UK & Europe
Trade & Commodities
Written by Robert Parson, Partner, Jennifer Greengrass, Associate, Iris Kyriazi, Trainee Solicitor
The EU-UK Trade and Cooperation Agreement (“TCA") overcame its final political obstacle in the last few weeks, when the European Parliament approved it by a large majority. However, the practical hurdles to be overcome in order to implement it are only now becoming clear.
The approval of the TCA was the culmination of months of discussion in the European Parliament regarding the timing of its adoption. The UK Parliament had already given effect to the TCA’s provisions in December 2020. On the EU side, the Council, acting on behalf of all 27 EU Member States adopted the decision allowing the signature of the TCA and its provisional application in January 2021, but the European Parliament and the Council were still required to ratify it.
The European Parliament vote resolves the legal uncertainty regarding the TCA, which aims to create a free trade area between the EU and the UK for goods and services and establishes preferential measures in areas such as consumer rights, aviation, energy and fisheries, among others.
The “zero quotas and zero tariffs” trade provisions between the UK and the EU were received positively1 by the Members of the European Parliament (“MEPs”) who also regard the safeguards on fair competition requirements as the potential basis for future trade agreements. Nevertheless, MEPs lamented the UK’s refusal to include security, foreign policy and development provisions in the agreement and to participate in the Erasmus+ student exchange programme. For the UK, this vote was viewed as the final step in a long journey2, and ushered in the hope that it would provide stability to EU-UK trade relations while giving the UK the opportunity to build new partnerships globally.
The vote, that was initially programmed for earlier this year, was delayed following the UK’s unilateral extension of waivers in favour of Northern Irish companies in spite of the trading provisions agreed by the two sides. The EU considered this a violation of the TCA and threatened some form of “legal action”. Commenting on the recent ratification of the TCA, the president of the European Commission offered a word of caution about faithful implementation being “essential”. Indeed, future breaches of “good faith” by the UK could be sanctioned by the EU, for instance by way of punitive tariffs on goods.
Overall, the TCA sets a strong basis for safeguarding the long-lasting cooperation between the UK and the EU and allows the UK government to achieve greater oversight over its own domestic regulations. Nevertheless, the UK will have to uphold certain regulatory principles in order to avoid giving rise to tariffs or to the removal of other benefits under the TCA.3 In particular, much still remains to be negotiated with regard to financial services4. There is, however, potential for better cooperation in the future. Indeed, the UK and the EU agreed at the end of March 2021, by means of a Memorandum of Understanding, to work towards setting up a “framework for voluntary regulatory cooperation in financial services”.5 As both parties to the TCA are now discovering, however, it is the “Cooperation” part of the TCA that has a lot of detail to be worked out and no small amount of teething problems to overcome.
While politicians on each side of the Channel are congratulating themselves, the practical manifestation of the TCA and the new spirit of cooperation for many UK and EU observers has been the recent deployment of Royal Navy and French Police boats to keep the peace in a heated dispute over fishing rights off Jersey.
For those with memories of the Icelandic Cod Wars6, this will bring back memories of the UK’s humiliating climbdown as Iceland gradually increased its territorial waters to a 200-mile limit in 1976 effectively ending British long-distance fishing. With the UK now boasting independent control of its territorial waters and its associated fishing rights after Brexit, many people will be unaware of what the UK now claims as its own. In fact, the UK claims territorial waters for a distance of 12 nautical miles from its shores (with some allowance for the narrow parts of the English Channel).7 Jersey claims a similar territorial water – 12 nautical miles surrounding the island – despite being 85 miles from the English coast and just 14 miles from the French coast (again allowing for the areas where Jersey’s 12 mile limit and that of France would overlap).8
Since the 19th Century, French fishing boats enjoyed rights to fish in Jersey territorial waters under the Granville Bay Agreement, which was renewed as recently as 2000. However, since the end of the transition period the right of EU boats to fish in UK waters has depended on the issuance of a licence by the United Kingdom Single Issuing Authority (UKSIA) operated by the Marine Management Organisation.9 The current dispute arises because those who negotiated the TCA agreed that access by UK fishermen to EU waters and vice versa would be dependent upon the issuance of licences by their respective fisheries' authorities which in turn required the applicant fisherman to produce evidence of having fished in the relevant waters for at least four out of the five years from 2012 to 2016 inclusive. Proof involves electronic position data such as Vessel Monitoring System (VMS) records (or similar) or some alternative evidence of that fishing record as well as its catch data for the corresponding periods. The requirements are apparently identical on both sides but those negotiating the rules do not seem to have consulted widely on the ability of the would-be licence holders to comply.
The result is much unhappiness among small scale French fishermen who have fished in Jersey waters for generations but without the sophisticated positional monitors that the authorities assumed they would have been using since 2012. Although the Jersey authorities have granted an amnesty to small non-VSM enabled vessels using static gear to continue to fish until 30 June 2021 to give them time to come up with alternative evidence of their record of fishing in Jersey waters. Many fishermen will simply not be able to comply. Vessels over 12 metres in length and smaller vessels using mobile gear (e.g. dredging or trawling rather than laying static nets or pots) needed to obtain a Jersey licence by 1 May in order to fish in the 12 mile waters around Jersey that do not overlap French waters. To add spice to the dispute, the Jersey authorities have added some extra conditions relating to sea zoning and permitted equipment, which are their own individual requirements. Inevitably, the story has taken on a political life of its own with reprisals being threatened if the UK/Jersey authorities do not cut the French fishermen some slack – and as they are quick to point out, France supplies all of Jersey’s electricity…
It is a rocky start to what looks set to be a long journey for the UK re-setting its relations with its neighbours. If the “Cooperation” part of the TCA is to bear fruit it will require some sophisticated politics and a willingness to achieve success in the new European economic, political and social landscape. France is now linking a resolution of the fishing dispute with progress on access to the financial services market – worth considerably more financially to the UK than the fish. Out of the glare of TV cameras, wise minds will be facing up to that reality and finding a way to work together.