Source: EURLEX
Language: en
Format: md

**Council of the**
**European Union**

**Interinstitutional File:**

**2020/0382(NLE)**

**PROPOSAL**

**Brussels, 27 December 2020**
**(OR. en)**

**14336/1/20**
**REV 1**

**UK 136**

From: Secretary-General of the European Commission, signed by Ms Martine
DEPREZ, Director

To: Mr Jeppe TRANHOLM-MIKKELSEN, Secretary-General of the Council
of the European Union

No. Cion doc.: COM(2020) 856 final/2

Subject: Proposal for a COUNCIL DECISION on the conclusion, on behalf of the
Union, of the Trade and Cooperation Agreement between the European
Union and the European Atomic Energy Community, of the one part,
and the United Kingdom of Great Britain and Northern Ireland, of the
other part, and of the Agreement between the European Union and the
United Kingdom of Great Britain and Northern Ireland concerning
security procedures for exchanging and protecting classified information

Delegations will find attached document COM(2020) 856 final/2.

Encl.: COM(2020) 856 final/2

14336/1/20 REV 1

## UKTF EN

EUROPEAN

COMMISSION

Brussels, 26.12.2020
COM(2020) 856 final/2

2020/0382 (NLE)

COM(2020) 856 final of 25.12.2020 downgraded on 26.12.2020.

Proposal for a

**COUNCIL DECISION**

**on the conclusion, on behalf of the Union, of the Trade and Cooperation Agreement**
**between the European Union and the European Atomic Energy Community, of the one**
**part, and the United Kingdom of Great Britain and Northern Ireland, of the other part,**

**and of the Agreement between the European Union and the United Kingdom of Great**

**Britain and Northern Ireland concerning security procedures for exchanging and**

**protecting classified information**

# **EN EN**

**EXPLANATORY MEMORANDUM**

**1.** **CONTEXT** **OF** **THE** **PROPOSAL**

        - **Reasons for and objectives of the proposal**

On 29 March 2017, the United Kingdom notified the European Council
pursuant to Article 50 of the Treaty on European Union (‘TEU’) of its intention
to withdraw from the European Union and from the European Atomic Energy
Community.

On 30 January 2020, following the consent of the European Parliament, the
Council adopted Decision (EU) 2020/135 on the conclusion of the Agreement
on the withdrawal of the United Kingdom of Great Britain and Northern
Ireland from the European Union and the European Atomic Energy
Community (the ‘Withdrawal Agreement’). [1] The Withdrawal Agreement
entered into force on 1 February 2020 and provides for a transition period
during which Union law applies to and in the United Kingdom in accordance
with that agreement. That period will end on 31 December 2020.

In its guidelines of 23 March 2018, the European Council restated the Union’s
determination to have as close as possible a partnership with the United
Kingdom in the future. According to these guidelines, such a partnership
should cover trade and economic cooperation as well as other areas, in
particular the fight against terrorism and international crime, as well as
security, defence and foreign policy. The European Council set those
guidelines with a view to the overall understanding of the framework for the
future relationship that was to be elaborated in a political declaration
accompanying and referred to in the Withdrawal Agreement.

The political declaration that accompanied the Withdrawal Agreement sets out
the framework for the future relationship between the European Union and the
United Kingdom [2] (‘Political Declaration’). It establishes the parameters of ‘an
ambitious, broad, deep and flexible partnership across trade and economic
cooperation with a comprehensive and balanced Free Trade Agreement at its
core, law enforcement and criminal justice, foreign policy, security and
defence and wider areas of cooperation.’

Article 184 of the Withdrawal Agreement provides that the Union and the
United Kingdom are to use their best endeavours, in good faith and in full
respect of their respective legal orders, to take the necessary steps to negotiate
expeditiously the agreements governing their future relationship referred to in
the Political Declaration and to conduct the relevant procedures for the
ratification or conclusion of those agreements, with a view to ensuring that
those agreements apply, to the extent possible, as from the end of the transition
period.

1 Council Decision (EU) 2020/135 of 30 January 2020 on the conclusion of the Agreement on the
withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and
the European Atomic Energy Community (OJ L 29, 31.1.2020, p. 1).
2 Political declaration setting out the framework for the future relationship between the European Union
and the United Kingdom (OJ C 34, 31.1.2020, p. 1).

# EN 1 EN

On 25 February 2020, the Council adopted Decision (EU, Euratom) 2020/266 [3]
authorising the opening of negotiations with the United Kingdom of Great
Britain and Northern Ireland for a new partnership agreement. The
Commission was appointed as the Union negotiator. The Council Decision also
included an addendum with the directives for the negotiation of a new
partnership with the United Kingdom of Great Britain and Northern Ireland
(‘negotiating directives’).

On 24 December 2020, the negotiations were completed and the Parties agreed
at the level of the Chief Negotiators on the Trade and Cooperation Agreement
and on the Agreement on security procedures for exchanging and protecting
classified information (the ‘Security of Information Agreement’).

The Security of Information Agreement is a supplementing agreement to the
Trade and Cooperation Agreement and, in accordance with Article
COMPROV.2 of the Trade and Cooperation Agreement, constitutes an integral
part of the overall bilateral relations between the Union and the United
Kingdom as governed by the Trade and Cooperation Agreement and forms part
of the overall framework. The Security of Information Agreement is linked to
the Trade and Cooperation Agreement by the same date of entry into
application and the same termination provision.

In parallel to the Trade and Cooperation Agreement and the Security of
Information Agreement, the Commission has negotiated the Agreement
between the Government of the United Kingdom of Great Britain and Northern
Ireland and the European Atomic Energy Community for Cooperation on the
Safe and Peaceful Uses of Nuclear Energy. The Recommendation for a Council
decision on the approval of that agreement is submitted together with this
proposal under a separate procedure. In addition to the conclusion of the
Agreement for Cooperation on the Safe and Peaceful Uses of Nuclear Energy,
that procedure also covers the conclusion of the Trade and Cooperation
Agreement as regards matters falling under the competence of the European
Atomic Energy Community (in particular, the participation of the United
Kingdom as a third country in the Euratom Research Programme and in the
European fusion activities, including ITER activities, through its membership,
as a third country, in the European Joint Undertaking for ITER and the

–
Development of Fusion Energy Fusion for Energy).

