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EU-Swiss trade relations and the institutional framework agreement

19-07-2021

On 26 May 2021, the Federal Council of Switzerland (Swiss executive authority) announced that the country will not formally sign the institutional framework agreement (IFA) agreed at political level with the European Union (EU) in 2018, thereby ending the negotiation process. The objective of the IFA was to create a horizontal governance framework that would have covered five major EU-Swiss trade-related bilateral agreements signed in 1999, part of the 'Bilaterals I' package. It also provided for ...

On 26 May 2021, the Federal Council of Switzerland (Swiss executive authority) announced that the country will not formally sign the institutional framework agreement (IFA) agreed at political level with the European Union (EU) in 2018, thereby ending the negotiation process. The objective of the IFA was to create a horizontal governance framework that would have covered five major EU-Swiss trade-related bilateral agreements signed in 1999, part of the 'Bilaterals I' package. It also provided for dynamic alignment of standards in the domains covered by the IFA, a dispute settlement mechanism with jurisdiction of the Court of Justice of the EU on EU law, and State aid rules. The EU considers that Switzerland does not respect all of its commitments in the existing agreements, which give the country access to parts of the EU's single market; it perceives the current situation as unbalanced, partly due to the absence of dispute settlement mechanisms in the existing agreements. In addition, the dynamic alignment and State aid rules envisaged in the IFA would have enhanced fair competition between EU and Swiss businesses ('level playing field'). Switzerland, although it aims to 'deepen' its relations with the EU by means of new sectoral agreements, is concerned by the potential application of the EU Citizens' Right Directive, as well as the potential future removal of the labour market exemptions provided by the IFA protocols. To a lesser extent, it is also concerned with the IFA's State aid rules. Switzerland consequently requested 'explicit clarification' from the EU on these points in 2019, then resumed talks in 2021. According to the European Commission and European Parliament, 'the door is always open', but new agreements are unlikely to be signed without a framework agreement. The Commission has also emphasised that the upgrading of existing agreements – necessary whenever new EU standards are adopted to maintain their applicability – will be assessed on a case-by-case basis to prevent unintended effects. Medical device equivalence, previously covered by provisions of the EU-Swiss Mutual Recognition Agreement, is the first no longer to be applied as a consequence of changes in EU standards.

EU-UK relations: Difficulties in implementing the Northern Ireland Protocol

09-07-2021

On 3 March 2021, the United Kingdom (UK) Secretary of State for Northern Ireland, Brandon Lewis, announced in a written statement to the UK Parliament, and without consulting the European Union (EU) in advance, that the grace period on border controls on a series of food and live products shipped from Great Britain to Northern Ireland would be extended. This meant that products of animal origin, composite products, food and feed of non-animal origin and plants and plant products could continue being ...

On 3 March 2021, the United Kingdom (UK) Secretary of State for Northern Ireland, Brandon Lewis, announced in a written statement to the UK Parliament, and without consulting the European Union (EU) in advance, that the grace period on border controls on a series of food and live products shipped from Great Britain to Northern Ireland would be extended. This meant that products of animal origin, composite products, food and feed of non-animal origin and plants and plant products could continue being shipped from Great Britain to Northern Ireland without the official certification, such as health and phytosanitary certificates, required by the Protocol on Ireland / Northern Ireland (the Protocol) of the Withdrawal Agreement (WA). In response to the UK's decision, the EU launched legal action against the UK for breaching the provisions of the Protocol, as well as the good faith obligation under the WA. According to the Protocol, the UK must establish border controls on goods moving between Great Britain and Northern Ireland according to EU law. The application of EU law to Northern Ireland, together with the conduct of border controls within the UK, was designed to prevent the establishment of physical border controls (a 'hard border') on the island of Ireland, so as to safeguard the Good Friday/Belfast Agreement which brought peace in Northern Ireland, while preserving the integrity of the EU's single market. The grace period on border controls was agreed by the EU and the UK in December 2020 as a temporary solution to problems raised by the UK. The UK government has reiterated that it intends to implement the Protocol, but that the border controls are causing trade disruption between Great Britain and Northern Ireland and require time to be resolved. It has also mentioned other issues involving areas as diverse as medicinal supplies and parcel shipments, as well as the complexity of customs systems and implementation of exchange of information between the EU and the UK. On 30 June 2021, the EU and the UK reached an agreement on some solutions, including the extension of the grace period on meat products, conditional on tight controls.

