The United Kingdom (UK) withdrew from the European Union (EU) and the European Atomic Energy Community (EURATOM) –hereafter referred to together as the 'Union’ – on 1 February 2020.

The transition period agreed under the Withdrawal Agreement, during which Union law continued to apply, to and in, the United Kingdom, ended on 31 December 2020. The United Kingdom left the EU Single Market and Customs Union and all Union policies, and EU law will no longer be applicable to and in the United Kingdom.

On the 24th of December 2020 a Trade and Cooperation Agreement was reached between the EU and the UK. We take a look at the main areas that made up the trade and security deal finalised on Christmas Eve.

Tariffs

On the 24th of December 2020 a Trade and Cooperation Agreement was reached between the EU and the UK. We take a look at the main areas that made up the trade and security deal finalised on Christmas Eve.

Trade in Goods

The agreement ensures that most goods traded between the EU and U.K. won’t face new tariffs or quotas. However, British exporters will face certain regulatory hurdles that will make it costlier to do business in Europe.

Rules of origin: U.K. firms will have to certify the origin of their exports to qualify for tariff-free access to the EU. There will be limits on what proportion of goods can be assembled from parts made overseas to qualify for tariff-free access.

EU parts will count as local content.

Cars will face special restrictions. Gasoline or diesel vehicles will need to be made with at least 55% UK content to escape tariffs.

Electric transition: electric and hybrid vehicles will be allowed to contain 60% overseas content. Batteries will be allowed to contain 70% international content, but that will drop to 50% by 2026.

Mutual recognition on testing and certification: The absence of a mutual recognition agreement means U.K. regulatory bodies won’t be able to certify products for sale in the EU.

Financial Services

The deal is limited for financial firms. There is no decision on so-called equivalence, which would allow firms to sell their services into the single market from the UK. The agreement only features standard provisions on financial services, as it doesn’t delve on market access. The U.K. and EU will discuss how to move forward on specific equivalence decisions. The two sides made a joint declaration to support enhanced cooperation on financial services. They aim to agree on a Memorandum of Understanding by March.

State aid

The EU had insisted the UK match its state aid rules.  It was agreed that the UK will set up its own subsidy regime. The new UK enforcement body can make decisions over whether state aid has distorted trade after the subsidy has been granted. However, the UK will have to ensure that its subsidy regime respects key principles set out in the treaty. The deal also allows both parties to adopt remedial measures if there is evidence that either of both sides enforcement body has failed to uphold the shared principles.

Level Playing Field

Both sides committed to upholding their environmental, social, labour and tax transparency standards to make sure they don’t undercut each other.

The deal doesn’t include hard clauses that would force the U.K. to stiffen its rules in lockstep with the EU. Instead, it includes a re-balancing mechanism with tariffs if they diverge too much.

Any retaliatory measures will also be subject to arbitration by an independent panel - not the European Court of Justice.

Both sides will be prevented from giving an unlimited state guarantee to cover a company’s debts or liabilities. In line with EU law, the U.K. won’t be able to rescue a failing firm without a restructuring plan.

Both sides will have to disclose the subsidies they award.

Rules of origin

The UK agreed with Brussels that EU materials and processing should to be counted as British input when the completed products are exported into the European market.

A product would therefore only attract tariffs under the agreement if more than 40% of its pre-finished value was either not of British origin or from a non-EU country.

The deal excludes diagonal accumulation, which would include parts from countries such as Japan and Turkey, with whom both the UK and the EU have a trade agreement, to be counted as British input.

Dispute Settlement

Disputes on the deal must be negotiated between the EU and the U.K. with no role for the EU courts.

An arbitration panel may rule on some areas and can order one side to resolve the problem or offer compensation. Failure to do so allows the other side to suspend obligations which could mean blocking some access or cooperation.

Fishing Rules

This was one of the most contentious areas after disputes over the control of British fishing ground.

UK fleets will take 25% of the current EU catch in British waters, worth 146 million pounds ($198 million), phased out over five years.

There is a transition period of five-and-a-half years during which reciprocal access rights to each other’s waters remain unchanged.

Customs

The U.K. exit from the European single market on Jan. 1 was going to lead to more customs bureaucracy for both sides. The accord largely commits the EU and Britain to follow international practices aimed at minimizing customs costs for businesses.