        - **Consistency with existing policy provisions in the policy area**

Both the European Council guidelines of 23 March 2018 and the Political
Declaration called for a close partnership between the Union and the United
Kingdom.

The negotiations of the Trade and Cooperation Agreement and the Security of
Information Agreement were preceded by the conclusion of the Withdrawal
Agreement, which entered into force on 1 February 2020. The Withdrawal
Agreement provides for a transition period during which Union law applies to
and in the United Kingdom in accordance with that agreement. The transition

3 Council Decision (EU, Euratom) 2020/266 authorising the opening of negotiations with the United
Kingdom of Great Britain and Northern Ireland for a new partnership agreement (OJ L 58, 27.2.2020, p.
53).

# EN 2 EN

period will end on 31 December 2020. The Trade and Cooperation Agreement
and the Security of Information Agreement aim to regulate the new
relationship between the Union and the United Kingdom, and hence to prevent
significant disruptions which could otherwise arise in that relationship
following the end of the transition period.

The Trade and Cooperation Agreement sets a solid basis for a mutually
beneficial and balanced partnership between the Union and the United
Kingdom. It also reflects the fact that, as a non-member of the Union, the United
Kingdom does not have the same rights nor enjoy the same benefits as a member
country.

        - **Consistency with other Union policies**

The Trade and Cooperation Agreement and the Security of Information
Agreement fully respect the Treaties and preserve the integrity and the
autonomy of the Union legal order. These agreements will not require the
Union to amend its rules, regulations or standards in any regulated area. They
promote the values, objectives, and interests of the Union, and ensure the
consistency, effectiveness and continuity of its policies and actions.

All imports from the United Kingdom will have to satisfy Union rules and
regulations (e.g. technical rules and product standards, sanitary or
phytosanitary rules, regulations on food and safety, health and safety standards,
environmental protection, consumer protection).

The Trade and Cooperation Agreement includes specific titles on Trade and
Level playing field standards in the areas of labour, environment, fight against
climate change and sustainable development, which link the economic part of
the Trade and Cooperation Agreement to the Union’s overall objectives in
sustainable development and specific objectives in the area of labour,
environment, and climate change.

Participation of the United Kingdom in Union programmes will fully respect
the basic acts defining the programmes and the existing Union regulations
related to financial management such as the Financial Regulation.

**2.** **LEGAL** **BASIS**

The substantive legal basis for the proposed Council Decision on conclusion is
Article 217 TFEU. This legal basis is the most appropriate given the broad scope of
the envisaged partnership.

The procedural legal basis is Articles 218(6) TFEU, Article 218(7) TFEU and the
second subparagraph of Article 218(8) TFEU. Article 218(6) TFEU provides for a
conclusion pursuant to a decision of the Council, following the European
Parliament’s consent. The second subparagraph of Article 218(8) TFEU provides for
unanimity voting in the Council. In addition, Article 218(7) TFEU has been added as
a legal basis as it is appropriate for the Council to authorise the Commission to
approve on the Union’s behalf certain modifications to the Trade and Cooperation
Agreement that are to be adopted by a simplified procedure or by a body set up by
the Trade and Cooperation Agreement.

# EN 3 EN

Thus, the legal basis for the proposed Council Decision is Article 217 TFEU, read in
conjunction with Articles 218(6) TFEU, Article 218(7) TFEU and the second
subparagraph of Article 218(8) TFEU.

**3.** **OTHER** **ELEMENTS**

        - **Implementation by bodies established under the Trade and Cooperation**
**Agreement**

Title III of Part One of the Trade and Cooperation Agreement establishes a
Partnership Council that will oversee the attainment of the objectives of that
agreement and of any supplementing agreement. The Partnership Council is
comprised of representatives of the Union and of the United Kingdom at
ministerial level who will meet at least once a year and will supervise and
facilitate the implementation and application of the Trade and Cooperation
Agreement and of any supplementing agreement, such as the Security of
Information Agreement.

The Partnership Council may adopt decisions in respect of all matters for
which the Trade and Cooperation Agreement or any supplementing agreement
so provides. The Partnership Council can only take its decisions and make
recommendations by mutual agreement between the Union and the United
Kingdom. It can in no way restrict the decision-making at Union level. The
Union and the United Kingdom may, through the Partnership Council or
Specialised Committees, decide to amend certain aspects of the Trade and
Cooperation Agreement or of any supplementing agreement, only in those
cases specifically provided therein. When the Parties approve such a decision,
it has to be subject to their respective applicable internal requirements and
procedures.

In the performance of its tasks, the Partnership Council will be assisted by the
Trade Partnership Committee, which in turn will be assisted by Trade
Specialised Committees, and by other Specialised Committees.

The Trade and Cooperation Agreement establishes the following Trade
Specialised Committees:

(a) The Trade Specialised Committee on Goods;

(b) The Trade Specialised Committee on Customs Cooperation and Rules of
Origin;

(c) The Trade Specialised Committee on Sanitary and Phytosanitary
Measures;

(d) The Trade Specialised Committee on Technical Barriers to Trade;

(e) The Trade Specialised Committee on Services, Investment and Digital
Trade;

(f) The Trade Specialised Committee on Intellectual Property;

(g) The Trade Specialised Committee on Public Procurement;

(h) The Trade Specialised Committee on Regulatory Cooperation;

(i) The Trade Specialised Committee on Level Playing Field for Open and
Fair Competition and Sustainable Development;

# EN 4 EN

(j) The Trade Specialised Committee on Administrative Cooperation in
VAT and Recovery of Taxes and Duties.

The Trade and Cooperation Agreement establishes the following Specialised
Committees:

(a) The Specialised Committee on Energy;

(b) The Specialised Committee on Air Transport;

(c) The Specialised Committee on Aviation Safety;

(d) The Specialised Committee on Road Transport;

(e) The Specialised Committee on Social Security Coordination;

(f) The Specialised Committee on Fisheries;

(g) The Specialised Committee on Law Enforcement and Judicial
Cooperation;

(h) The Specialised Committee on Participation in Union Programmes.

The Partnership Council may establish or dissolve Trade Specialised
Committees or Specialised Committees, and the Trade Partnership Committee
may establish or dissolve Trade Specialised Committees.

