Title II – Trade in Services and Investment
The Agreement establishes the treatment and level of access the UK and EU have agreed to grant each other’s service suppliers and investors. These provisions will offer businesses and individuals the certainty and support they need to continue trading profitably with the EU, while maintaining the UK’s right to regulate as an independent nation.
The Agreement significantly builds on the Parties’ commitments under WTO rules and locks in market access across substantially all sectors. The level of ambition reflects the UK and EU’s respective Free Trade Agreements with Japan, although in a few areas – most notably legal services – the agreement breaks new ground.
Chapter 1 – General provisions
This Chapter establishes the scope and definitions for the Agreement on Services and Investment and sets out provisions that apply to the whole title. It also includes a commitment for the Parties to review the services and investment provisions, with a view to introducing future improvements.
Chapters 2 and 3 – Cross-border trade in services and investment
The Agreement includes well-established provisions on cross-border trade in services and investment that will secure continued market access across a broad range of sectors, including professional and business services, financial services and transport services, and will support new and continued foreign direct investment. These chapters include obligations on:
- Market Access, to ensure service suppliers and investors do not face limitations such as economic needs tests, restrictions on corporate form and foreign equity caps;
- National Treatment, to provide for non-discriminatory treatment between UK and EU service suppliers and investors;
- Local Presence, to ensure that cross-border trade is not inhibited by establishment requirements. This is only the second time the EU has agreed a separate obligation on Local Presence;
- Prohibition of performance requirements, to ensure investments are not subject to conditions such as domestic content requirements or export restrictions;
- Senior management and boards of directors, to prevent nationality restrictions on senior personnel; and
- most Favoured Nation, to ensure that the Agreement keeps pace with the Parties’ future
For all sectors covered by these chapters, the provisions on cross-border trade in services and investment liberalisation apply unless otherwise stated. Exceptions to these obligations are set out in Annexes to the Agreement.
These Annexes builds on existing agreements including:
- The EU and UK have scheduled new commitments on home title legal services;
- The Parties have improved their level of commitment on combined transport services and telecommunications services; and
- The UK has secured new protections for its competition regime and provided a clear statement of our policy space with respect to investment in the UK’s fishing industry.
Chapter 4 – Temporary entry and stay of natural persons for business purposes
The Agreement sets out the commitments taken by the UK and EU on business mobility. These provisions will give the UK’s firms and individuals the legal certainty and administrative clarity they need to continue engaging in business activity and delivering services in the EU when the transition period ends.
The Agreement includes well established commitments on short-term business visitors; business visitors for establishment purposes; intra-corporate transferees; contractual service suppliers; and independent professionals. The Parties have agreed not to impose market access restrictions (such as economic needs tests) or discriminatory barriers on business persons falling into these categories.
The Parties have also agreed commitments on length of stay that broadly reflect the outcome reached in the EU-Japan Economic Partnership Agreement. This includes the ability for UK short-term business visitors to travel to the EU for 90 days in any 180-day month period. The Parties have also agreed not to impose work permits on business visitors for establishment purposes.
Exceptions to the Parties’ commitments on business mobility are set out in the Agreement’s Annexes.
The Agreement also includes comprehensive measures on transparency and procedural facilitations, easing the burden on future visa and work permit applicants. It guarantees that intra-corporate transferees can be accompanied by their partners and dependents when placed abroad, with minimal administrative burdens.
All of this supports the government’s new immigration policy, ensuring that the brightest and best global talent can come to the UK for business purposes.
Chapter 5 – Regulatory framework Section 1 – Domestic Regulation
While preserving the regulatory autonomy of both Parties, the Domestic Regulation provisions will limit ‘behind the border’ barriers, such as lengthy and opaque authorisation processes. These provisions build on the Joint Initiative on Services Domestic Regulation under negotiation at the WTO and will enable service providers and investors in both the UK and the EU to conduct their business effectively.
Section 2 – Mutual recognition of professional qualifications
The UK and the EU have agreed a framework for the recognition of qualifications between the Parties which is based on the EU’s recent FTA agreements. It makes improvements on those agreements, which are designed to make the system more flexible and easier for regulatory authorities to use.
This approach will allow the UK and its regulators to maintain standards of professional competence. From early 2021, the government will provide help and guidance to UK regulatory authorities and professional bodies to help them benefit from these provisions as well as other recognition paths.
