Customs Union Goods and Regulation
The general level of customs tariff is relatively low on average; approximately four per cent. Quotas are restricted in trade between WTO parties. Agricultural goods are subject to exceptions. Preferential quotas and tariffs subject to quotas may be negotiable in relation to agricultural products.
Tariff-free access for goods to the EU might reasonably be expected to be included in a free trade agreement. The more challenging agreements typically relate to agriculture and fishing.
The terms of customs’ procedures, facilitation, cooperation and rules of origin are largely governed by World Trade Organisation practice and may be relatively easily agreed.
An advantage of a customs union is that it greatly enhances frictionless trade. In particular certificates of origin are not required in trade between members of a customs union.
The UK government has indicated that it does not want to remain in the EU Customs Union. This is because it would mean membership of the EU’s external common commercial policy and preclude free trade agreements with third countries.
Services are likely to be the most difficult area for agreement in a UK EU post-Brexit Trade Agreement. The existing free trade agreements entered by the EU which make provision for significantly less freedom to provide services than membership of the EU. There is likely to be significantly less freedom for trade in services with the single market. The extent of access is likely to be a contentious matter.
The GATS agreement on Services provides for a default must favoured nation and non-discrimination rules. The principal exception is by way of a comprehensive trade agreement. The GATS General Agreement on Services requires there to be substantial coverage in terms of the number of the sectors, volume of trade affected and the modes of supply.
There must be no exclusion of any particular type of supply. There must be the absence of or the elimination of substantially all discrimination on a national basis in the sectors covered by the agreement. The state parties may decide on the modes of supply of services to liberalise for each sector, provided that no mode of supply is excluded completely.
The WTO Trade in Services Agreement seeks services liberalisation for those willing to adhere and is under continuing development and negotiation. The EU is party to the trading services agreement together with 20 other states and it is likely that the UK will seek to continue to support it.
Modern trade agreements seek to deal with internal barriers to trade than before as they seek to embrace services.
Under the forms of agreements entered, the supply sectors are either listed as included or excluded. The latter method is more common in recent comprehensible agreements so that all sectors are covered unless excluded.
Some sectors are the subject of separate agreements, due to the issues involved such as cultural services and financial services. Freedom of movement is sometimes liberalised to some extent in conjunction with provisions in relation to services.
CETA requires the EU and Canada to list discriminatory measures and quantitative restrictions in relation to services across all sectors. EU businesses are granted greater access to Canada’s postal telecommunications and maritime transport services markets. They are granted greater access to public procurement.
The EU-Canada agreement does not provide for free movement of people. The EU-Canada trade agreement provides more limited provision on the mutual recognition of professional qualifications than applies within the EU. There is a framework for professional associations to recognise each other’s qualifications. There is no access to the profession of the other as of rights.
There is a requirement to accept arrangements for temporary movement of professionals working in service sectors Staff transferred by their company may be accompanied by spouses and family if working in the other territory. The period for transfers of contractual service providers and independent professionals is extended.
In practice Canadian firms are more likely to establish local subsidiaries, employing locals who hold qualifications in that EU country.
The EU Canadian agreement provides for a limited right of establishment and the ability to set up a subsidiary. However, this is very far short of providing passporting rights and being able to provide services from the UK or EU, into the other.
Deep and Comprehensive Free Trade Agreements
A free trade agreement might be part of a wider association agreement providing for a framework of cooperation between the EU and the UK. Such an agreement would deal with trade and also cover wider issues.
The EU has recently entered association agreements with Ukraine and Georgia. They provide a wide degree of access in a single market but do not allow free movement of persons. They do provide precedents for the divisibility of the so-called four freedoms (services, goods, persons, and capital) in that free movement of persons is restricted.
The agreement with Ukraine is referred to as a Deep and Comprehensive Free Trade Agreement. It grants Ukraine tariff-free access for goods. It provides for cooperation on VAT and customs procedures. If facilitates deepening of trade relationships in key services such as finance, transport, and energy.
Ukraine is obliged to conform at the relevant EU sectoral legislation in order to obtain market access. There are provisions for mutual recognition of technical standards, the observance of the EU policies on public procurement, state aid, competition and intellectual property. There are provisions for mediation and trade dispute settlement involving a tribunal of three judges.
The EU-Ukraine agreement provides for increased cooperation in security policy, asylum, migration, border management and the combating of organised crime.
An association agreement would be a mixed agreement requiring EU member state ratification in most cases.