The Trade and Cooperation Agreement also provides for a role for the
Partnership Council and Specialised Committees in dispute settlement, which
is addressed in Title I of Part Six of the Trade and Cooperation Agreement.

        - **Implementation and application of the Trade and Cooperation Agreement**
**in the Union**

In accordance with Article 216(2) TFEU, agreements concluded by the Union
are binding upon the institutions of the Union and its Member States.

It is appropriate to authorise the Commission, pursuant to Article 218(7)
TFEU, to approve on behalf of the Union certain modifications to the Trade
and Cooperation Agreement that are to be adopted by a simplified procedure or
by a body set up by the Trade and Cooperation Agreement. Such modifications
relate to the following provisions of the Trade and Cooperation Agreement:

–
paragraphs 4, 5 and 8 of Article TBT.9 [Cooperation on market
surveillance and non-food product safety and compliance], as regards the
establishment of or the amendments to the arrangements for the regular
exchange of information between the Parties set out in Annexes [TBTXX] and [TBT-ZZ];

–
paragraph 3 of Article 2 [Product definitions, oenological practices and
processes] and paragraph 3 of Article 3 [Certification requirements on
import in the respective territories of the Parties] of Annex TBT-5 [Trade
in Wine], as regards amendments of the Appendices to that Annex;

–
paragraph 2 of Article 1 [Objective and scope] of Annex TBT-4 [Organic
Products], as regards amendments of the Appendices to that Annex;

–
Article 11 [Amendments to appendices] of Annex TBT-2 [Medicinal
Products], as regards amendments of the Appendices to that Annex;

# EN 5 EN

–
Article PPROC.18 [Amendment of Section B of ANNEX.PPROC-1]
concerning amendments to Section B of Annex PPROC-1 on market
access commitments;

–
Article AVSAF.12 [Adoption and amendments of annexes to this
Chapter] as regards amendments to Annex AVSAF-1 or to annexes as
provided for in paragraph 2 of Article AVSAF.3 [Scope and
implementation];

–
paragraph 3 of Article LAW.EUROPOL.48 [Forms of crime] as regards
amendments to Annex LAW-3, where the list of forms of crime for
which Europol is competent under Union law is changed;

–
paragraph 3 of Article LAW.EUROJUST.63 [Forms of crime] as regards
amendments to Annex LAW-4, where the list of forms of crime for
which Eurojust is competent under Union law is changed;

–
Article SSC.68 [Amendments] of the Protocol on Social Security
Coordination as regards amendments to any of the annexes or appendices
to the Protocol on Social Security Coordination.

The Commission should inform the Council of the above-mentioned proposed
modifications in advance. The Council may object to those proposed
modifications by a blocking minority of the Council in accordance with Article
16(4) TEU. In that case, the Commission has to reject the proposed
modifications on behalf of the Union, without prejudice to the possibility of
subsequently making a proposal to the Council in accordance with Article
218(9) TFEU.

The Commission should also be authorised, pursuant to Article 218(7) TFEU,
to approve on behalf of the Union the position to be taken on the following
modifications to the Trade and Cooperation Agreement, subject to informing
the Council thereof in advance:

–
the amendment to the threshold under which the Chapter Three on
subsidy control of Title XI of Heading One of Part Two of the Trade and
Cooperation Agreement does not apply as set out in paragraph 4 of
Article LPFOFCSD.3.2 [Scope and exceptions] and paragraph 3 of
Article LPFOFCSD.3.3 [Services of public economic interest] and as
regards the threshold under which the transparency obligation does not
apply as set out in paragraph 2 of Article LPFOFCSD.3.3 [Services of
public economic interest].

Furthermore, in order to allow the Union to timely react where relevant
conditions are no longer met, the Commission should be empowered to take
certain decisions suspending benefits granted to the United Kingdom under the
Annex on Organic Products and the Annex on Medicinal Products. Prior to
doing so, the Commission should inform the representatives of the Member
States, who may object to the position presented by the Commission by a
blocking minority. The Commission should also be empowered to adopt, in
accordance with the same procedure, any other necessary implementing
arrangements for the effective functioning of those Annexes.

Moreover, to guarantee compliance with the obligations under the Trade and
Cooperation Agreement, there are robust enforcement mechanisms. The Trade
and Cooperation Agreement provides the possibility for the Parties to take

# EN 6 EN

swift, autonomous and operational measures to protect their interests, including
in particular in the areas of the level playing field (i.e. rebalancing measures,
remedial measures) and fisheries (i.e. compensatory measures, remedial
measures), as well as, more generally, in cases of serious economic, societal or
environmental difficulties of a sectorial or regional nature.

It is important for the Union to be fully able to deploy these enforcement
measures rapidly and effectivlely. For this purpose, the Commission should be
empowered to suspend obligations under the Trade and Cooperation
Agreement in accordance with Article GOODS.19 on measures in case of
breaches or circumvention of customs legislation, Article LPFOFCSD.3.12 on
remedial measures in the area of level plaing field, Article ROAD.11 on
remedial measures in road transport), Article AIRTRN.8 on refusal, revocation,
suspension or limitation of operating authorisation in air transport, Article
FISH.14 on remedial measures in the area of fisheries, Article FISH.9 on
compensatory measures in case of withdrawal or reduction of access, Articles
UNPRO.3.1 and UNPRO.3.20 on suspension and termination of the
participation of the United Kingdom in a Union programme and Article
INST.24 on temporary remedies or to take appropriate safeguard measures in
accordance with Article INST.36.

In accordance with the Treaties, the Commission will also act on behalf of the
Union on all steps of the procedure regarding dispute settlement under Title I
of Part Six of the Trade and Cooperation Agreement.

        - **Detailed explanation of the specific provisions of the draft Agreements**

The broad and ambitious cooperation between the Union and the United
Kingdom envisaged by the Trade and Cooperation Agreement reflects the
conclusions and guidelines of the European Council of 23 March 2018 and
builds upon the Political Declaration.

The Trade and Cooperation Agreement is a single package that comprises four
main components:

–
general and institutional arrangements;

–
economic arrangements (including provisions on trade and level playing
field guarantees);

–
arrangements on law enforcement and judicial cooperation in criminal
matters; and

–
provisions on dispute settlement, basic values and safeguard measures.