Multilateral investment court: Framework options

03-06-2021

The Council of the EU has authorised the European Commission to represent the EU and its Member States in the intergovernmental talks at the United Nations Commission on International Trade Law (UNCITRAL), with a view to reforming the existing investor-state dispute settlement (ISDS) system. The latter provides a procedural framework for disputes between international investors and host states in relation to international investment agreements, and relies on arbitration procedures. The system has ...

The Council of the EU has authorised the European Commission to represent the EU and its Member States in the intergovernmental talks at the United Nations Commission on International Trade Law (UNCITRAL), with a view to reforming the existing investor-state dispute settlement (ISDS) system. The latter provides a procedural framework for disputes between international investors and host states in relation to international investment agreements, and relies on arbitration procedures. The system has raised serious concerns among stakeholders across the EU, especially in relation to the transparency and consistency of decisions, the independence of arbitrators, and the cost and duration of arbitral procedures. The intergovernmental talks at UNCITRAL are aimed at reforming the system in a manner that would address these concerns; the overarching goal of the Council mandate is to establish a full-fledged permanent multilateral investment court with an appellate mechanism and tenured judges. UNICTRAL talks started in 2017; in April 2019, the working group identified three areas of concerns, namely a) consistency and predictability of arbitral decisions; b) integrity of arbitrators and decision-makers; and c) cost and duration of ISDS disputes. The states then tabled reform proposals that provided the framework for the discussions launched in October 2019. The UNCITRAL Secretariat has circulated two documents summarising the proposals regarding the selection and appointment of ISDS members, the establishment and scope of an appellate mechanism, and the enforcement mechanism. The proposals range from perfecting the current ISDS to setting up formal investment courts comprised of first-instance and appellate tribunals. The documents include questions to the government delegations. In its reply to the initial draft, the delegation at UNCITRAL for the EU and its Member States supports the establishment of a multilateral investment court composed of a first-instance and an appellate tribunal staffed by full-time adjudicators.

The level playing-field for labour and environment in EU-UK relations

26-04-2021

The level playing-field (LPF) provisions of the Trade and Cooperation Agreement (TCA) between the European Union (EU) and the United Kingdom (UK) constitute a key part of the agreement, and became a major source of divergence between the negotiators. LPF provisions establish rules to safeguard fair competition between the parties' businesses. A notable component are the rules on social provisions, labour, environment and climate change, often referred to as the 'trade and sustainable development' ...

The level playing-field (LPF) provisions of the Trade and Cooperation Agreement (TCA) between the European Union (EU) and the United Kingdom (UK) constitute a key part of the agreement, and became a major source of divergence between the negotiators. LPF provisions establish rules to safeguard fair competition between the parties' businesses. A notable component are the rules on social provisions, labour, environment and climate change, often referred to as the 'trade and sustainable development' (TSD) chapters in other free trade agreements (FTAs). The trading relationship between the EU and the UK is fundamentally different from that with other non-EU countries since, on the one hand, EU laws were applicable to the UK until the end of the transition period on 31 December 2020 and, on the other, these two economies neighbour each other and are strongly interconnected. The TCA is therefore designed to maintain sufficiently 'convergent' standards to safeguard fair competition, while providing each party with the freedom to implement its own approach to social and environmental protection. To this end, the TCA requires that parties do not weaken or reduce their levels of social, labour and environmental standards as of the end of 2020 (non-regression); the EU commitments on climate change, in particular on climate neutrality by 2050, will also remain for both parties. In addition, the TCA introduces rebalancing provisions creating a mechanism whereby a party can take 'proportionate measures' in order to offset any (adverse) 'material impacts on trade or investment' resulting from 'significant divergences' between parties. It also allows either party to request a review with a view to amending the agreement, and either party can opt to terminate the trade chapters if the amendment is not satisfactory. Although the TCA LPF provisions on labour and environment are in many respects similar to those in the EU's new generation FTAs, they strengthen the enforcement of non-regression provisions by allowing for remedial measures, and also reinforce the precautionary approach. The TCA also represents a notable innovation with its rebalancing and review provisions.

EU-UK Trade and Cooperation Agreement

22-04-2021

During the April plenary session, the European Parliament is due to vote on giving its consent to the Council decision concluding the Trade and Cooperation Agreement between the European Union and the United Kingdom. This Agreement, which has been provisionally applied since 1 January 2021, is the institutional framework, which, conditional on Parliament's consent, will govern the new EU-UK relationship. It establishes trade on zero-tariff/quota terms and covers a wide range of areas, including energy ...

