Cross-Border Trade in Services
34. The Agreement should promote trade in services and investment by providing service suppliers and investors with certainty and transparency about their future operating environment. The Agreement should enhance cooperation between the parties and competent authorities, and facilitate trade through provisions on issues such as the recognition of professional qualifications.
35. The provisions on services and investment should be based on recent EU FTAs, such as CETA and the EU-Japan EPA, and could draw on precedent from trade negotiations where the EU has made offers to other third-country partners. It should deliver ongoing liberalisation for trade in services and investment and provide the basis for the future development of services trade between the parties.
36. The Agreement should provide for balanced and reciprocal market access. It should have substantial sectoral coverage and cover all four modes of supply.1 The 1 The WTO’s General Agreement on Trade in Services defines four modes of supply: 1. From the territory of one Member into the territory of another Member. 2. In the territory of one Member to the service consumer of any other Member 3. By a service supplier of one Member, through commercial presence, in the territory of another Member 4. By a service supplier of one Member through the presence of natural persons in the territory of another Member . Provisions should respect both parties’ right to regulate and be subject to limited, justified carve-outs, such as for services in the exercise of governmental authority.
37. On Cross-Border Trade in Services specifically, the Agreement should include provisions on: a. Market Access, to ensure service suppliers do not face limitations such as economic needs tests; b. National Treatment, to provide for non-discriminatory treatment between UK and EU service suppliers; c. Local Presence, to ensure that cross-border trade is not inhibited by establishment requirements – as the EU has recently agreed with Mexico; and d. As part of a balanced and reciprocal agreement, Most Favoured Nation treatment, to ensure the Agreement continues to provide for ongoing liberalisation.
38. Both sides should provide a transparent schedule of their commitments against these obligations, and the baseline for the negotiation on schedules should be both parties’ best offer to date. In areas of key interest, such as professional and business services, there may be scope to go beyond these commitments. Chapter 9: Investment 39. In line with existing EU FTAs, the Agreement should include provisions on investment, including: a. Market Access, to ensure investors do not face limitations such as those on corporate form and foreign equity caps; b. National Treatment, to provide for non-discriminatory treatment between UK and EU investors; c. the prohibition of performance requirements, to ensure investments are not subject to conditions such as domestic content requirements; d. senior management and boards of directors, to prevent restrictions on residency and nationality for senior personnel; and e. as part of a balanced and reciprocal agreement, Most Favoured Nation treatment, to ensure the Agreement continues to provide for ongoing liberalisation. 40. Both sides should schedule their commitments against these obligations in a way that provides a clear and predictable basis upon which EU businesses can invest in the UK, and UK businesses can realise investment opportunities in the EU. The baseline for the negotiation on schedules should be both parties’ best offer to date.
Temporary Entry and Stay for Business Purposes
41. The Agreement should also promote trade in services where it is facilitated by the temporary entry and stay of natural persons for business purposes (otherwise known as ‘Mode 4’).
42. The Agreement should include commitments that will provide legal certainty to service suppliers and businesses who move employees between the UK and EU, as well as investors.
43. The Agreement could build on the Mode 4 commitments in CETA and the EU-Japan EPA, and should cover: short-term business visitors, including for establishment purposes; intra-company transferees; contractual service suppliers; and independent (i.e. self-employed) professionals and investors.
44. Both parties should clearly set out, on a reciprocal basis, the activities that can be undertaken by a short-term business visitor.
45. The provisions of the Agreement will be without prejudice to, and consistent with, the UK’s recently announced points-based immigration system.
46. Reflecting recent WTO discussions, the Agreement should tackle bureaucracy and unnecessary regulatory measures. The Agreement, while respecting the parties’ right to regulate, should reduce practical impediments to the ability of foreign service suppliers to compete on equal terms with their domestic counterparts. The Agreement should include reciprocal commitments to ensure that authorisations, licences, qualification requirements, and other permissions, which are needed to provide a service, are open to service suppliers on non-discriminatory terms and are processed in a timely, affordable way.
47. The Agreement should include best practice commitments on the transparency of these processes and the conditions that apply to authorisations, licencing and qualification procedures and requirements, and other permissions. The Agreement should also include best practice commitments on transparency of regulation and the development of technical standards, for example, by identifying sources of information for service suppliers and the relevant competent authorities.
Mutual Recognition of Professional Qualifications
48. The Agreement should provide a pathway for the mutual recognition of professional qualifications, underpinned by regulatory cooperation. Comprehensive coverage would ensure that qualification requirements do not become an unnecessary barrier to trade in regulated services, across the modes of supply, between the UK and the EU.