The envisaged partnership is premised on the recognition of democracy, rule of
law and human rights, as well as the fight against climate change and
countering proliferation of weapons of mass destruction. A breach of any of
these essential elements allows the Parties to terminate or suspend the
operation of the Trade and Cooperation Agreement or any supplementing
agreement in whole or in part. The Parties also affirm their commitment to
ensuring a high level of personal data protection.

The scope of the Trade and Cooperation Agreement is comprehensive. It
includes the areas of interest outlined in the Political Declaration: trade and
economic cooperation, law enforcement and judicial cooperation in criminal
matters, participation in Union programmes and thematic areas of cooperation.

# EN 7 EN

The Trade and Cooperation Agreement does not include arrangements for
cooperation in the area of foreign policy, external security and defence, given
the position of the United Kingdom not to negotiate nor include such
arrangements in the Trade and Cooperation Agreement. The Trade and
Cooperation Agreement respects the autonomy of the Union’s decision-making
powers and its legal order, the integrity of its Single Market and the Customs
Union and the indivisibility of the four freedoms of movement (people, goods,
services and capital). It covers not only free trade in goods and services but
also ways to prevent distortions and unfair competitive advantages. The Trade
and Cooperation Agreement reflects the fact that the United Kingdom is
leaving the Union’s system of common rules, supervision and enforcement
mechanisms, and can thus no longer enjoy the benefits of membership or of the
Single Market.

The Trade and Cooperation Agreement establishes an overall governance
framework covering all areas of cooperation under the Trade and Cooperation
Agreement and under any supplementing agreement, such as the Security of
Information Agreement, while certain adaptations are included to respond to
justified sectorial needs.

To guarantee compliance with the obligations under the Trade and Cooperation
Agreement, there are robust enforcement mechanisms. The Trade and
Cooperation Agreement foresees the possibility for the Parties to take swift,
autonomous and operational measures to protect their interests, including in
particular in the areas of the level playing field (i.e. rebalancing measures,
remedial measures) and fisheries (i.e. compensatory measures, remedial
measures), as well as, more generally, in cases of serious economic, societal or
environmental difficulties of a sectorial or regional nature.

As regards its territorial scope, the Trade and Cooperation Agreement covers,
with respect to the Union, the territories to which the Treaties apply and, with
respect to the United Kingdom, the territory of the United Kingdom. The Trade
and Cooperation Agreement also provides a limited coverage for the Channel
Islands and Isle of Man in what concerns trade in goods and access to waters.
In line with the Declarations included in the minutes of the European Council
of 25 November 2018 and with the Council negotiating directives, the Trade
and Cooperation Agreement does not apply to Gibraltar.

The Trade and Cooperation Agreement consists in seven Parts (further divided
into Headings, Titles, Chapters and Sections), three Protocols and a number of
Annexes, as follows:

**Part One (Common and Institutional Provisions)** contains the general
provisions, principles of interpretation of the Trade and Cooperation
Agreement and definitions, and institutional framework.

Part One sets out the provisions on governance and implementation of the
Trade and Cooperation Agreement and establishes joint governance bodies (the
Partnership Council, Trade Partnership Committee, Trade Specialised
Committees and other Specialised Committees).

The governance provisions provide clarity on how the Trade and Cooperation
Agreement will be operated and controlled. They have been conceived to be
flexible and adaptable to specific needs that may arise in different areas. In

# EN 8 EN

view of the scope and complexity of the Trade and Cooperation Agreement,
the Union insisted on a single governance framework covering the whole of the
Agreement. This provides legal certainty to businesses, consumers and citizens,
while avoiding multiple parallel structures and the creation of additional
bureaucracy.

The Partnership Council will oversee the implementation of the agreement.
Comprised of representatives of the Union and the United Kingdom at
ministerial level, the Partnership Council will meet in different configurations
depending on the matter at hand. It will be the forum in which the Parties will
discuss any issues that might arise, with the power to take binding decisions by
mutual consent. It will be assisted in its work by the Trade Partnership
Committee, Trade Specialised Committees and other Specialised Committees.

**Part Two (Trade, Transport, Fisheries and Other Arrangements)** includes
six headings:

–
Heading One: Trade, consisting of twelve titles: Title I (Trade in goods),
Title II (Services and investment), Title III (Digital trade), Title IV
(Capital movements, payments, transfers and temporary safeguard
measures), Title V (Intellectual property), Title VI (Public procurement),
Title VII (Small and medium-sized enterprises), Title VIII (Energy), Title
IX (Transparency), Title X (Good regulatory practices and regulatory
cooperation), Title XI (Level playing field for open and fair competition
and sustainable development), Title XII (Exceptions);

–
Heading Two: Aviation, consisting of two titles: Title I (Air Transport)
and Title II (Aviation Safety);

–
Heading Three: Road Transport, consisting of two titles: Title I
(Transport of goods by road) and Title II (Transport of passengers by
road);

–
Heading Four: Social Security Coordination and visas for short-term
travel;

–
Heading Five: Fisheries;

–
Heading Six: Other Provisions.

As follows from its headings and titles, Part Two covers trade in goods and
services, as well as a broad range of other areas of economic and broader
cooperation, such as investment, competition, tax transparency, energy, air and
road transport, non-discrimination with regard to certain mobility arrangements
and social security coordination, and fisheries.

Part Two sets out a modern, sustainable trade policy. Both Parties commit to
common high standards in areas such as labour and social standards,
environmental protection, the fight against climate change, including carbon
pricing, and relevant standards on tax avoidance and tax transparency. [4] It also
contains principles on subsidies to prevent either Party from granting subsidies
that have a material effect on trade or investment between the Parties. These
agreed standards and principles are associated with domestic enforcement and

4 The Union and the United Kingdom also intend to endorse a Joint Declaration on Countering Harmful
Tax Regimes at the time of conclusion of the Agreements.

# EN 9 EN

dispute settlement mechanisms to ensure that businesses from the EU and the
UK compete on a level playing field. Part Two foresees that each Party can
take unilateral measures as appropriate to protect itself against effects on trade
or investment resulting from subsidies or from significant divergences in the
respective subsidy control systems or in the respective levels of labour and
social, environmental or climate protection.

