Comparing the UK and EU draft working texts for a UK/EU trade agreement
The UK and the EU have published their draft working texts for a trade agreement that is going to replace the existing arrangements between the UK and the EU, expected to end on 31 December 2020. The NFU's EU exit and international trade team has provided detailed briefings on the two parties’ proposals. You can read more on the UK text here and on the EU text here.
The purpose of this briefing is to set out a comparison of the UK and EU positions in relation to areas of relevance for the UK agri-food sector and to provide the NFU perspective on the key issues.
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The UK and the EU agree on the aim to maintain liberalised market access for trade in goods, ensuring there are no tariffs, fees, charges and quantitative restrictions on trade in manufactured and agricultural goods between the UK and the EU, where goods meet the relevant rules of origin.
The NFU supports the UK government’s and the EU’s common objective of securing a free trade agreement that involves no tariffs, fees, charges and quantitative restrictions on each other’s goods. It is welcome that both the EU and UK are aiming to maintain tariff free, quota free access for each other’s goods. If realised, then this would achieve one part of the NFU ambition for “free and as frictionless trade as possible with the EU.” Unfortunately, even with “free” trade there is still scope for “friction” and this too must be addressed by negotiators.
The UK proposes RoO which means only originating goods can benefit from free trade. They propose that if the good is not wholly originating (plants grown and harvested / animals born and raised), then the parties should be able to use either weight or value method to determine if a good has been sufficiently transformed. Although most modern FTAs use weight methodology, the ability to use value better accommodates premium products and any added value processing, it is also what is provided for in CETA. The UK text proposes that bilateral cumulation between UK and EU should be allowed, as well as diagonal cumulation with countries with which both the UK and the EU have trade agreements. Draft text on Product Specific Rules (PSRs) has not been shared, but we understand the UK is seeking maintenance of the status quo.
The EU also proposes an approach to RoO which means only originating goods can qualify for preferential treatment. The EU proposes that if a good is not wholly originating, then only the weight methodology should be used to determine if a product has been sufficiently transformed. The draft EU text provides for bilateral cumulation with the UK but does not provide for any diagonal cumulation with mutual FTA partners. Draft text on PSR has not been tabled, but we understand it will likely be based on text proposed for EU agreements with NZ and Australia which take a more restrictive approach to the