49. The Agreement should ensure that the parties can set their own professional standards and protect public safety. The parties should explore how competent authorities could recognise applicants who demonstrate that they meet the host states’ standards. The Future Relationship with the EU | Th
50. The Agreement should provide commitments to ensure fair and equal access to telecommunications networks and services, preventing anti-competitive practices and delivering benefits for consumers. Telecommunications services provide key infrastructure for the digital economy and equitable access will provide mutual benefits for the parties, reinforcing the provisions of the digital chapter.
51. The Agreement should provide commitments to promote trade in postal and delivery services, while protecting the UK’s right to define national standards and regulatory requirements. The UK and the EU are world leaders in the area of postal services liberalisation and the Agreement should reflect continued commitment to these principles.
52. The Agreement could promote trade in audio-visual services as well as associated businesses in the audio-visual supply chain by ensuring fair access and treatment for audio-visual services, and provide protections for the UK’s audio-visual services policy framework.
53. The Agreement should promote financial stability, market integrity, and investor and consumer protection for financial services, providing a predictable, transparent, and business-friendly environment for cross-border financial services business.
54. The Agreement should include legally binding obligations on market access and fair competition, in line with recent CETA precedent.
55. The Agreement should also build on recent precedent, such as the EU-Japan EPA and international best practice, by establishing regulatory cooperation arrangements that maintain trust and understanding between our autonomous systems of regulation as they evolve. This could include appropriate consultation and structured processes for the withdrawal of equivalence findings, to facilitate the enduring confidence which underpins trade in financial services. 2 2 Equivalence decisions themselves are covered separately under “Technical and other processes beyond the scope of the future relationship negotiations”.
56. The Agreement should promote trade in digital services and facilitate modern forms of trade in both services and goods and in both new, technology-intensive businesses and traditional industries.
57. The Agreement should include commitments on market access and regulatory governance of digital trade. Commitments on market access should minimise barriers to the supply of digital services provided from the territory of a party into the territory of the other party and will provide a clear and predictable basis upon which business can invest. This should lock in regulatory certainty, while preserving the UK’s regulatory autonomy.
58. The Agreement should include provisions to promote an open, secure and trustworthy online environment; encourage regulatory cooperation and a strategic dialogue on emerging technologies; and stimulate e-commerce through measures that facilitate the cross-border flow of data. Elements of this could draw upon international best practice and ongoing negotiations, for example negotiations on the WTO’s Joint Statement Initiative on E-Commerce.
59. Digital is a growing, dynamic sector. Reflecting this, the digital provisions in recent EU Free Trade Agreements have been evolving. The provisions on digital trade in the Agreement could, in specific areas, go beyond those precedents to reflect the direction of travel in current digital trade negotiations. For example, provisions on electronic authentication have continued to evolve as part of EU Free Trade Agreement negotiations with Australia and Mexico and at the WTO, and this should be reflected in the Agreement.
Capital Movements, Payments and Transfers
60. In line with EU-Japan EPA and CETA precedents, the Agreement should provide commitments on capital movements and payments as a key facilitator of trade and investment. The Agreement should ensure protection for bilateral capital flows and prevent the imposition of restrictions, while safeguarding the ability of the parties to pursue legitimate public policy objectives.
International Road Transport
61. The UK and EU should secure continued connectivity for commercial road transport services, i.e. road haulage and passenger transport (buses and coaches).
62. The UK and EU should ensure a liberalised market for road transport between the UK and the EU to allow for the competitive provision of services. UK and EU road transport operators should be entitled to provide services to, from and through each other’s territories with no quantitative restrictions. While there is no direct EU precedent for this (the EU’s FTAs are with countries where significant cross-border road transport is impractical for geographical reasons) this is consistent with many commercial road transport bilateral agreements EU Member States have with countries outside the EU. The Agreement, which could take the form of a protocol to the CFTA, could also cover other rights and operating flexibilities that bring economic The Future Relationship with the EU | The UK’s Approach to Negotiations 15 and environmental benefits through increasing the efficiency of road transport services.
63. UK hauliers and passenger transport operators would be expected to comply with the relevant international rules (such as ECMT and AETR3 ) when operating outside of the UK. The Agreement should respect the UK’s autonomy as a third country and not require the UK to follow EU standards. The parties should agree how to cooperate on monitoring and enforcement. The Agreement would leave the UK free to regulate domestic haulage and passenger transport, including in a way which reflects the circumstances of the island of Ireland.