In terms of trade in goods, the provisions in Part Two go beyond recent EU
free trade agreements with partners, such as Canada and Japan, by providing
for zero tariffs and zero quotas on all goods. To benefit from these exceptional
preferences, businesses must ensure that their products originate in the Union
or in the United Kingdom. These ‘rules of origin’ are essential to ensure the
integrity of the Union market. The Trade and Cooperation Agreement will also
facilitate, to the extent permitted by the Union Customs Code, the customs
formalities that apply to any third country outside the Customs Union. It will
also remove unnecessary technical barriers to trade, yet still ensuring that all
United Kingdom’s goods entering the Union fully meet the Union’s high
regulatory standards, including on food quality (e.g. sanitary and phytosanitary
standards) and product safety.

A significant level of openness for trade in services is also agreed, going
beyond the baseline provisions of the WTO General Agreement on Trade in
Services (GATS), while reflecting the fact that the United Kingdom no longer
benefits from free movement of persons and, hence, from freedom to supply
services. United Kingdom’s service providers wanting to offer services in the
Union will need to meet all appropriate regulatory requirements in the Union,
but they will not be treated any less favourably than Union operators in those
areas covered by the Trade and Cooperation Agreement, and vice-versa [5] .
United Kingdom’s investors can also establish legal entities in the Union in
order to offer services across the single market and vice-versa. The Agreement
includes a framework for the future negotiation of recognition agreements in
relation to profesional qualifications.

The Trade and Cooperation Agreement contains provisions aimed at
facilitating digital trade, by addressing unjustified barriers, and ensuring an
open, secure and trustworthy online environment for businesses and
consumers, along with high standards of personal data protection. The
Agreement also contains provisions guaranteeing the protection of intellectual
property rights. Additionally, it includes provisions on mutual opportunities in
the Parties’ respective public procurement markets and on procurement
standards going beyond their commitments under the WTO Government
Procurement Agreement (GPA).

On energy, as the United Kingdom will no longer participate in the single
electricity market and EU trading platforms, the Trade and Cooperation
Agreement creates a new framework for bilateral energy cooperation, aimed at
ensuring cost-efficient, clean and secure supplies of energy that are essential to
the functioning of both economies, and putting in place new mechanisms to
cooperate on renewable energy, in particular in the North Sea, and tackling

5 In accordance with the EU’s trade policy a limited number of sectors are excluded (public services,
some transport services, and audiovisual services to preserve cultural diversity).

# EN 10 EN

climate change. Substantive provisions on level playing field and liberalisation
are also part of the Agreement, including in terms of conditions for subsidies in
the energy sector. As in the other areas, the provisions on energy do not
replicate the full benefits of the Single Market for the United Kingdom, taking
into account its third-country status.

On transport, the Trade and Cooperation Agreement provides for continued
and sustainable air and road connectivity, while respecting the integrity of the
Single Market. It includes provisions to ensure that competition between Union
and United Kingdom operators takes place on a level playing field, so that
passenger rights and transport safety are not undermined.

Part Two also contains a framework for joint and sustainable management of
fish stocks in Union and United Kingdom’s waters. The United Kingdom, as an
independent coastal state, will have control over its waters and it will be able to
further develop British fisheries, yet European fishermen and women will
continue to have access to UK waters to carry out their fishing activities.

**Part Three (Law Enforcement and Judicial Cooperation in Criminal**
**Matters)** sets out a framework for law enforcement and judicial cooperation in
criminal matters. It recognises the need for strong cooperation between
national police and judicial authorities and also Union agencies and bodies, in
particular for fighting and prosecuting cross-border crime and terrorism.

Part Three covers the following key areas:

–
Data exchange: arrangements for timely, effective and efficient exchange
of air passenger data (known as Passenger Name Records or PNR),
DNA, fingerprint and vehicle registration data (so-called ‘Prüm data’ –
which have never before been exchanged between the Union and a nonSchengen third country) criminal record information and operational
information – complementing international channels, such as Interpol;

–
Europol and Eurojust: effective cooperation between the United
Kingdom and Europol and Eurojust, in line with the rules for cooperation
with third countries established in Union legislation;

–
Surrender: enabling the swift surrender of criminals between the Member
States of the Union and the United Kingdom through streamlined
procedures, strict deadlines, robust safeguards (including appropriate
grounds for refusal of surrender), procedural rights and judicial control;

–
Mutual assistance: arrangements to facilitate and supplement the Council
of Europe Conventions in criminal matters, e.g. through streamlined
procedures, time limits, and technological infrastructures, on a wide
range of measures, including freezing and confiscating property;

–
Anti-money laundering: provisions for cooperation on combating money
laundering and the financing of terrorism.

Part Three respects the United Kingdom’s status as a non-Union member
outside of the Schengen area. For instance, the United Kingdom will no longer
have direct, real-time access to sensitive Union databases that support the

–
Union area of freedom, security and justice as this is provided only to
Member States and very closely associated countries that accept all
accompanying obligations.

# EN 11 EN

The close and comprehensive police and judicial cooperation is underpinned by
guarantees to respect democracy and the rule of law, to protect effectively
fundamental rights and freedoms of individuals, including those enshrined in
the European Convention on Human Rights and by giving effect domestically
to them, as well as commitments by both Parties to uphold high levels of data
protection standards. This was a particularly important demand from the Union
side with a view to ensuring that both the security and the fundamental rights
of its citizens are protected. Part Three also provides for specific provisions on
suspension of cooperation in case of serious and systemic deficiencies in
ensuring any of these safeguards, as well as a dedicated dispute settlement
mechanism.

**Part Four (Thematic Cooperation)** includes two titles: Title I: Health
Security and Title II; Cyber Security. Part Four sets out provisions for
cooperation between the Parties on health security and cyber security issues,
including through temporary and limited participation of the United Kingdom
in a number of Union structures, only upon invitation by the Union, and
provided specific common threats arise.

**Part Five (Participation in Union Programmes, Sound Financial**
**Management and Financial Provisions)** sets out provisions regarding the
United Kingdom’s continued participation as a third country in a number of
flagship Union programmes, subject to financial contribution by the United
Kingdom to the Union budget. The precise list of such programmes will be
adopted later by the Specialised Committee on Participation in Union
Programmes. In addition the Specialised Committee on Participation in Union
Programmes may also set up a list of services provided through the
implementation of Union Programmes to which the United Kingdom may have

access.