Both sides pledge to limit customs red tape.

The U.K. says there will be bespoke measures to help firms including cooperation at roll-on, roll-off ports. On the other side the EU claims there will be specific facilitation arrangements for wine, as well as organic, automotive, pharmaceutical and chemical products.

Aviation and Trucking

The agreement has stopped short of granting automatic recognition to British aerospace designs and products.

Such recognition will be restricted to minor changes until the EU gains confidence in the U.K.’s capability for overseeing design certification.

Both sides commit to good and efficient management of visa and border arrangements for road hauliers and to appropriately facilitate the entry and stay of truckers.

Data Flows

The deal includes a temporary solution to keep data flowing between the EU and U.K. until the bloc has adopted a data adequacy decision.

This bridge period starts on the date the new deal takes effect and will last a maximum six months, or end as soon as the EU’s data adequacy decision has been finalized.

Personal data shipped to the U.K. during this interim period shall not be considered as transfer to a third country under EU law.

Both the EU and UK committed to upholding high levels of data protection standards and to ensure cross-border data flows to facilitate trade in the digital economy without imposing limits on where data can be stored or processed.

Energy

The U.K. won’t have access to the EU’s internal energy market. There will be new arrangements in place by April 2022 to make sure that trading is smooth and efficient on interconnectors

The deal includes guarantees on security of energy supply.

The U.K. is no longer part of the EU’s emissions trading system but both sides agreed to cooperate on carbon pricing in future and consider linking their respective systems.

The U.K.-EU agreement would be suspended if either side breaches their commitments to the 2015 Paris Agreement on climate.

Professional Services

The deal means that there will no longer be automatic mutual recognition of professional qualifications.

Doctors, nurses, dentists, pharmacists, vets, engineers or architects must have their qualifications recognized in each member state they wish to practice in. However, the deal does create a framework for the recognition of qualifications in future.

Mobility – freedom of movement

Rules that will cease to apply from January 2021 include those on freedom of movement. EU citizens will no longer have the right to move to the UK to work and settle, and vice versa.

The UK will introduce a new immigration policy from January 2021, having passed new legislation. Under the planned points-based system to attract skilled workers, EU nationals will no longer have preferential treatment.

UK nationals no longer have the freedom to work, study, start a business or live in the EU. Visas will be required for stays over 90 days. Coordination of some social security benefits such as old-age pensions and healthcare will make it easier to work abroad and not lose any pre-existing build-up of contributions to national insurance.

Business Travel

The U.K. and EU agreed that short-term business visitors won’t need to hold work permits or undergo economic needs tests.

There is no limit to how long EU citizens can stay in EU countries other than their own. This right disappears for UK passport holders on 31 December 2020. Instead, they can visit most EU countries plus the four EFTA states for a combined total of up to 90 days in any 180-day period. Passport will be stamped on entry to and exit from all countries.This also applies vice-versa for EU nationals visiting the UK for business related activities.

Taxation

There are no provisions constraining UK domestic tax regime or tax rates. Both sides pledged to uphold global standards on tax transparency and fighting tax avoidance.

Agriculture

Trade of farm goods will benefit from the zero-tariff, zero-quota terms between the two sides. But the lack of an equivalence agreement on phyto-sanitary rules means shippers will face new hurdles at the border.

No tariffs: The lack of levies is especially important for the agriculture and fishing sector, as some meat and dairy products would have faced taxes topping 40% under WTO terms

U.K. agri-food consignments will have to have health certificates and undergo sanitary and phyto-sanitary controls at member states’ border inspection posts.

Both sides will be able to maintain their own sanitary standards going forward.

Food and agri-products entering Northern Ireland from Great Britain will be subject to checks and phyto-sanitary controls.

Law Enforcement

The deal will allow cooperation between the U.K. and EU, particularly as part of investigations into terrorism and serious crime, including with the exchange of DNA, fingerprint and airline passenger information.

There will be cooperation between U.K. and EU law-enforcement agencies, but the U.K. loses membership in Europol and Euro just.

Extradition: The U.K. said there will similar cooperation on extraditions to that between the EU and Norway and Iceland, but with appropriate further safeguards for individuals beyond those in the European Arrest Warrant.

