While a Memorandum of Understanding on financial services is beneficial for the UK and the EU, it is not critical and does not in itself change the basis on which financial services are traded across the UK-EU border (or not). Most of the circumstances in which we can imagine that a memorandum of understanding would be of real help, for example during a cross-border financial crisis, are circumstances in which we would expect UK and EU regulators to work together on an informal basis, even if no mous is in place. The importance of accepting the elimination of tariffs for sectors crucial for bilateral trade (and also for Spain), such as agri-food and automotive, which would have suffered from high tariffs, should not be underestimated. Nevertheless, daily trade flows will decline sharply. Agricultural and food trade is subject to obtaining health certificates that were not previously required and are now systematically checked in addition to regular checks. Industrial products must bear the CE marking to ensure they meet EU technical requirements, which means that UK manufacturers now need three brands: one for the UK, another for products destined for Northern Ireland and a third for products destined for the EU). Some products such as chemicals or pharmaceuticals now need to be re-registered and face additional barriers to approval. Similarly, VAT and special taxes are due on each import (including online purchases), and not in the context of regular declarations of intra-Community transactions. However, a level playing field does not mean that the UK must comply with the same standards as the EU (as would have been the case with an agreement that kept the UK in the single market), but that it must maintain a similar level of requirements and adapt as the rules change. Of course, the EU would have preferred automatic compensation through tariffs in the event of a regulatory divergence, or at least an interpretation by the Court of Justice of the European Union. In the end, however, it opted for a complex bilateral procedure to assess the divergence, with arbitration if no agreement can be reached.
This means that if UK environmental, labour or state aid standards diverge and the EU believes that this leads to elements of unfair competition, bilateral negotiations will take place to resolve the problem. If the two parties fail to reach an agreement, the case will be subject to arbitration, which may result in compensation through tariffs (or even, for example, the reimbursement of unfair state aid received by companies). The system of bilateral negotiations, arbitration and retaliation is particularly complex for labour and environmental standards and state aid. As part of the prudent approach successfully imposed by the EU, the general dispute settlement mechanism will be launched by informing the Joint Partnership Council. If a solution is not found amicably, the dispute will be subject to binding external arbitration with the injured party, who will be entitled to take countermeasures in case of non-compliance. No more equivalence or mutual alignment – In the agreement, the parties did not provide for a general equivalence regime (“equivalence plus” or “mutual alignment”) that was discussed during the negotiations. Under such a system, a wide range of financial services could have granted market access on the basis of mutual recognition of their respective regulatory standards. Trade between the UK and the EU will vary considerably under the ACC compared to its EU member state. In announcing the agreement on December 24, the British Prime Minister noted that “December 1.
There will be no tariff fence and there will be no non-tariff barriers. Although in many cases the ACC guarantees the duty-free movement of goods between the UK and the EU, this depends on whether the goods themselves meet certain conditions (particularly with regard to origin); and even if there are no future legislative or regulatory changes in the UK or the EU, there will indeed be significant non-tariff barriers between the parties, both in terms of goods and services that did not exist when the UK was an EU Member State. With the EU-UK Trade and Cooperation Agreement of 24 December 2020 (“Agreement”), the UK and the EU have fundamentally changed market access for financial services companies. From 1. In January 2021, UK financial services companies that intend to do business in the EU will no longer be allowed to use the European single market and offer their services across borders on the basis of the European passport. .