FTA UK & Iceland, Liechtenstein, Norway (UK)

Thursday 8th July, trade ministers from Iceland, Liechtenstein and Norway signed a free trade agreement (FTA) with the UK. Conclusion of negotiations on an FTA had been announced on 4th June, and Norway had published the text (English language starts at page 105).

The UK trade minister made a statement to Parliament (8th July) – here.

Norway’s minister of trade and industry remarks at 4th June press conference on the matter – here, Norway’s press release (4th June) here.

The signed legal text will be published in the UK shortly, along with the Explanatory Memorandum that is a statutory requirement under the Constitutional Reform and Governance (CRaG) Act.

The Explanatory Memorandum provides the context, explaining what the new treaty is meant to achieve, what legislation (if any) will be needed to implement it, when it will take effect, the financial implications, and the territorial application of the agreement.

I will blog post again when the further documents are published.

Trade Deals status (UK)

The UK is entering into bi-lateral trade arrangements following its exit from the European Union. The current status is here. Note the conformity assessment arrangements in MRAs.

The UK and Australia announced a few days ago, a trade deal would be agreed shortly, likely June.

The UK Department for International Trade gave an update on the UK-Australia FTA on 15 March – here.

I will issue a new blog post when the UK-Australia FTA text is published.

Trade Agreement with Norway and Iceland (UK)

The EU, Norway and Iceland are members of the EEA (European Economic Area) which has its own Agreement in force since 1994. This Agreement means Norway and Iceland adopt EU Law in the areas of Environment and Health and Safety.

The UK signed a trade in goods agreement with Norway (and Iceland) in Dec 2020.

The UK trade in goods agreement includes provisions on:

• trade in goods – including provisions on preferential tariffs, tariff rate quotas, rules of origin and customs and trade facilitation

• geographical indications with Iceland

Information on changes to trade with Norway and Iceland that apply from 1 January 2021 is here. This link also includes access to the trade in goods agreement itself.

As in the UK-EU FTA, there is no equivalence on standards, goods sold into the Norwegian and Iceland markets must the regulatory requirements as set out in EU Law implemented in Norway and Iceland via the EEA Agreement, and be labelled correctly.

From 1 January 2021, regulations for industrial and agricultural products might not be aligned across the UK, Iceland and Norway. This is also the case with regulations across the UK and the EU. But the EU-UK FTA does not cover Norway and Iceland, and so variation may occur not just as respects the EU, but also Norway and Iceland.

From 1 January 2021, the UK will continue to treat most imports from Iceland and Norway no less favourably than imports from the European Union, for a time limited period. This includes requirements for product testing.

Iceland and Norway will also continue to replicate the EU’s treatment of industrial products from the UK. This includes requirements for product testing.

For rules of origin (which are tripping up GB goods movement to the EU and Northern Ireland), please check with BEIS. But simply re-packaging or re-labeling a product from the EU and exporting it to Norway or Iceland as a good originating in the UK is not permitted. Also, check with BEIS re the customs processes for an EU good dispatched to Norway or Iceland from a GB distribution centre.

Trade Continuity Deal with Canada (UK)

The EU has a free trade deal with Canada. The deal is not rolled over.

The UK did sign a continuity trade agreement (TCA) with Canada. But the TCA did not come into force on 1 January 2021. To minimise the impact of this, the UK and Canada signed a Memorandum of Understanding (MoU).

Information on changes to certain aspects of trade that apply from 1 January 2021 until the UK-Canada agreement takes effect is here.

The MoU covers provisions on:

• preferential tariffs

• tariff rate quotas

• rules of origin

• technical barriers to trade particularly in the areas of pharmaceuticals and telecommunications

As in the UK-EU FTA, there is no equivalence on standards, goods sold into the Canadian market must the regulatory requirements as set out in Canadian law, and be labelled correctly.

For rules of origin (which are tripping up GB goods movement to the EU and Northern Ireland), please check with BEIS. But simply re-packaging or re-labeling a product from the EU and exporting it to Canada as a good originating in the UK is not permitted. Also, check with BEIS re the customs processes for an EU good dispatched to Canada from a GB distribution centre.

Role of Parliament in Trade Deals (UK)

This blog does not focus on trade. However, I get asked a lot of questions about how the agreements made by the government under its royal prerogative to make trade deals, are in practice scrutinised.