The legal bases (basic acts) of the Union programmes and activities in which
the United Kingdom may participate have still not been adopted. However,
there is a common understanding between the United Kingdom and the Union
on the programmes in which the United Kingdom may participate and under
which specific conditions, subject to the conditions provided in the definitive
legal bases. Therefore, a Joint Declaration attached to the Trade and
Cooperation Agreement provides a framework for the protocols that will be
added to that agreement by the Specialised Committee on Participation in
Union Programmes when the legal bases of those programmes will be adopted.

**Part Six (Dispute Settlement and Horizontal Provisions)** includes three
titles: Title I (Dispute settlement), Title II (Basis for cooperation) and Title III
(Fulfilment of obligations and safeguard measures).

On dispute settlement, if a disagreement arises and a solution cannot be found
between the Parties, the Trade and Cooperation Agreement foresees that an
independent arbitration tribunal can be established to settle the matter through
a binding ruling. This dispute settlement mechanism applies to most areas of
the Trade and Cooperation Agreement, including level playing field and
fisheries. It is accompanied by credible and robust enforcement and
compliance mechanisms, including the possibility to suspend the complaining
party’s obligations under the Trade and Cooperation Agreement e.g. to
reintroduce tariffs and/or quotas. Furthermore, each Party will under certain

# EN 12 EN

conditions be able to cross-retaliate whenever another Party does not comply
with the ruling of the arbitration tribunal. For instance, a persisting breach by
one Party that concerns a specific economic sector will allow the other Party to
retaliate with measures in other economic sectors. Each Party may also
unilaterally take appropriate safeguard measures in cases of serious economic,
societal or environmental difficulties of a sectorial or regional nature.

**Part Seven (Final Provisions)** contains final provisions, including on the entry
into force, review and termination of the Trade and Cooperation Agreement.

Two **Protocols** provide for **administrative cooperation and combating fraud**
**in the field of Value Added Tax, mutual assistance for the recovery of**
**claims relating to taxes and duties** and for **mutual administrative assistance**
**in customs matters** .

**The Protocol on Social Security Coordination** sets out a number of social
security coordination measures aimed at protecting the social security
entitlements of EU citizens and UK nationals in a cross-border situation
involving the UK and the EU as of 1 January 2021. Third-country nationals,
stateless persons and refugees are also protected. A wide range of benefits is
covered, including old-age and survivors’ pensions, death grants, sickness
benefits, maternity / paternity benefits related to the birth of a child, benefits in
respect of accidents at work or pre-retirement benefits. The Protocol ensures
that the social security coordination arrangements established therein are based
on the principle of non-discrimination between the Member States of the
Union.

**The Agreement concerning security procedures for exchanging and**
**protecting classified information** sets out rules and modalities for the
exchange of classified and non-classified sensitive information. In line with
other security of information agreements concluded by the Union with other
third countries, the Security of Information Agreement ensures the secure
handling of sensitive information, based on the principle of the originator’s
consent prior to the release of the information exchanged. The Security of
Information Agreement applies as from the date of application of the Trade and
Cooperation Agreement, or from the date the Parties have notified each other
that they have completed their respective internal requirements and procedures
to release classified information under that agreement, whichever is later.

# EN 13 EN

2020/0382 (NLE)

Proposal for a

**COUNCIL DECISION**

**on the conclusion, on behalf of the Union, of the Trade and Cooperation Agreement**
**between the European Union and the European Atomic Energy Community, of the one**
**part, and the United Kingdom of Great Britain and Northern Ireland, of the other part,**

**and of the Agreement between the European Union and the United Kingdom of Great**

**Britain and Northern Ireland concerning security procedures for exchanging and**

**protecting classified information**

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union (‘TFEU’), and in
particular Article 217, in conjunction with Article 218(6), Article 218(7) and the second
subparagraph of Article 218(8) thereof,

Having regard to the proposal from the European Commission,

Having regard to the consent of the European Parliament, [6]

Whereas:

(1) On [DATE], the Council adopted Council Decision No (EU) …, regarding the signing,
on behalf of the Union of the Trade and Cooperation Agreement between the
European Union and the European Atomic Energy Community, of the one part, and
the United Kingdom of Great Britain and Northern Ireland, of the other part, (the
‘Trade and Cooperation Agreement’) and of the Agreement between the European
Union and the United Kingdom of Great Britain and Northern Ireland concerning
security procedures for exchanging and protecting classified information (the ‘Security
of Information Agreement’).

(2) The Trade and Cooperation Agreement establishes the basis for a broad relationship
between the Union and the United Kingdom involving reciprocal rights and
obligations, common actions and special procedures. The Security of Information
Agreement is a supplementing agreement to the Trade and Cooperation Agreement,
intrinsically linked to the latter in particular with regard to its entry into application
and termination. The decision on the signing of the Trade and Cooperation Agreement
and the Security of Information Agreement (the ‘Agreements’) should therefore be
based on the legal basis providing for the establishment of an association allowing the
Union to enter into commitments in all areas covered by the Treaties.

(3) It is appropriate to define the modalities of the Union’s representation in the
Partnership Council and the Committees established by the Trade and Cooperation
Agreement. The Commission, as provided for in Article 17(1) of the Treaty on
European Union (‘TEU’), is to represent the Union and to express the Union’s
positions as established by the Council in accordance with the Treaties. The Council is
to exercise its policy-making and coordinating functions as provided for in Article

6 OJ C,, p. .

# EN 14 EN

16(1) TEU by establishing the positions to be taken on the Union’s behalf in the
Partnership Council and the Committees established by the Trade and Cooperation
Agreement. Furthermore, where the Partnership Council or the Committees
established by the Trade and Cooperation Agreement are called upon to adopt acts
having legal effects, the positions to be taken on the Union’s behalf in these bodies are
to be established in accordance with the procedure set out in Article 218(9) TFEU.

(4) One or more Member States may request that the Commission representative be
accompanied, as part of the Union delegation, by a representative of that or those
Member States in a meeting of the Partnership Council and other joint bodies
established by the Agreement.

