Draft framework for future UK-EU relationship published

The draft Political Declaration setting out the framework for the UK-EU future relationship has been agreed at negotiators’ level and agreed in principle at political level, subject to endorsement by EU27 leaders at a Council summit this Sunday.

It sets out the scope and terms of the future UK-EU relationship. It provides instructions to negotiators that will deliver a future relationship by the end of 2020 covering an economic partnership, a security partnership and agreements on areas of shared interest.

Services (29-36, 43)

  • The declaration sets that the UK and EU will set out an ambitious, comprehensive and balanced arrangements on trade in services and investment, delivering a level of liberalisation in trade in services well beyond the parties’ WTO commitments.
  • Since the draft outline published next week, the commitments on services and investment have been expanded to include text that highlights the need to respect each party’s 'right to regulate'. As below, it also highlights 'professional and business services' specifically with regards to Article V of the General Agreement on Trade in Services Agreement on trade in services.
    • 30. In line with Article V of the General Agreement on Trade in Services, the Parties should aim at substantial sectoral coverage, covering all modes of supply and providing for the absence of substantially all discrimination in the covered sectors, with exceptions and limitations as appropriate. The arrangements should therefore cover sectors including professional and business services, telecommunications services, courier and postal services, distribution services, environmental services, financial services, transport services and other services of mutual interest.
  • It notes that the arrangements should include provisions on market access and national treatment under host state rules for the parties' service providers and investors. It also says arrangements should allow for the temporary entry and stay of natural persons for business purposes in defined areas.
  • It says that the parties should agree discipline on domestic regulation and that parties should establish a framework for voluntary regulatory cooperation in areas of mutual interest, including exchange of information and sharing best practice.
  • Of note, it states the intention to develop appropriate arrangements on professional qualifications, recognising they are 'necessary to the pursuit of regulated professions'.
    • 36. The Parties should also develop appropriate arrangements on those professional qualifications which are necessary to the pursuit of regulated professions, where in the Parties' mutual interest.
    • The declaration also says that the parties should include provisions to enable free movement of capital and payments related to transactions liberalised under the economic partnership, subject to relevant exceptions.

    Dispute settlement (79, 124, 132-135)

    • The document provides stronger language on the need to maintain 'open and fair' competition and a level playing field, and calls for mechanisms for enforcement and dispute settlements as part of the future relationship. The base for dispute settlement are highlighted in the Withdrawal Agreement, with parties first attempting to resolve matters through discussion and consultation before referring to the Joint Committee for formal resolution. This Joint Committee may refer to an independent arbitration panel, whose eventual decision will be binding. Disputes based on Union law will be referred to the Court of Justice of the European Union (CJEU) as the sole arbiter of Union law.

    Mobility (50-56)

    • The parties commit to 'establish mobility arrangement based on non-discrimination between the Union’s Member States and full reciprocity'. These would allow visa-free travel or short-term visits and both sides 'agree to consider conditions for entry and stay for purposes such as research, study, training and youth exchanges'. It notes that the UK has decided that the principle of free movement of persons between the Union and the UK will no longer apply.

    Family law (57-58)

    • The declaration highlights a commitment to the 'effective application of the existing international family law instruments', noting the UK’s intent to accede to the 2007 Hague Maintenance Convention. It also states that options will be explored for judicial cooperation in matrimonial, parental responsibility and 'other related matters'.

    Judicial cooperation on criminal matters (88-90)

    • The declaration recognise the value in facilitating operational cooperation between the United Kingdom’s and member states’ law enforcement and judicial authorities, and will therefore work together to identify the terms for the United Kingdom’s cooperation via Europol and Eurojust.
    • It says that the effective arrangements based on streamlined procedures and time limits enabling the UK and EU to surrender suspected and convicted persons efficiently and expeditiously, with the possibilities to waive the requirement of double criminality and to determine the applicability of these arrangements to own nationals and for political offences.
    • The declaration states the need to consider further arrangements for cooperation, including joint investigation teams with capabilities that are equivalent to Union mechanisms where technically and legally possible.

    Intellectual property (44-47)

    • The declaration sets out the protection and enforcement of intellectual property rights, going beyond the standards of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights and the World Intellectual Property Organisation conventions where relevant.
    • It will preserve the parties' current high levels of protection, inter alia, of certain rights under copyright law, such as the sui generis right on databases and the artists' resale 10 right.
    • It notes the protection afforded to existing geographical indications in the Withdrawal Agreement, the parties should seek to put in place arrangements to provide appropriate protection for their geographical indications.
    • They also set out that the UK and the EU should maintain the freedom to establish their own regimes for the exhaustion of intellectual property rights. It also notes that the parties should establish a mechanism for cooperation and exchange of information on intellectual property issues of mutual interest, such as respective approaches and processes regarding trademarks, designs and patents.

    Anti-money laundering (91)

    • The declaration states that the UK and EU agree to support international efforts and go beyond the standards of the Financial Action Task Force with regard to beneficial ownership transparency and ending anonymity associated with virtual currencies. The revised text states this will be done through obliging virtual currency exchanges and custodian wallet providers to apply customer due diligence controls.

    Trading relationship

    • The declaration includes no reference to 'frictionless trade' as was proposed by the UK. However, with regard to trade in goods, includes a commitment for the EU and UK to negotiate 'a free trade area, combining deep regulatory and customs cooperation, underpinned by provisions ensuring a level playing field for open and fair competition'. The text also envisages a 'trading relationship on goods that is as close as possible'.
    • It references 'facilitative arrangements and technologies' to avoid the need for the Irish backstop. The Political Declaration refers a way to put in place 'ambitious customs arrangements' by envisaging the possibility of 'making use of all available facilitative arrangements and technologies'. It states that 'such facilitative arrangements and technologies will also be considered in developing any alternative arrangements for ensuring the absence of a hard border on the island of Ireland'.

    Institutional framework and governance (120-128)

    • The text notes that the institutional framework of the EU-UK relationship could take the form of an Association Agreement, an ambitious model for EU relations with third countries (eg Ukraine).
    • The declaration also refers to the possibility of reviewing the future relationship should positions and red lines on either side change or evolve in the future.

    Future relationship negotiations (138-147)

    • Both sides agree to drive forward preparations for trade negotiations after Sunday’s Council meeting to ensure that they are in the position to formally begin negotiations once the UK leaves the EU in March 2019. As part of these preparations the EU and UK will draw up a proposed schedule to deliver the required work programme. Alternative arrangements relating to Ireland will be given priority.
    • After the UK leaves the EU, both sides will begin negotiations under Article 218 of the Treaty on the Functioning of the EU. This article will shape the process in a similar manner as Article 50 shaped negotiations since March 2017. Immediately after the UK leaves the EU both parties will agree on a programme setting out the structure and format of the negotiation rounds, and a formal schedule of negotiating rounds.
    • The EU and UK will organise a high-level conference every six months to take stock of progress and agree on actions to move forward.

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