During the April plenary session, the European Parliament is due to vote on giving its consent to the Council decision concluding the Trade and Cooperation Agreement between the European Union and the United Kingdom. This Agreement, which has been provisionally applied since 1 January 2021, is the institutional framework, which, conditional on Parliament's consent, will govern the new EU-UK relationship. It establishes trade on zero-tariff/quota terms and covers a wide range of areas, including energy, transport and fisheries.

EU-UK Trade and Cooperation Agreement: An analytical overview

02-02-2021

This EPRS publication seeks to provide an analytical overview of the Trade and Cooperation Agreement (TCA) between the European Union (EU) and the United Kingdom (UK), which was agreed between the two parties on 24 December and signed by them on 30 December 2020, and has been provisionally applied since 1 January 2021. The European Parliament is currently considering the Agreement with a view to voting on giving its consent to conclusion by the Council on behalf of the Union. The paper analyses many ...

This EPRS publication seeks to provide an analytical overview of the Trade and Cooperation Agreement (TCA) between the European Union (EU) and the United Kingdom (UK), which was agreed between the two parties on 24 December and signed by them on 30 December 2020, and has been provisionally applied since 1 January 2021. The European Parliament is currently considering the Agreement with a view to voting on giving its consent to conclusion by the Council on behalf of the Union. The paper analyses many of the areas covered in the agreement, including the institutional framework and arrangements for dispute settlement, trade in goods, services and investment, digital trade, energy, the level playing field, transport, social security coordination and visas for short-term visits, fisheries, law enforcement and judicial coordination in criminal matters, and participation in Union programmes. It looks at the main provisions of the Agreement in each area, setting them in context, and also gives an overview of the two parties' published negotiating positions in the respective areas.

Excluding Northern Irish imports from EU tariff rate quotas

22-12-2020

The United Kingdom (UK) withdrew from the European Union (EU) on 1 February 2020. The Withdrawal Agreement, which entered into force on 1 February 2020, provides for a transition period during which the UK will remain in the EU's single market and customs union until 1 January 2021. The Withdrawal Agreement also includes a Protocol on Ireland/Northern Ireland, which states that Northern Ireland will be part of the UK's customs territory and internal market after the transition, but that goods originating ...

The United Kingdom (UK) withdrew from the European Union (EU) on 1 February 2020. The Withdrawal Agreement, which entered into force on 1 February 2020, provides for a transition period during which the UK will remain in the EU's single market and customs union until 1 January 2021. The Withdrawal Agreement also includes a Protocol on Ireland/Northern Ireland, which states that Northern Ireland will be part of the UK's customs territory and internal market after the transition, but that goods originating in Northern Ireland have access to the EU without tariffs or quotas, and that EU law relating to competition and trade is applicable to Northern Ireland. While the Protocol creates obligations between the UK and the EU, and specifically allows for the free movement of goods between Northern Ireland and the EU and vice versa, it does not create obligations vis-à-vis third countries. This could lead to circumvention of the use of EU tariff rate quotas and pose a risk to the proper functioning of the EU single market and the integrity of the common commercial policy. To address these risks and provide legal clarification, the European Commission adopted a legislative proposal on 14 August 2020 setting out that goods imported to Northern Ireland from non-EU countries would not benefit from the EU tariff rate quotas and other import quotas unless ultimately destined for the EU. With just a single amendment, to bring forward entry into force (but not change the date of application, 1 January 2021), corresponding to the Council's position, the European Parliament voted on the report in plenary on 25 November 2020. The regulation was then adopted by the Council at first reading, and signed by the Presidents of the two branches of the EU legislature on 16 December 2020.

UK trade agreements with third countries: Implications for the EU

22-12-2020

The United Kingdom (UK) left the European Union (EU) on 1 February 2020 and will regain competence for its own international trade policy as soon as the transition period concludes at the end of 2020. Freedom to determine its own trade relationships was a major reason for the UK's withdrawal from the EU: its new international trade policy is based on the goal of establishing 'global Britain', a country asserting that it is strongly committed to trade openness with international leadership. To this ...