(5) It is appropriate to authorise the Commission, pursuant to Article 218(7) TFEU, to
approve on the Union’s behalf certain modifications to the Trade and Cooperation
Agreement that are to be adopted by a simplified procedure or by a body set up by the
Trade and Cooperation Agreement in accordance with the provisions of that
agreement. The procedure of consultation of the Council regarding such modifications
should be established.

(6) Furthermore, in order to allow the Union to timely react where relevant conditions are
no longer met, the Commission should be empowered to take certain decisions
suspending benefits granted to the United Kingdom under the Annex TBT-4 [on
Organic Products] and Annex TBT-2 [on Medicinal Products]. Prior to doing so, the
Commission should inform the representatives of the Member States, who may object
to the position presented by the Commission by a blocking minority. The Commission
should also be empowered to adopt, in accordance with the same procedure, any other
necessary implementing arrangements for the effective functioning of those Annexes.

(7) With a view to enable the Union to take rapid and effective action to protect its
interests in accordance with the Trade and Cooperation Agreement, and until a
specific legislative act regulating the adoption of remedial measures under the Trade
and Cooperation Agreement is adopted and enters into force in the Union, the
Commission should be empowered to take remedial measures, such as the suspension
of obligations under the Trade and Cooperation Agreement or any supplementing
agreement, in cases of breaches of certain provisions of the Trade and Cooperation
Agreement or non-fulfillement of certain conditions, notably in the areas of trade in
goods, level playing field, road transport, air transport, fisheries and Union
programmes, as specified in the Trade and Cooperation Agreement, as well as to take
appropriate remedial measures, rebalancing measures and countermeasures.

(8) Whenever the Union is required to act in order to comply with the provisions of the
Agreements, such action is to be taken in accordance with the provisions of the
Treaties, while respecting the limits of the powers conferred upon each institution. It is
therefore for the Commission to provide the United Kingdom with the information or
notifications required in the Agreements, except where the Agreements refer to other
specific institutions, bodies, offices and agencies of the Union and to consult the
United Kingdom on specific matters. It is also for the Commission to represent the
Union before the arbitration tribunal where a dispute has been submitted to arbitration
in accordance with the Trade and Cooperation Agreement.

(9) It is recalled that, in accordance with the negotiating directives of 25 February 2020,
the territorial scope of the Trade and Cooperation Agreement concluded between the
Union and the United Kingdom does not include Gibraltar. This does not preclude the
possibility to have separate agreements between the Union and the United Kingdom in

# EN 15 EN

respect of Gibraltar in line with the declaration of the European Council and of the
European Commission included in the minutes of the European Council meeting of 25
November 2018.

(10) The conclusion of the Trade and Cooperation Agreement as regards matters falling
under the competence of the European Atomic Energy Community is subject to a
separate procedure.

(11) The Agreements should be approved on behalf of the Union,

HAS ADOPTED THIS DECISION:

_Article 1_

The Trade and Cooperation Agreement between the European Union and the European
Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and
Northern Ireland, of the other part, is hereby approved on behalf of the Union as regards
matters other than those falling under the competence of the European Atomic Energy
Community.

The Agreement between the European Union and the United Kingdom of Great Britain and
Northern Ireland concerning security procedures for exchanging and protecting classified
information is hereby approved on behalf of the Union.

The texts of these Agreements are attached to this Decision.

_Article 2_

The President of the Council is hereby authorised to designate the person(s) empowered to
proceed, on behalf of the Union, to give the notifications provided for in the following
provisions:

(a) with regard to the Trade and Cooperation Agreement:

–
Article LAW.OTHER.134 [Notifications];

–
Article FINPROV.11 [ Entry into force].

–
Article SSC.11 of the Protocol on Social Security Coordination;

(b) with regard to the Agreement concerning security procedures for exchanging and
protecting classified information:

–
Article 19, paragraphs 1 and 2.

_Article 3_

1. When the Commission represents the Union in bodies created by the Trade and
Cooperation Agreement, it shall inform the Council in a timely manner about the
discussions and the outcome of the meetings and of acts adopted by written
procedure, and, upon request, shall provide minutes and other documents relating to
such meetings or procedure. The Commission shall also inform the European
Parliament, as appropriate.

2. During the first five years after the entry into force of the Trade and Cooperation
Agreement, the Commission shall report annually to the European Parliament and to

# EN 16 EN

the Council on the implementation and application of the Trade and Cooperation
Agreement.

_Article 4_

1. The Commission shall be authorised to approve, on behalf of the Union,
modifications to the Trade and Cooperation Agreement to be adopted by the
Partnership Council or the Specialised Committees as the case may be, in accordance
with the following provisions of that agreement:

(a) paragraphs 4, 5 and 8 of Article TBT.9 [Cooperation on market surveillance
and non-food product safety and compliance], as regards the establishment of
or the amendments to the arrangements for the regular exchange of information
between the Parties set out in Annexes [TBT-XX] and [TBT-ZZ];

(b) paragraph 3 of Article 2 [Product definitions, oenological practices and
processes] and paragraph 3 of Article 3 [Certification requirements on import
in the respective territories of the Parties] of Annex TBT-5 [Trade in Wine], as
regards amendments of the Appendices to that Annex;

(c) paragraph 2 of Article 1 [Objective and scope] of Annex TBT-4 [Organic
Products], as regards amendments of the Appendices to that Annex;

(d) Article 11 [Amendments to appendices] of Annex TBT-2 [Medicinal
Products], as regards amendments of the Appendices to that Annex;

(e) Article PPROC.18 [Amendment of Section B of ANNEX.PPROC-1], as
regards amendments to Section B of Annex PPROC-1 on market access
commitments;

(f) Article AVSAF.12 [Adoption and amendments of annexes to this Chapter], as
regards amendments to Annex AVSAF-1 or to other annexes as provided in
that Article;

(g) paragraph 3 of Article LAW.EUROPOL.48 [Forms of crime], as regards
amendments to ANNEX LAW-3, where the list of forms of crime for which
Europol is competent under Union law is changed;

(h) paragraph 3 of Article LAW.EUROJUST.63 [Forms of crime], as regards
amendments to ANNEX LAW-4, where the list of forms of crime for which
Eurojust is competent under Union law is changed;

(i) Article SSC.68 [Amendments] of the Protocol on Social Security Coordination,
as regards amendments to any of the Annexes or Appendices to the Protocol on
Social Security Coordination.

