EU | Brexit | The UK EU Brexit Agreement

On December 31st, 2020 the Trade and Cooperation Agreement between the European Union (EU) and the United Kingdom (UK) was published, avoiding in a last-minute turn the possibility of a No Deal scenario. The Agreement describes the commercial relation between the two entities, now that the United Kingdom has withdrawn from the European Union, thus emphasizing the need for non-discriminatory trade in a fair neighbouring cooperation. Even though the deal does not directly lay down EHS rules, we decided to provide a quick overview of the Agreement for the following topics: Technical Barriers to Trade (TBT), Energy, and Transport of goods by Air/Road. The Agreement is valid between the two Parties, but it provides a frame for future Regulations that will be adopted in those areas.

Existing provisions arising from EU Law

One of the most important part of the Agreement, apart from defining the economical relation in a non-discriminatory market between the United Kingdom and the EU for the future, was also to agree on the level playing field, while taking into consideration the Laws and Regulations stemming from EU Law, adopted prior to the United Kingdom’s withdrawal from the EU.

Settling the issue is the purpose of Title IX of the part of the Agreement regarding Trade, which requires for instance both Parties to not weaken or reduce the labour and social levels of protection that prevailed before the Agreement, or to fail to enforce the laws and standards in that matter. The Agreement particularly targets those labour and social levels, which would affect trade or investment between Parties (as part of social dumping). The same principle of non-regression goes for the environmental law or climate level of protection. A specific article establishes furthermore both Parties’ obligations in terms of carbon pricing starting from 2021. Carbon pricing shall cover at least, greenhouse gases emissions from electricity generation, heat generation, industry and aviation.

Market access for goods and technical barriers to trade

With the United Kingdom out of the European Single Market, the rules of free trade laid down in the European Treaties ceased to apply. However, in order to keep the trade flowing between the two entities, the Agreement established a minimal sets of rules, based on existing international rules (Global Agreement on Tariffs and Trade, GATT 1994), to promote a fair competition in the trade of goods. To that end, the Agreement prohibits the adoption of custom duties, export duties, taxes and other charges, unless they would be equally imposed should the product be destined for domestic consumption. However, article GOODS.7 of the Agreement establishes a legal frame for the introduction of fees and formalities, as long as those fees are proportionate to the service rendered (for instance, for the extra time needed for administrative formalities). Generally speaking, disproportionate fees, taxes, charges or duties cannot be introduced or maintained as well as any financial burden that would seek to protect a domestic production.

To ensure further trade in goods, the Agreement also lays down rules on unnecessary technical barriers to trade, that shall be prevented, identified and lifted. Technical barriers can encompass for instance technical rules and standards that a product has to meet in order to enter the market of one or the other Party (EU or UK). The Agreement sets therefore an obligation for both Parties to carry out impact assessment of their planned technical regulations, and to assess the relevance of alternative solutions to those technical barriers. In the Agreement, international standards are directly mentioned as a basis for technical regulations adopted by both entities. Furthermore, the Agreement introduces rules on the marking and the labelling of products, when those are rendered mandatory by one or the other Party. The Agreement restricts the use of marking/labelling on the products, in order for those requirements not to be an obstacle to trade. For example, the marking or labelling of products can be, among other conditions, limited to situations where:

  • The marking/labelling is relevant for consumers or users or the information states that the product respects mandatory requirements;
  • The marking/labelling does not need prior approval, registration or certification, nor any fee as a precondition to place products on the market, unless justified by legitimate interest, and apart for establishing the compliance to standards.

As products are likely to face technical barriers to trade, mostly due to the comprehensive existing European Regulations REACH and CLP, a specific annex lays down specific provisions for the adoption of technical rules for chemicals (Annex TBT-3). The Agreement requires both the EU and the UK to implement the UN Global Harmonized Standards (UN GHS) on chemicals. Those standards are currently a wide basis for the labelling of chemicals as established in CLP Regulation for the EU. If one or the other Party would like to classify a substance differently, according to their own set of rules, they should give the other Party the possibility to express the views on such classification. The Agreement further underlines the need for technical cooperation between the EU and the UK and the will to exchange information on chemicals.