The UK trade policy observatory has written this useful blog on the subject here.

You can read there that the UK Parliament does not have a formal role. Although, in practice the government has taken to publishing trade objectives, and holding a limited parliamentary debate on them.

UK-US FTA

US – the USTR publishes its trade objectives (Feb 2019) – here.

UK – the UK publishes its trade objectives (April 2020) – here.

In practice, the UK-US FTA has not progressed. Mini-trade deals are also not agreed.

European Union (Future Relationship) Act (UK)

This 31 Dec 2020 dated Act (a Brexit Law) implements the Trade and Cooperation Agreement (TCA – a free trade deal) that was agreed with the European Union (EU) in the closing days of 2020. Here

I wrote blog posts earlier on the content of the TCA. The primary purpose of the TCA is to reduce tariffs and to deal with Customs and VAT in relation to GB-EU trade from 1st Jan 2021.

The Future Relationship Act 2020 also implements the Agreement on Nuclear Cooperation and the Agreement on Security Procedures for Exchanging and Protecting Classified Information, as agreed between the UK and the EU.

S.29 gives the general implementation –

Existing domestic law has effect on and after the relevant day with such modifications as are required for the purposes of implementing in that law the Trade and Cooperation Agreement or the Security of Classified Information Agreement so far as the agreement concerned is not otherwise so implemented and so far as such implementation is necessary for the purposes of complying with the international obligations of the United Kingdom under the agreement.

S.31 gives the implementing power –

(1) A relevant national authority may by regulations make such provision as the relevant national authority considers appropriate—

(a) to implement the Trade and Cooperation Agreement, the Nuclear Cooperation Agreement, the Security of Classified Information Agreement or any relevant agreement, or

(b) otherwise for the purposes of dealing with matters arising out of, or related to, the Trade and Cooperation Agreement, the Nuclear Cooperation Agreement, the Security of Classified Information Agreement or any relevant agreement.

(2) Regulations under this section may make any provision that could be made by an Act of Parliament (including modifying this Act).

(3) Regulations under this section may (among other things and whether with the same or a different effect) re-implement any aspect of—

(a) the Trade and Cooperation Agreement,

(b) the Nuclear Cooperation Agreement,

(c) the Security of Classified Information Agreement, or

(d) any relevant agreement,

which has already been implemented (whether by virtue of this Act or otherwise).

(4) But regulations under this section may not—

(a) impose or increase taxation or fees,

(b) make retrospective provision,

(c) create a relevant criminal offence,

(d) amend, repeal or revoke the Human Rights Act 1998 or any subordinate legislation made under it, or

(e) amend or repeal the Scotland Act 1998, the Government of Wales Act 2006 or the Northern Ireland Act 1998 (unless the regulations are made by virtue of paragraph 27(b) of Schedule 5 to this Act or are amending or repealing any provision of those Acts which modifies another enactment).

(5) Subsection (4)(b) does not apply in relation to any regulations under this section which are for the purposes of replacing or otherwise modifying, or of otherwise making provision in connection with, the provision made by section 37(4) and (5).

Schedule 5 sets out the rules for regulations made under this Act (including specifics about the procedure to be followed).

Additionally, there are –

(1) powers re information exchange on non-food Product Safety

As part of the TCA, the UK and the EU agreed a Chapter on Technical Barriers to Trade (‘TBT’) and related annexes, including on medicinal products; motor vehicles, equipment and parts; and chemicals, as well as for organic products and wine.

The TBT chapter applies to the preparation, adoption and application of technical regulations, standards, conformity assessment procedures, and market surveillance, while the annexes make provisions for more detailed arrangements in the relevant sectors. The TBT chapter and annexes include, amongst other things, provision relating to international standards and provision for the UK and EU to share information on non-food product safety.

The Act creates two gateways: one for the UK to share this data with the EU, and another to share information received from the EU in the UK.

The Act permits the sharing of non-food Product Safety information that is not in the public domain, for a permitted purpose, such as traceability information about businesses in the supply chain. A permitted purpose is where the sharing of the information is to ensure the protection of consumers, health, safety, or the environment.

(2) powers re international standards

The TBT Chapter covers international standards. For the purposes of the TBT Chapter (and the World Trade Organization (‘WTO’) TBT Agreement), standards are documents approved by bodies recognised for standardisation, which provide rules, guidelines or characteristics for products or related processes, with which compliance is voluntary. International standards are approved by international standardising bodies.