The Agreement clarifies that the provisions on professional qualifications are without prejudice to alternative arrangements that the UK may agree with the EU, allowing for improved mechanisms to be agreed in future. Agreements will be negotiated on a profession-by-profession basis
Section 3 – Telecommunications Services
The provisions on telecommunications regulation lock in existing levels of liberalisation in UK and EU markets, confirming both sides’ leadership in this area and our commitment to openness. The Agreement includes standard provisions on authorisations, access to and use of telecoms networks, interconnection, fair and transparent regulation and the allocation of scarce resources. The provision on authorisation is the most liberalised authorisation regime agreed in any FTA. It ensures that businesses from either Party will not have to wait for prior authorisation before they begin to deliver services, giving our operators access to EU telecoms markets which is without precedent in an FTA.
The Agreement contains measures to encourage cooperation on the promotion of fair and transparent rates for international mobile roaming. It also covers obligations on net neutrality, which fulfils the UK’s dual aims of securing commitments towards an open internet and protecting the safety of users online.
Section 4 – Delivery Services
The Agreement confirms the Parties’ commitment to open and fair markets in delivery services. It promotes trade in postal and delivery services, while protecting the UK and EU’s right to define national standards and regulatory requirements. Both Parties must maintain an independent regulatory body and prevent designated national suppliers from engaging in market distortive practices.
Section 5 – International Maritime Transport Services
The International Maritime Transport Services provisions include commitments on non-discriminatory access to ports; the use of port infrastructure; the use of maritime auxiliary services such as storage and warehousing; customs facilities and the assignment of berths and facilities for loading and unloading. The Agreement also includes important provisions which allow UK shipping companies to move empty containers and provide feeder services between ports in an EU Member State, subject to authorisation.
Section 6 – Financial Services
The Agreement includes provisions on cross-border trade in financial services and investment that will secure continued market access. The Agreement provides protections that will ensure that our regulatory and supervisory authorities will be able to act to ensure financial stability, market integrity and protect investors and consumers.
The Parties have agreed a joint declaration setting out their commitment to these shared objectives and have agreed to enhanced cooperation as well as information sharing and bilateral dialogue in order to establish a durable and stable relationship.
The declaration reaffirms the integrity of our respective, autonomous equivalence frameworks. The Parties will discuss how we move forward on specific equivalence determinations. The Parties will codify the framework for regulatory cooperation in a Memorandum of Understanding.
Section 7 – Legal Services
The Agreement includes ground-breaking provisions on legal services that go beyond what the EU has included in any other FTA to date. These measures will improve the clarity and certainty of market access for UK lawyers. The Agreement will give UK solicitors, barristers and advocates the right to advise their clients across the EU on UK and public international law using their home professional titles, except where EU Member States have placed specific limits on this activity.
Where EU Member States require UK lawyers to register in order to provide advice on UK and public international law, the Agreement makes clear this cannot mean requalification or admission to the local legal profession.
Title III – Digital Trade
The Agreement contains some of the most liberalising and modern digital trade provisions in the world. These provisions will promote trade in digital services and facilitate new forms of trade in goods and services. The Agreement also ensures that the UK and the EU will cooperate on digital trade issues in future, including emerging technologies. This is the first time the EU has agreed provisions on data in a free trade agreement. The provision helps to facilitate the cross-border flow of data by prohibiting requirements to store or process data in a certain location. This prevents the imposition of costly requirements for British businesses. The Agreement confirms strong data protection commitments by both the UK and the EU, protecting consumers and helping to promote trust in the digital economy.
The Agreement includes a guarantee that neither the UK nor the EU will discriminate against electronic signatures or electronic documents on the basis that they are in digital form. The Agreement also ensures that contracts can be completed digitally, with a small number of exceptions.
The Agreement includes online consumer protection and anti-spam provisions giving consumers strong protections when buying from businesses in either the UK or the EU. The Agreement contains specially tailored exceptions to preserve policy space for the UK or the EU to protect users online. In parallel it ensures companies are protected by a guarantee against the forced transfer of source code, protecting valuable intellectual property..
The Agreement also includes a novel provision on open government data, inspired by recent discussions at the WTO. When governments choose to make non-personal or anonymised public sector data available, this provision will encourage them to make that data easily accessible and in machine- readable formats.