An arrest warrant may not be refused on the grounds that the offense may be regarded by the executing State as a political offense, as an offense connected with a political offense or as an offense inspired by political motives.

Where extradition isn’t possible, there will still be a path to justice in every case such as requiring EU countries to refer cases to prosecution.

Science

The UK will continue to participate in the EU’s flagship €80bn Horizon Europe programme as a paying associate member for seven years. It will also continue in Copernicus and Euratom.

Erasmus

The UK is out of the university exchange programme, as the EU’s insisted that to be an associate member it would have to commit to a seven-year payment plan.The Irish government confirmed students in Northern Ireland can continue to access Eramus as part of its promise to make sure Irish citizens in the region will never be left behind their fellow citizens south of the border. Citizens in Northern Ireland can also avail of a scheme to replace the European health insurance card (EHIC) funded by the Irish government.

TV Services

The EU successfully kept the audio visual sector out of the deal, which is home to around 1,400 broadcasters, about 30% of all channels in the EU.

Britain’s TV and video-on-demand service providers will no longer be able to offer pan European services to European viewers unless they relocate part of their business to an EU member state.

Travel into the EU for paid work

Staff seconded to the EU on business can stay for up to three years if they are managers and specialists and up to one year for trainee employees. Those on short-term business will need a work permit and may stay for a period of up to 90 days in any 12-month period.

Under the deal, reciprocal arrangements have been made to facilitate short-term business trips and temporary secondments of highly-skilled employees.

Other Withdrawal Agreement arrangements still in force

the continued protection of citizens’ rights, including social security rights, for EU citizens and UK nationals concerned for the duration of their lifetime;

a financial settlement, ensuring that the United Kingdom and the Union will honour all financial obligations undertaken while the United Kingdom was a member. The settlement also ensures that EU projects and programmes under the current Multiannual Financial Framework (2014-2020) are financed as foreseen until their closure, thereby providing certainty to all beneficiaries of EU programmes, including UK beneficiaries;

a Protocol on Ireland and Northern Ireland, most parts of which will apply as from the end of the transition period, providing a legally operative solution that avoids a hard border on the island of Ireland, protects the all-island economy and the Good Friday (Belfast) Agreement in all its dimensions, while safeguarding the integrity of the EU Single Market;

other arrangements required for an orderly withdrawal of the United Kingdom, ensuring inter alia: a smooth winding-down of cooperation arrangements and procedures between the United Kingdom and Member States in relevant matters of EU law; legal clarity for goods already placed on the market, and goods that are moving between the EU and the United Kingdom at the end of the transition period; continued protections and safeguards in the United Kingdom on a wide range of issues, from EU intellectual property rights, to personal data transmitted before the end of the transition period or processed thereafter in the United Kingdom on the basis of the Withdrawal Agreement, or EURATOM material located in the United Kingdom.  

About

The United Kingdom (UK) withdrew from the European Union (EU) and the European Atomic Energy Community (Euratom) –hereafter referred to together as the 'Union’ – on 1 February 2020. The transition period agreed under the Withdrawal Agreement, during which Union law continued to apply, to and in, the United Kingdom, ended on 31 December 2020. The United Kingdom left the EU Single Market and Customs Union and all Union policies, and EU law will no longer be applicable to and in the United Kingdom. The substantive provisions of the Withdrawal Agreement apply irrespective of the outcome of the future relationship negotiations. It provides for:

Enhance cyber-expertise

Protect enterprises and individuals through training on leading cybersecurity practices.

Grow technical capabilities in Malta's private sector

Establish Malta as a leader in technology and cyber security.

Expand access to technical education

Provide Maltese citizens with accessible resources and technical training to elevate Malta's workforce and empower individuals to pursue skilled technology roles.

Other Partners

The eSkills Malta Foundation is a National Coalition made up of various representatives from Government, industry and education, who can contribute to the increase in digital skills and the development of the IT profession.

The Malta Information Technology Agency is the central driver of Government’s Information and Communications Technology (ICT) policy, programmes and initiatives in Malta.

The Malta Digital Innovation Authority is the primary Authority responsible for promoting all governmental policies that promote Malta as the centre for excellence for technological innovation, while setting and enforcing standards that ensure compliance with any other international obligations.

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