Part 1: The Comprehensive Free Trade Agreement (CFTA)
1. The Comprehensive Free Trade Agreement (henceforth: the Agreement) should be structured as follows and cover broadly the following ground. Chapter 1: General Definitions and Initial Provisions
2. The Agreement should set out the terms used in the CFTA and should explain the relationships with the World Trade Organization (WTO) and other relevant international agreements.
3. The Agreement should provide liberalised market access for trade in goods. The provisions on market access should be comprehensive and ensure 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; and should ensure that Special Agricultural Safeguards are not applied to goods traded between the parties.
4. There should be standard provisions to uphold and build upon WTO commitments and principles, and to ensure transparency and certainty for businesses. In a similar way to recent EU Free Trade Agreements such as the EU-Canada Comprehensive Economic and Trade Agreement (CETA), it should facilitate trade and address non-tariff barriers for UK exports to the EU (such as import and export licensing restrictions) and vice versa. It should also facilitate cooperation and data-sharing in relation to trade in goods between the UK and the EU.
5. The Agreement should contain provisions on rules of origin which ensure that only ‘originating’ goods are able to benefit from the liberalised market access arrangements agreed in the CFTA. There should be general provisions on the conditions that products need to have satisfied to be considered ‘originating’, similar to the provisions in recent EU FTAs such as the EU-Japan Economic Partnership Agreement (EPA) and CETA. These rules should be supported by predictable and low-cost administrative arrangements for proving origin. All this should be accompanied by detailed product-specific rules of origin. In line with general practice, these arrangements should reflect the requirements of UK and EU industry.
6. The Agreement should provide for cumulation between the UK and the EU, allowing EU inputs and processing to be counted as UK input in UK products exported to the EU and vice versa. It would also be appropriate to include measures that support trade and integrated supply chains with partners with which both the UK and the EU have free trade agreements or other preferential trade arrangements (diagonal cumulation).
7. The Agreement should provide for the protection of domestic industry from injury caused by dumped or subsidised goods, or surges of imports of goods.
8. In line with best practice, the UK and the EU should reaffirm their rights and obligations with regard to trade remedies, as set out under the WTO Anti-Dumping Agreement, Agreement on Subsidies and Countervailing Measures and Agreement on Safeguards, and should demonstrate commitments to transparency, due process and proportionate use of trade remedies.
9. As in recent EU Free Trade Agreements, the Agreement should ensure that the parties follow appropriate procedures for conducting fair and transparent anti-dumping and countervailing investigations by providing for notification, disclosure and consultation requirements which both parties must follow. It should provide that both parties may apply the lesser duty rule and must apply an economic/public interest test during anti-dumping and countervailing investigations to ensure proportionate use of trade remedies. In a similar way to the EU-Japan EPA, it should also include provisions to ensure that neither party may apply multiple safeguard measures to the same good, at the same time.
10. The Agreement should promote trade in goods by addressing regulatory barriers to trade between the UK and EU, while preserving each party’s right to regulate, as is standard in free trade agreements. It should apply to trade in all manufactured goods, as well as to agri-food products for issues not covered by sanitary and phytosanitary (SPS) requirements. The Agreement should cover technical regulation, conformity assessment, standardisation, accreditation, metrology, market surveillance, and marking and labelling.
11. The Agreement should build upon the WTO TBT Agreement, in line with recent EU Free Trade Agreements such as CETA and the EU-Japan EPA. It should promote principles of good regulatory practice when setting technical regulation, to ensure it is not more trade-restrictive than necessary. It should include provisions to facilitate the acceptance of the results of conformity assessment procedures, to ensure that these are not applied more strictly than is necessary to provide adequate confidence to the importing party. It should establish a framework for either party to request that the other consider its technical regulation to be equivalent to its own regulation.
12. The Agreement should encourage the use of relevant international standards and cooperation between standardising bodies, including within international fora. It should include commitments to cooperate and share information when setting marking or labelling requirements to ensure these are applied in a non-discriminatory manner and do not constitute unnecessary obstacles to trade. It should promote a risk-based approach to market surveillance and establish mechanisms for cooperation and data-exchange.