Title IV: Capital movements, payments, transfers and temporary safeguard measures
The UK and EU have agreed commitments on the free flow of capital and payments for goods and services in order to facilitate trade and investment. The provisions ensure that the UK and EU can still pursue public policy objectives in their respective jurisdictions. We have also agreed specific exceptions allowing the Parties to impose appropriate temporary reservations – for example, in the event of a balance of payments crisis.
Title V: Intellectual property
The Agreement includes precedented commitments on Intellectual Property (IP) that provide high standards of protection for, and enforcement of, IP rights. These include registered IP rights such as patents, trade marks and designs, and unregistered rights such as copyright, trade secrets and unregistered designs. These provisions refer to, and in many areas exceed, the standards set out in international agreements such as the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) and World Intellectual Property Organization (WIPO) treaties.
The Agreement includes mechanisms for cooperation and exchange of information on IP issues of mutual interest. The Agreement also retains regulatory flexibility for each Party, enabling the UK to develop an IP system in line with our domestic priorities.
With respect to Geographical Indications (GIs), the Agreement enables both Parties to set their own rules and the future directions of their respective schemes. The UK and EU have agreed a review clause on GIs, which provides that the UK and EU may, if both Parties agree it is in their interests, use reasonable endeavours to agree rules for the protection and domestic enforcement of their GIs.
Title VI: Public procurement
The Agreement ensures that the UK can maintain a separate and independent procurement regime and will enable the Government to enact reform of our system. The Agreement provides for a transparent and non- discriminatory framework of rules for trade in public procurement. These rules are based on the WTO Government Procurement Agreement (GPA), with some precedented additions for covered procurement, including the use of electronic means in procurement, electronic publication of notices, environmental, social and labour considerations, and domestic review procedures.
The UK and EU have also agreed an extension of market access coverage beyond the GPA, which includes: the gas and heat distribution sector; private utilities that act as a monopoly; and a range of additional services in the hospitality, telecoms, real estate, education and other business sectors. This will provide businesses with additional opportunities and will benefit contracting authorities through increased competition, creating better value for money for the taxpayer.
Title VII: Small and Medium-sized Enterprises (SMEs)
The Agreement includes typical commitments to provide SMEs with clear and accessible online information about the Agreement, helping them to trade and do business in each Party’s jurisdiction. This covers customs procedures, intellectual property rights, and public procurement. The Agreement commits each Party to provide for a searchable online database, on measures such as customs duties, taxes and rules of origin.
The Agreement also establishes a framework that will allow the Parties to work together to increase opportunities for SMEs and to report on their activities.
Title VIII: Energy
The energy provisions support and strengthen the UK and the EU’s respective energy and climate ambitions. This includes the way in which the parties trade electricity and gas over interconnectors, work together on security of supply, integrate renewables into our respective markets and cooperate to develop opportunities in the North Sea,
The Agreement commits both Parties to develop and implement new, efficient trading arrangements by April 2022. These will ensure that capacity on the interconnectors is maximised and that there is implicit trading in how this capacity is allocated (i.e. capacity and electricity are sold together). This will benefit UK consumers and help integrate renewables and other clean technologies onto the grid in line with our domestic commitment to net zero emissions. Whilst this system is being implemented, alternative trading arrangements will be in place for electricity. We have also agreed arrangements that will ensure we continue to trade gas efficiently via the PRISMA platform.
The UK and EU have agreed to enhance our cooperation on renewable energy, including in the North Sea. This will facilitate the development of hybrid projects that combine interconnectors and offshore windfarms, and opens up the potential for a North Sea grid. This will help realise the region’s huge potential, enabling renewable energy to continue to power our homes and businesses in the future.
The Agreement provides for a new set of arrangements for extensive technical cooperation between the respective regulators and system operators, particularly with regard to security of supply, market abuse and network development.
The Agreement supports trade and investment in energy goods and raw materials between the UK and EU. These will help facilitate open and competitive markets, removing unnecessary barriers to goods.
Title IX: Transparency
This Chapter recognises the benefits of a transparent and predictable regulatory environment. Reflecting existing UK practice, it provides for the publication of laws and regulations, procedures and administrative rulings to the public and business; a mechanism for enquiries from the public; and the possibility for review and appeal of administrative decisions. It applies only to the trade part of the Agreement.
Title X: Good regulatory practices and regulatory cooperation
This Chapter provides principles of good regulatory practice, which reflect existing UK practice, as well as providing the basis for voluntary regulatory cooperation between the UK and the EU.