On 31st Dec 2020, most areas of UK product legislation are retained EU law (subject to Brexit amendments – we term this ‘Brexitised’). Retained EU law enables the Secretary of State to designate certain standards in respect of Britain (Northern Ireland continues to follow EU Law) so that they give rise to the rebuttable presumption of conformity with requirements set regulations.

Article TBT .4(3) of the TCA requires the UK and the EU to use international standards as the basis for their technical regulations, except where these would be ineffective or inappropriate to meet the legitimate objectives pursued. A similar requirement applies in the WTO Agreement on TBT. Article TBT.4(4)-(5) defines relevant international standards for the purposes of the TBT Chapter of the TCA.

The Act amends retained EU law to enable this commitment to be met, by providing extra clarity that international standards can be used among the standards which the Secretary of State may designate for the presumption of conformity with manufactured goods regulation in Great Britain.

The Act enables UK Ministers to designate an international standard directly where that is in the UK’s interests.

[the result of this is to add the Future Partnership Act to the list of instruments amending domestic law and retained EU Law – please consult the Cardinal Environment Brexit Consolidated Law list for progress – this is in subscribers’ EHS Legislation Registers & Checklists]

(3) powers re control of goods movement

Customs authorities control the movement of goods across borders for purposes other than tax, including the protection of public health and safety, national security and the protection of the environment, including plant and animal health. Standards in the area of safety and security can be set both domestically and at international level. This is reflected in the objectives of the Customs and Trade Facilitation chapter of the TCA, which commit the parties to cooperate to achieve public policy objectives, and commit the UK and the EU to maintain consistency with international instruments and standards applicable in the area of customs and trade.

The Act gives HMRC the power to amend retained EU law in the area of safety and security, to ensure the UK can keep pace with international standards governing the movement of goods and meet TCA commitments.

Trade Bill (UK)

This is a Brexit bill (a bill that results from the UK’s departure from the EU). The bill describes itself as an instrument – to make provision about the implementation of international trade agreements; to make provision establishing the Trade Remedies Authority and conferring functions on it; and to make provision about the collection and disclosure of information relating to trade.

The bill is nearing Royal Assent (passage into law as an Act). As an Act, it will –

(1) give Ministers the power to ensure that the UK can implement procurement obligations that will arise from the UK acceding to the Agreement on Government Procurement (GPA). The GPA is a plurilateral agreement within the World Trade Organization (WTO) framework.

This power will allow the Government and the devolved authorities to use the negative resolution procedure (a procedure that allows a Minister to sign an instrument into law immediately without debate) to implement changes to domestic law to meet and enforce obligations arising from its independent membership of the GPA.

(2) give Ministers the power to implement continuity UK trade agreements with partner countries with which the EU has existing trade agreements as at 31 January 2020.

This power will allow the Government and devolved authorities to use the affirmative resolution procedure (a procedure that allows a Minister to sign an instrument into law after a short debate that cannot amend the instrument) to implement the changes to domestic law which will be necessary for the UK to meet obligations flowing from these agreements.

The power cannot be used to implement a free trade agreement with the USA or China.

The current state of agreed UK continuity trade agreements is here.

[in addition, the UK has agreed a Free Trade Deal with the EU, given effect by the European Union (Future Relationship) Act 2020 – implementing instruments also flow from it – as they do from the pre-existing Withdrawal Acts 2018 and 2020 – we term this Brexit law]

(3) establish the Trade Remedies Authority (TRA), a new organisation to be set up to deliver a UK trade remedies framework, and to enable the TRA to provide advice, support and assistance to the Secretary of State in connection with the conduct of international disputes, other functions of the Secretary of State relating to trade and functions of the TRA.

The TRA may also provide advice, support and assistance in relation to international trade and trade remedies to others as it considers appropriate.

(4) give a power to HM Revenue and Customs (HMRC) to enable HMRC to collect information on behalf of the Government to confirm the number of exporters of goods and services there are in the UK, and to enable the Government to identify those exporters for trade promotion purposes.

(5) create a power to establish a data sharing gateway between HMRC and other public and private bodies, so that those bodies, including the Department for International Trade, can discharge their public functions and access relevant data for research, monitoring and evaluation.