Post Brexit – A New Trade and Cooperation Agreement between The European Union and The United Kingdom

On 1 January, the new EU – UK trade and cooperation agreement entered into force. The agreement regulates the relationship between the future cooperation of the parties following the UK’s departure from the internal market and the customs union.

As a result of the UK´s departure from the EU, a withdrawal agreement was established between the UK and the EU. Among other things, the withdrawal agreement stated that the UK would exit the EU on 1 February 2020. However, it was also stated in the withdrawal agreement that the UK was obligated to comply with EU law during a transition period ending on 31 December 2020.

Due to the departure from the EU, the UK market and the market of the remaining EU member states, such as Sweden, were separated. In order to maintain the movement of goods, services and persons, it was of great importance for the parties to agree on the future cooperation upon expiry of the transition period. Therefore, the trade and cooperation agreement (TCA) was approved by the parties on 24 December 2020. The TCA entered into force on 1 January 2021 and applies provisionally until 28 February 2021, at which time it is expected to be approved by all parties concerned.

The UK´s departure from the EU’s internal market and customs union entails extensive changes in several areas. EU law in the areas of import / export restrictions, company law, value-added tax, competition law, state aid, copyright, electronic communications / trade and posting of workers, are no longer directly applicable in and / or in relation to the UK. The European Commission’s website contains summaries of the impact on a large number of industries following the UK departure (sectoral guidance notices) which can be found here.

Below, attention will be drawn to how a few, but practically significant, subject areas are affected by the UK´s departure from the EU and from the establishment of the TCA.

Trade in goods and services

Companies exporting and importing goods between the EU and the UK will continue to be able to transfer goods across the markets duty-free, given that the goods comply with the so-called rules of origin stated in the TCA. The rules of origin require a certain degree of processing of a product in an EU member state or in the UK (or both) in order to achieve a standard of origin. If certain goods do not meet with the rules of origin, the EU Common Customs Tariff will apply to goods imported from the UK while the UK customs tariff will apply on goods exported to the UK.

The UK´s departure from the EU also entails that the internal market’s principle of mutual recognition is no longer applicable on regulated services, such as banking, payment and e-commerce services. Thus, such service providers established within the EU should identify UK licenses required for existing operations in the UK. Corresponding restrictions on the freedom to provide services between markets, also apply to providers of information society services.

Additionally, during the spring of 2021, the EU and the UK are expected to establish a common framework on the area of financial services.

Data protection and transfers of personal data

As a result of the UK´s departure from the EU, the General Data Protection Regulation (the GDPR) is no longer directly applicable in the country. Consequently, within the meaning of the GDPR, the UK is considered to be a third country. However, the UK has implemented a national legislation, the UK Data Protection Act, which reflects the main principles of the GDPR.

According to the TCA, personal data can be transferred between the EU and the UK for a limited period of time, provided that the UK’s current data protection legislation (as stated above) remains unchanged. The transition period ends on 30 June 2021, at which time the European Commission is expected to have decided whether the UK meets the requirements for an adequate level of data protection. If such decision is made, personal data may continue to be transferred freely between the EU and the UK, in accordance with the GDPR regulations.

If the European Commission decides that the UK does not meet the requirements for an adequate level of data protection, organisations will be obligated to ensure that one of the transfer mechanisms referred to in Article 46 of the GDPR, such as standard contractual clauses, is in place prior to any transfer of personal data to the country. In the light of the European Data Protection Board’s recently adopted recommendations on third country transfers (01/2020), and if a decision on the adequate level of data protection is not taken regarding the UK, it may be necessary to take additional safety measures related to data transfers.

The provisions on the transfer of personal data between the EU and the UK can be found in Article FINPROV.10A of the TCA.

Trademark protection

From 1 January 2021, trademarks and international registrations that are already registered in the EU (according to the so-called Madrid Protocol) and have been designated for the EU, will automatically be converted into national British trademark registrations with regards to the legal protection of trademarks in the UK. Such UK registrations will correspond with the EU designation, i.e. include the same goods and services and have the same application, priority, registration and renewal dates as the original registration. The registration will be assigned a special UK registration number.

As a result of the UK’s departure from the EU, EU trademark applications will no longer include the UK. However, anyone who has applied for an EU trademark before the end of 2020, will be able to apply for a registration of a corresponding national right in the UK no later than September 2021. Such a separate application will be processed in accordance with UK law and assigned a national application number.

The EU-UK TCA can be found here.

If you want to know more about the TCA you are welcome to contact Esa Kymäläinen, lawyer and partner, at TIME DANOWSKY Advokatbyrå. For questions about trademark rights, please contact Maria Häägg, lawyer at TIME DANOWSKY Advokatbyrå.