The border in the Irish Sea
But services aren’t covered by the TCA?
No. In 2019, the UK had a £97bn annual deficit on the trade in goods with the EU, and a surplus of £18bn on trade in services. Henceforth, UK businesses will lose the right to offer services across the EU. Service providers will mostly have to establish subsidiaries in the nations in which they wish to operate; professionals will no longer have their qualifications recognised throughout the bloc. This is not arguably the blow it might be, as the EU single market in services is limited by an array of regulatory obstacles. However, the vital question of whether UK financial services providers will be allowed access to Europe is yet to be decided, in a separate process. The EU will decide unilaterally whether to grant “equivalence” to the UK’s financial regulatory regime: i.e. whether it’s trustworthy enough to allow UK banks and financial firms into the EU.
What are the other main points of the TCA?
Free movement of EU workers into the UK has ended; UK nationals will now need a visa for stays of longer than 90 days in the EU in a 180-day period. UK pet passports will no longer be valid. The UK will no longer have automatic access to key EU security databases, but should be able to gain access upon request. It will also not be a member of the EU’s law enforcement agency, Europol, but it will have a presence at its headquarters. The TCA has not concluded negotiations about the movement of personal data between the EU and the UK, a crucial economic issue. Early this year, the EU will make a decision about whether the UK’s regulatory system is “adequate” to allow this to continue.
Arguably the most significant feature of the UK’s new
settlement with Europe doesn’t even feature in the TCA: it was settled by the Withdrawal Agreement last January. The Protocol on Northern Ireland replaced Theresa May’s “backstop”, but it had the same aim: to prevent a hard border between Northern Ireland and the Republic of Ireland, by placing Northern Ireland in
the EU’s single market for goods and by having it apply EU customs rules at its ports. This created a new trade border in the Irish Sea, which many see as a threat to the integrity of the UK: all sitting Northern
Irish MPs at Westminster voted against the TCA. When the PM declared, late last year, “We have taken back control of laws and our destiny”, it did not apply
to Northern Ireland, which must follow EU rules on goods, agriculture, the environment and state aid, yet
has no say in how these rules are designed. Goods crossing from Britain to the North encounter significant
additional paperwork and costs; in the first week of 2021, a quarter of all lorries were turned away. Shelves have been left empty; Sainsbury’s has withdrawn hundreds of products. It is already clear, said Sam McBride in the Belfast News Letter, “that Northern
Ireland will be profoundly reshaped by Brexit”.
Overall, is this a good deal?
It usually takes the EU five to seven years to negotiate a free trade agreement, so completing it in time was a considerable achievement. And there’s no doubt that the UK team pushed back effectively against some of the EU’s more imperious demands. However, it doesn’t change the tradeoff at the heart of Brexit, between sovereignty and market access. The TCA formalises a hard Brexit, which will increase the UK’s autonomy but diminish its economic ties to the continent. The UK Office for Budget Responsibility has forecast that the deal will mean a loss to the economy of around 4% of GDP over 15 years relative to remaining in the EU. Freedom, however, may also bring many advantages. One thing’s for sure: with a new UK-EU Partnership Council and scores of committees set up, negotiations won’t end here.