Introduction

At the end of 2020, the UK-EU Trade and Cooperation Agreement (TCA), agreed just over a week beforehand, came into force. It provided for the trading relationship between the two parties, following UK departure from the EU in January 2020, and the cessation of the transition arrangement that had come into effect at this this point. The EU was the UK’s most significant trading partner. Since it was leaving European Single Market, the new agreement was of substantial significance to UK, as well as the EU.

A key feature of the deal was that broadly there would be no tariffs (charges) or quotas (that is limits on the financial value) on trade in goods. There would, however, be non-tariff barriers, for instance checks and documentation to be completed, that had not previously applied when the UK was a member of the EU or in the transition period. Other aspects of the TCA included provision for the UK to continue to take part in some EU programmes; and for security cooperation. The operation of the TCA was to be supported by a UK-EU Partnership Council. It would have the power to resolve disputes arising from the TCA. Both the UK and the EU were allowed under the TCA to retaliate, for instance through restrictions in trade, if a finding of the Council was not acted upon by the other party, or if it objected to the impact of a particular measure it had taken. The TCA was subject to a review every five years. Either party could withdraw with a year’s notice, or more quickly if there was an issue involving the rule of law or human rights (see: chapter 5). This provision for review led some observers to conclude that the TCA and the relationship it pertained to would continue to be a matter of political controversy. The leading legal academic, Catherine Barnard, has said that ‘Anyone who thinks this is done and dusted is wrong. This issue is going to run and run and run.’ (Barnard, 2021)

Diving Deeper

Competing agendas

During the negotiations leading to the TCA, the UK government publicly presented itself as prioritising sovereignty. When employing this term, it meant that, whatever agreement the UK might or might not reach with the EU after leaving, it would not make commitments that formally restricted its freedom of action. The EU was most interested in what it termed a ‘level playing field’. It was concerned that, the UK should not be able to exploit the access it retained to the EU Single Market. Therefore, an agreement guaranteeing the UK the ability to trade with the EU with minimal restrictions should contain within it requirements for the UK to remain broadly in alignment with core EU rules. The UK would not, therefore, be able to change its regulations in a way that put it in a position of commercial advantage. The UK, given its emphasis on sovereignty, was reluctant to submit itself to such restraints. Its representatives claimed publicly that they would rather leave with no deal at all than sign up to an arrangement that restricted its freedom for action. How serious the UK was about making good on this threat, or if the economic damage it might incur was too much to contemplate, is hard to know. The TCA as ultimately arrived at addressed the concerns of the EU by enabling it to take retaliatory measures if the UK pursued policies it regarded as problematic (the same safeguards were also available to the UK).

Scrutiny

The TCA was announced on Christmas Eve, 24^th December 2020. The conclusion of an agreement could not have been left much later. While the UK had formally left the EU at the end of January 2020, transitional arrangements had come into place that preserved continuity in areas including trade. However, they were due to expire at the end of the year. Were no arrangement in place by this point, then by default there would be what was known as a ‘no deal’ Brexit. The UK, previously fully integrated into the European Single Market, would be trading with it on the most basic terms provided for by the World Trade Organisation. There would, for instance, be tariffs on goods. The outcome would surely have been immense disruption to trade and significant economic damage, both to the UK and EU, though falling more heavily on the UK. If this outcome were to be avoided, then the deal needed to be put into effect. Yet there was very little time to scrutinise such an important deal (well over 1,000 pages long) before doing so. In practice there was a straight choice between accepting the deal arrived at or having none at all. The UK Parliament agreed to it; though on the EU side, the TCA was implemented only on a provisional basis, subject to approval by the European Parliament at a later date.

Lack of opposition

The House of Commons voted to approve the TCA on 30 December, by a majority of 521 to 73. Not only the governing Conservative Party, but also the leadership of the official opposition, the Labour Party, supported the deal (though there was resistance to this decision within Labour). While many within the Labour Party disliked Brexit, for a number of reasons the party was trying to distance itself from this position. At the 2019 General Election it had lost seats to the Conservatives in constituencies, for instance in the North East of England, where there had been large majorities in favour of Brexit at the 2016 referendum (see: chapters 6, 7 and 8). The Labour leadership hoped to reverse these losses, and took the view that to do so it should present itself as having accepted Brexit as a reality and now moving on from the issue. Moreover, to vote against the deal would, it feared, be to appear to be willing to risk a ‘no deal’ and the damage such an outcome implied. The consequence of Labour reluctance to be perceived as seeking to reverse Brexit was that it was politically more difficult for it to criticise the government handling of policy towards the EU. In particular, it was hard for Labour to take issue with any possible negative consequences of a deal which it had supported in Parliament.

Implementation, impact and future

The TCA made it possible to avoid the problems that might arise form tariffs and quotas. But there was initial evidence suggesting that Brexit had made a significant negative impact on levels of trade between the EU and the UK, and in particular on exports from the UK to the EU. Disentangling the impact of the coronavirus pandemic from Brexit was difficult. So was separating what were short term difficulties that might be overcome over time from what were more lasting difficulties. Yet it appeared to be the case that some sectors of the UK economy, including food production of various kinds, faced serious challenges. As a third party, the UK was now subject to regulations that created barriers to accessing the Single Market. There appeared to be losses to the financial sector also. The UK government was determined to secure trade deals elsewhere in the world that might offset any damage, or even exceed it in value. How successful it would be in this regard remained to be seen. Furthermore, such agreements could create further complications for the relationship with the EU under the TCA, if the EU felt that they posed a threat to it. The relationship was unlikely to be entirely settled. The way in which the TCA was structured meant that continual renegotiations were almost an inbuilt feature. The UK might seek improvements, from its point of view, to the overall deal. But to do so might require it to align more closely with EU rules, and in this respect compromise its sovereignty. The precise context within which matters would play out, however, was unknowable. How stable, for instance, would the EU prove to be in future? How damaging would Brexit be to it? Or would it benefit from it more than suffer?

Summary

The Trade and Cooperation Agreement (TCA) provided for the trading relationship between the EU and the UK after the end of the Brexit transition period. It avoided a ‘no-deal’ Brexit.

In negotiations, the UK prioritised sovereignty, while the EU was focused on maintaining a ‘level playing field’.

The TCA avoided tariffs and quotas on trade in goods. But it did not avoid non-tariff barriers connected to regulations, for instance. It did not deal substantially with financial services.

It was subject to limited scrutiny. Political opposition, including from the Labour Party, was muted.

There was evidence that the TCA had led to a negative impact on trade, at least in the short term. It seemed unlikely that it would be a final settlement of the EU-UK relationship.

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