Energy

The Trade Agreement between the EU and the UK entails a section on Energy, in which are mostly discussed provisions on the liberalization of the energy market, the energy subsidies, and the trade of raw materials. For instance, the Deal puts forward that both entities are entitled to take relevant measures for a legitimate goal, such as the security of supply of energy goods and raw materials, to fight against climate change, etc.  On the other hand, the EU and the UK are obliged to ensure in their cooperation the free access to electricity and gas market, on which fair competition and non-discrimination measures still apply.

In terms of tackling climate change, both Parties are confirming the ambition they set in their respective National Energy and Climate Plan drawn up under EU Law, to achieve a certain share of energy from renewable sources in gross final energy consumption by 2030 (and economy-wide neutrality in 2050). The support for the integration of electricity from renewable sources in the market will still be promoted in both Parties legislation, with the exception of biofuels, bioliquids and biomass, supported by national legislation only when criteria on their sustainability and greenhouse gases (GHG) emissions savings will be met. The energy products eligible for subsidies will be defined in national Law according to standards, for the adoption of which both Parties are intending to cooperate.

The Parties also agreed on extended cooperation for the development of offshore renewable energy as well as on enhancing the safety of offshore operations (including oil and gas operations). Non-discriminatory rules for the granting of exploration permits for hydrocarbons were also foreseen in the Deal.

Please note that the Title VIII of the Trade Part of the Agreement, shaping the relations between the EU and the UK as far as Energy is concerned, is only applicable until 30 June 2026, with an extension clause up to 31 March 2027.

Transport of goods

1. Air Transport

The European Union and the United Kingdom laid down in the Trade Agreement the conditions under which air transport would be organized between the two geographical areas, regardless of the transport being for persons or for goods. Both Parties are granting one another the right for their respective air carriers to operate within each other’s territory (see for instance article AIRTRN.5), as well as the right to fly across territories, and to make stops in those for non-traffic purposes. The Agreement also sets up a preferential treatment for the air carriers originating from the EU or from the UK, to be granted authorization to operate on both territories with only minimal procedural requirements, while applying for an authorisation, provided the applicants are respecting the rules laid down for the aviation safety and security defined in the Agreement.

2. Road transport

EU/UK Brexit Deal seeks to facilitate the transport of goods by road, by establishing mutual conditions for road haulage operators to pursue their activities on both territories. To that end, the Heading Three of the Agreement lays down the requirements for operators in transport of goods by road to be entitled to conduct road haulage operations in the UK and in the EU. For instance, according to article ROAD.5, the operators shall hold a valid licence to conduct their activity, under the condition that the operators meet the requirements laid down in Annex ROAD-1. A certified true copy of the licence matching one of the model set out in Appendix ROAD.A.1.3 of Part A to Annex ROAD-1 will be kept on board and produced in case of inspections. The licence shall contain at least two of the security features listed under the same Annex, Appendix ROAD.A.1.4.

The articles relating to road haulage are also making mandatory for the operators wishing to undertake road haulage operations in the UK and in the EU to comply with the requirements for the posting of drivers (as referred in Article ROAD.4). Drivers will also be required to hold a certificate of professional competence (CPC) issued in accordance with the Annex of the Agreement (Section of Part B, Annex ROAD-1) and to comply with the rules on driving and working time, rest periods, breaks and the use of tachographs.

Furthermore, all vehicles shall be equipped with tachographs. The technical requirements for tachographs are defined in the Annex of the Agreement (Section 2 of Part C of Annex ROAD-1). Parties to the Agreement cannot reject or prohibit the use of vehicles undertaking road haulage operations for the authorized purposes set out in Article ROAD.4, if the vehicle complies with the rules laid down in the Annex.

In a Declaration released on the same day as the Trade Agreement, the Parties agreed to facilitate the entry or temporary stay of drivers carrying out road haulage operations, even though the Agreement did not settle a unique position concerning the granting of visa. Each Party will uphold its own right to deliver visa to people entering the territory, but notes that the transport of goods across the EU/UK border is of critical importance for the economy, hence the need to lighten the administrative load in terms of border arrangements for persons for transport of goods purposes.

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