13. The core TBT provisions in the Agreement should be augmented by protocols and annexes that address specific technical barriers, facilitate trade in particular sectors, and reflect existing international commitments and recent EU agreements. These should include the following. Protocol on the mutual recognition of conformity assessment results
14. This protocol should facilitate trade in goods that are subject to third party conformity assessment processes as set out in the technical regulations of either party, consistent with provisions found in CETA. It should apply to all relevant sectors. It should establish routes for the designation of conformity assessment bodies in either party to test against the requirements in the other. It could also include transitional provisions to automatically recognise bodies that are currently recognised between the parties, and any approvals that they have already issued.
Protocol on the mutual recognition of certificates of conformity for marine equipment
15. This protocol should facilitate trade in marine equipment by providing for mutual recognition of certificates of conformity, similar to the EU-US agreement on the same topic. Mutual recognition should be provided for, based on both parties’ adoption of the relevant international instruments of the International Maritime Organisation (IMO) and the relevant testing standards. It should also include dedicated provisions on cooperation, information-sharing and market surveillance.
Annex on chemicals
16. This annex should facilitate trade in chemical substances and related products and ensure high levels of protection for the environment and human and animal health. It could provide for cooperation between UK and EU authorities, including on implementing the Global Harmonised System of Classification and Labelling of Chemicals. In order to ensure high levels of protection and to support UK and EU businesses to meet the separate regulatory requirements of the two markets, the parties could agree data and information sharing mechanisms, in line with the relevant provisions set out in UK and EU regulation and existing third-country mechanisms.
17. This annex should also include a commitment to develop a memorandum of understanding (MOU) to enhance cooperation further, similar to the MOUs that the European Chemicals Agency has agreed with Australia and Canada. Annex on medicinal products
18. This annex should facilitate trade in medicinal products and support high levels of patient safety. It should provide for mutual recognition of certificates of Good Manufacturing Practice (GMP) compliance issued by the regulatory authority of either party, as well as acceptance of batch testing certificates issued by a manufacturer based in either party, in line with provisions in CETA. It should include commitments to cooperate on pharmacovigilance and to develop a comprehensive confidentiality agreement between regulators, in line with agreements between the European Medicines Agency and Swiss, US and Canadian authorities. This should facilitate information sharing and enable regulators to act promptly to safeguard patient safety and public health, such as by responding to urgent adverse drug reactions. To further promote public health, this annex could also cover procedures relating to vaccines and other biological medicinal products, and clinical trials. Annex on motor vehicles and parts
19. This annex should facilitate trade in all categories of motor vehicles, equipment and parts, based on international standards on vehicle safety and environmental protection. It should draw on the parties’ commitments to mutual recognition of type approvals for products covered by UN regulations, consistent with the approach in agreements such as the EU-Japan EPA. It should also allow for either party to designate technical services in the other, in accordance with UK and EU regulation. It could also establish dedicated cooperation mechanisms to address regulatory barriers, and provide for information exchange to support activities including market surveillance. Annex on organic products
20. This annex should facilitate trade in organic products, by enabling products marketed as organic in one party to be marketed as organic in the other. It should contain provisions establishing equivalence between the UK and EU on technical regulation for organic products. It should also include provisions relating to labelling, the exchange of information, peer review, and control authorities. This annex should be broadly in line with the agreement on organics the EU has with Chile.
Sanitary and Phytosanitary (SPS) Measures
21. The UK will maintain a robust SPS regime reflecting our existing high standards. The SPS agreement should build on the WTO SPS Agreement in line with recent EU agreements such as CETA and the EU-NZ Veterinary Agreement.
22. The Agreement should protect human, animal and plant life and health, and the environment while facilitating access to each party’s market. It should ensure parties’ SPS measures do not create unjustified barriers to trade in agri-food goods between the UK and EU. The Agreement should reflect SPS chapters in other EU preferential trade agreements, including preserving each party’s autonomy over their own SPS regimes.
