaration provides that the parties “envisage having a trading relationship on goods that is as close as possible”.  This will take account of the fact that post Brexit, the parties “will form separate markets and distinct legal orders” – although the parties envisage “comprehensive arrangements that will create a free trade area, combining deep regulatory and customs cooperation, underpinned by provisions ensuring a level playing field for open and fair competition”.

Significantly, although the document is predicated on retaining close ties, there is no reference to the earlier ambition for ‘frictionless trade’. There is also no suggestion of a ‘common rulebook’.  Although the UK will ‘consider’ aligning with EU rules, this appears to be solely for the benefit avoiding ‘unnecessary barriers to trade’ and would seem to fall short of what had been envisaged by the Chequers Plan. The UK would also not be part of EU agencies such as: the European Medicines Agency, the European Chemicals Agency, and the European Aviation Safety Agency – although the parties will explore the possibility of co-operation with the UK in these areas.

Separately, it is of note that any future arrangements as to fishing will be concluded separately to trade: the Declaration commits the parties to establish a new fisheries agreement encompassing access to waters and quotas.

Finally in relation to customs, there is no resolution to the question of the UK being outside the Customs Union, while avoiding a hard border between Ireland and Northern Ireland.  However, there is a commitment to “build and improve on the single customs territory” provided for in the draft Withdrawal Agreement, obviating the need for checks on rules of origin.  Moreover, in language that will be welcomed by the UK Government, there is acceptance that use of “facilitative arrangements and technologies will also be considered in developing any alternative arrangements for ensuring the absence of a hard border on the island of Ireland on a permanent footing”. In addition, the parties declare that they intend to consider mutual recognition of trusted traders’ programmes, administrative cooperation in customs matters and mutual assistance.

Ultimately, the Declaration provides that the extent of the UK’s commitments on customs and regulatory cooperation, including with regard to alignment of rules, will be taken into account in the application of related checks: combined with the use of all available facilitative arrangements, this could lead to a spectrum of different outcomes.

Although there is little indication as to what future customs arrangements will look like, there is nevertheless a stated desire on both sides to explore innovative solutions as to how a breakthrough might be achieved.

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