The EU-UK Trade and Cooperation Agreement (TCA) covers a broad range of areas and establishes a new institutional framework for the operation and enforcement of the Agreement. However, it does not cover services, including financial services, to any great extent and there will undoubtedly be sectors such as fisheries which will be adversely affected by Brexit and where sectoral support will be required.
The TCA is underpinned by provisions ensuring a level playing field and mechanisms for avoiding and settling disputes between the EU and the UK concerning the interpretation and application of the TCA and supplementing agreements, with a view to reaching, where possible, a mutually agreed solution. These measures include an ability to impose unilateral rebalancing measures (Tariffs) in some instances.
The TCA also includes Most Favoured Nation Clauses such that if in the future either the UK or the EU agree to more preferential treatments with countries, the UK / the EU, as relevant, can generally claim equivalent treatment.
The EU and the UK have also agreed to create a joint body, called the Partnership Council, to efficiently manage the TCA, which will be co-chaired by a Member of the European Commission and a representative of the UK at ministerial level. The EU or the UK can refer to the Partnership Council any issue relating to the implementation, application and interpretation of the Agreement.
The TCA also provides for the establishment of a range of committees and working groups which appear to provide a framework for the resolution of disputes and for close cooperation between the UK and the EU across a broad range of areas into the future.
The TCA will be reviewed every 5 years, with the first general review taking place by end 2025. Either the UK or the EU can terminate the TCA with 12 months’ notice.
Key elements of the TCA are discussed below.
As we have seen in recent days, these technical barriers are not insignificant and have the ability to create significant disruption to supply chains.
In tandem with the TCA, on 25 December 2020 the European Commission put forward a proposed Regulation for a Brexit Adjustment Reserve to provide financial support to EU Member States worst affected by the UK leaving the EU. The proposed Regulation will now have to be adopted by the EU Parliament and the EU Council. The Reserve is intended to mitigate the adverse economic and social impacts of Brexit and will fund specific measures set up by the Member States to help businesses and economic sectors, workers, regions and local communities suffering from the impact of the end of Transition Period. The Brexit Adjustment Reserve will cover expenditure in any Member State over a period of 30 months, from 1 July 2020 to 31 December 2022.
The Brexit Adjustment Reserve will be implemented under shared management with the Member States and will most likely be implemented in Ireland through state agencies such as Enterprise Ireland and Bord Uisce Mhara. Member States will likely roll over existing systems already used for the management and control of cohesion policy funding or the European Union Solidarity Fund. Ireland’s initial proposed allocation for 2021 is €1.051 billion or 25% of the fund.
The Reserve can be used to support measures such as:
Businesses should analyse what parts for their business will be significantly impacted by Brexit. Based on that analysis, identify projects that require substantial funding (>€1M) that may be eligible for funding from the Reserve. Thereafter, consider approaching Government agencies with the projects and lobby for funding.
If you have any queries on how Brexit will affect your business, please get in touch with our dedicated Brexit Response Team.