23. The UK will continue to pursue a risk-based approach to disease management and surveillance, based on scientific evidence. In line with precedent, the Agreement should include: a. the recognition of both parties’ health and pest status, and provisions on regionalisation and compartmentalisation, which will enable UK-EU trade to continue from approved zones and compartments in the event of disease and pest outbreaks; 9 b. provisions that will allow the parties to conduct an audit or verification of the SPS controls of the other party, in accordance with agreed underlying principles for carrying out audits; c. Emergency Measures provisions that commit the parties to notifying each other rapidly of any emergency SPS measures, and to taking account of shipments in transit at the time emergency measures are introduced.
24. The Agreement should include an equivalence mechanism for SPS measures, as is standard in free trade agreements, to determine and manage equivalence over time while managing risks to biosecurity and to facilitate access to each party’s markets. The Agreement should also agree reciprocal equivalence in certain commodities, reflecting UK-EU trade flows. The provisions on equivalence should be based on recent EU Free Trade Agreements, such as CETA and the EU-NZ Veterinary Agreement. The Agreement should outline the level of checks and fees to which agrifood commodities will be subject at the border of the importing party. Where the parties make a determination of equivalence, the relevant agri-food goods would be subject to reduced levels of checks at the border and could benefit from simplified certification, in line with CETA and the EU-NZ Veterinary Agreement.
25. The Agreement should include provisions to enhance cooperation between the parties including an agreement on data and information sharing, to the level which is required to manage the delivery of the SPS chapter within the Agreement. It should encourage the use of relevant international standards, guidelines and recommendations of the International Plant Protection Convention (IPPC), the World Organisation for Animal Health (OIE) and Codex Alimentarius, and encourage cooperation in these international fora. The SPS provisions should also cover transparency and nondiscrimination, inspection and approval procedures and approval of establishments without prior inspections. 26. The UK and EU are global leaders in antimicrobial resistance (AMR) and Animal Welfare. As precedented in other EU Free Trade Agreements, the Agreement should include a joint commitment for both parties to establish a framework for UK-EU dialogue and to continue to cooperate on preventing AMR and raising global animal welfare standards.
Customs and Trade Facilitation (CTF)
27. The Agreement should provide for streamlined customs arrangements covering all trade in goods, in order to smooth trade between the parties, while ensuring that customs authorities remain able to protect their regulatory, security and financial interests.
28. To that end, the Agreement should draw on the WTO Trade Facilitation Agreement, the World Customs Organization (WCO) Revised Kyoto Convention, and other international precedent on CTF. It should reflect the nature of trade between the UK and EU and the associated practical steps that customs authorities will need to take in introducing controls on those routes.
29. The Agreement should therefore include measures to facilitate legitimate trade by addressing administrative burdens for traders. This should include provisions to support the efficiency of documentary clearance, customs simplifications, transparency, advance rulings, and non-discrimination. It should also provide for cooperation on measures to improve the efficiency and ease of making declarations over time.
30. The Agreement should also support the flow of goods across borders, particularly with regard to key trade routes between the UK and EU. It should therefore include measures on customs security which support legitimate trade. Acknowledging the practical constraints of “roll-on roll-off” trade, it should include measures to minimise delays at the border associated with customs clearance.
31. The core provisions on CTF should be accompanied by annexes to provide for specific forms of cooperation and trade facilitation. Annex on customs security measures
32. This annex should include measures on customs security which support legitimate trade between the two parties. This should be consistent with the WCO Standards to Secure and Facilitate Global Trade framework and similar to EU agreements with other countries. Annex on customs cooperation and mutual administrative assistance
33. This annex should enable the parties to work together while upholding their respective customs regimes, to protect revenue and combat criminality through efficient and reciprocal exchange of information and mutual assistance across customs matters. The annex should reflect similar agreements the EU has negotiated with partners such as New Zealand and Japan.