The United Kingdom (UK) left the European Union (EU) on 1 February 2020 and will regain competence for its own international trade policy as soon as the transition period concludes at the end of 2020. Freedom to determine its own trade relationships was a major reason for the UK's withdrawal from the EU: its new international trade policy is based on the goal of establishing 'global Britain', a country asserting that it is strongly committed to trade openness with international leadership. To this end, the UK has concluded as many continuity agreements as possible, in order to roll over existing EU free trade agreements (FTAs), such as that with South Korea. It has also renegotiated, rather than simply roll over, the provisions of EU FTAs, with partners who so demanded, including Japan. Beyond those countries with EU FTAs to which the UK has been party, it has expanded the range of its FTA negotiations to Australia, New Zealand and the United States (US), three of its major trading partners. When it comes to geographic scope, the UK has set the Pacific as a high priority, its objective being to access the newly established Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). In addition, the UK aims to use its advantage in digital trade and services to become a 'world digital trade powerhouse', and has stressed that FTA provisions should promote digital trade and foster regulatory cooperation in the field. The EU represents 50 % of the UK's total trade, and the UK economy is integrated with and reliant on the EU. Therefore, although the UK is facing obstacles in signing trade agreements, its new strategy has a number of implications for the EU. The UK is committed to remaining an open country with respect to international trade and its focus on digital trade and services, which depend less on geography, is seen as a way to diversify away from the EU.

UK Internal Market Bill and the Withdrawal Agreement

20-11-2020

On 9 September 2020, the United Kingdom (UK) government tabled a bill in the House of Commons which would govern the country's internal market after the Brexit transition period ends. It aims to allow goods and services to flow freely between the four jurisdictions of the UK – England, Scotland, Wales and Northern Ireland – replacing the rules now in place through membership of the EU's single market. Certain parts of this UK Internal Market Bill are particularly controversial, as they explicitly ...

On 9 September 2020, the United Kingdom (UK) government tabled a bill in the House of Commons which would govern the country's internal market after the Brexit transition period ends. It aims to allow goods and services to flow freely between the four jurisdictions of the UK – England, Scotland, Wales and Northern Ireland – replacing the rules now in place through membership of the EU's single market. Certain parts of this UK Internal Market Bill are particularly controversial, as they explicitly contravene the Protocol on Ireland/Northern Ireland attached to the Withdrawal Agreement (WA) that was ratified in January 2020. First, the bill provides that the UK government may authorise Northern Ireland businesses not to complete exit summary declarations when sending goods to Great Britain, thereby breaching the Union Customs Code applicable to NI. The bill would also allow the UK government to interpret, dis-apply or modify the application of the State aid rules of the European Union, which are applicable to UK measures that affect trade between Northern Ireland and the EU. Last but not least, the bill provides that UK regulations in these areas will have effect notwithstanding their incompatibility with relevant domestic or international law, including the Withdrawal Agreement. The reaction of the European Commission to the bill was immediate, calling for an extraordinary meeting of the EU-UK Joint Committee, which was held the following day, 10 September. On 1 October, the Commission sent a letter of formal notice to the UK for breaching its obligations under the WA, marking the beginning of an infringement process against the UK. As the UK did not reply by the end of October, the Commission may now proceed with the process, sending a Reasoned Opinion to the UK. Meanwhile, the bill has passed third reading in the House of Commons, even if in the House of Lords the government has been heavily defeated, with amendments removing the controversial clauses. While the government has indicated its intention to re-table the clauses when the bill returns to the Commons in December, it would be open to it to no longer press for their inclusion, if and when agreement is reached in the ongoing negotiations on the future EU-UK relationship.

New EU-UK partnership

16-06-2020

Following the withdrawal of the United Kingdom from the European Union, the two parties are negotiating their future relationship, with a view to sealing an agreement that will enter into force after the transition period ends on 31 December 2020. After the fourth round of negotiations ending on 5 June 2020, a number of critical points of divergence remain, with only limited progress made so far towards resolving them. The European Parliament is expected to vote on a recommendation on the negotiations ...

Following the withdrawal of the United Kingdom from the European Union, the two parties are negotiating their future relationship, with a view to sealing an agreement that will enter into force after the transition period ends on 31 December 2020. After the fourth round of negotiations ending on 5 June 2020, a number of critical points of divergence remain, with only limited progress made so far towards resolving them. The European Parliament is expected to vote on a recommendation on the negotiations during its June plenary session.

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