2. The Commission shall submit the proposed modifications specified in paragraph 1 to
the Council before their approval.

The Commission shall approve those proposed modifications on behalf of the Union
unless, within one month after the Commission has submitted them to the Council, a
number of Member States representing a blocking minority of the Council in
accordance with Article 16(4) of the Treaty on European Union object to them. If
there is such an objection, the Commission shall reject the proposed modifications on
behalf of the Union.

3. The Commission shall approve, on behalf of the Union, modifications to the Trade
and Cooperation Agreement to be adopted by the Partnership Council or the

# EN 17 EN

Specialised Committees as the case may be, in accordance with the following
provisions of that agreement:

(a) paragraph 4 of Article LPFOFCSD.3.2 [Scope and exceptions], as regards the
threshold under which the Chapter on subsidy control does not apply;

(b) paragraph 2 of Article LPFOFCSD.3.3 [Services of public economic interest],
as regards the threshold under which the transparency obligation does not
apply;

(c) paragraph 3 of Article LPFOFCSD.3.3 [Services of public economic interest],
as regards the threshold under which the Chapter does not apply

(d) Article LPFOCDSD.3.5 [Prohibited subsidies and subsidies subject to
conditions], as regards the updating of the conditions to be applied to subsidies
under this Article;

(e) Article LPFOCDSD.3.11 [Recovery], as regards different arrangements to
ensure recovery of subsidies.

The Commission shall inform the Council of the proposed modifications before their
approval.

4. The Commission shall ensure that the approval on behalf of the Union of the
proposed modifications set out in this Article:

(a) is in the interests of the Union;

(b) serves the objectives pursued by the Union within the framework of its trade
policy, aviation safety, social security and law enforcement and judicial
cooperation;

(c) is not contrary to Union law or international law;

(d) avoids creating obstacles to innovation.

_Article 5_

1. The Commission shall be authorised to take, on behalf of the Union, any decision to:

(a) confirm or suspend the recognition of equivalence following the reassessment
of equivalence to be carried out by 31 December 2023 in accordance with
paragraph 3 of Article 3 [Recognition of equivalence] of Annex TBT-4

[Organic Products];

(b) suspend the recognition of equivalence in accordance with paragraphs 5 and 6
of Article 3 [Recognition of equivalence] of Annex TBT-4 [Organic Products];

(c) accept official Good Manufacturing Practice documents issued by an authority
of the United Kingdom for manufacturing facilities located outside the territory
of the issuing authority and to determine the terms and conditions under which
the Union accepts those official Good Manufacturing Practice documents in
accordance with paragraphs 3 and 4 of Article 5 [Recognition of inspections]
### of Annex TBT-2 [Medicinal Products ] ;

(d) adopt any necessary implementing arrangements for the exchange of official
Good Manufacturing Practice documents with the authority of the United
Kingdom under Article 6 [Exchange of official GMP documents] of Annex
### TBT-2 [on Medicinal Products ] and for the exchange of information with the

# EN 18 EN

authority of the United Kingdom regarding inspections of manufacturing
### facilities under Article 7 [Safeguards] of Annex TBT-2 [Medicinal Products ];

(e) suspend recognition of inspections or acceptance official Good Manufacturing
Practice documents issued by the United Kingdom and notify the United
Kingdom of its intention to apply Article 9 [Suspension] of Annex TBT-2
### [Medicinal Products ] and enter into consultations with the United Kingdom in

accordance with paragraph 3 of Article 8 [Changes to the applicable
### legislation] of Annex TBT-2 [Medicinal Products ] ;

(f) suspend totally or partially, for all or some of the products listed in Appendix C
to Annex TBT-2 [on Medicinal Products], the recognition of inspections and
acceptance of official Good Manufacturing Practice documents of the other
Party in accordance with paragraph 1 of Article 9 [Suspension] of Annex TBT2 [Medicinal Products].

2. The Commission shall take those proposed decisions in accordance with the
procedure laid down in Article 4(2) of this Decision.

_Article 6_

1. Until a specific legislative act regulating the adoption of such measures is adopted
and enters into force in the Union, the decision of the Union to take the following
measures under the Trade and Cooperation Agreement shall be taken by the
Commission in accordance with the conditions set out in the corresponding
provisions of the Trade and Cooperation Agreement as regards:

(a) the suspension of the relevant preferential treatment of the product(s)
concerned as set out in Article GOODS.19 [Measures in case of breaches or
circumvention of customs legislation];

(b) the application of remedial measures and the suspension of obligations as set
out in Article LPFOFCSD.3.12 [Remedial measures];

(c) the application of rebalancing measures and counter-measures as set out in
Article LPFOFCSD.9.4 [Rebalancing];

(d) the application of remedial measures as set out in Article ROAD.11 [Remedial
measures];

(e) the refusal, revocation, suspension or limitation of operating authorisation of an
airline, Article AIRTRN.8 [Refusal, revocation, suspension or limitation of
operating authorisation];

(f) the application of remedial measures as set out in Article FISH.14 [Remedial
measures and dispute resolution];

(g) compensatory measures as set out in Article FISH.9 [Compensatory measures
in case of withdrawal or reduction of access]

(h) the suspension or termination of the participation of the United Kingdom in
Union programmes, as set out in Article UNPRO.3.1 [Suspension of the
participation of the United Kingdom in a Union programme by the European
Union] and Article UNPRO.3.20 [Termination of the participation of the
United Kingdom in a Union programme by the European Union];

# EN 19 EN

(i) an offer or acceptance of temporary compensation or the suspension of
obligations in the context of compliance following an arbitration or panel of
experts procedure under Article INST.24 [Temporary Remedies], except as
provided in Regulation (EU) No 654/2014;

(j) the safeguard measures and rebalancing measures as set out in Article INST.36

[Safeguard measures].

2. The Commission shall fully inform the Council in a timely manner of its intention to
adopt the proposed measures set out in paragraph 1 and take into account the
possible views expressed. The Commission shall also inform the European
Parliament, as appropriate.

3. The Commission may also adopt measures reinstating the rights and obligations
under the Trade and Cooperation Agreement as they existed prior to the adoption of
measures foreseen in paragraph 1.

_Article 7_

This Decision shall enter into force on the day of its adoption.

Done at Brussels,

_For the Council_

_The President_

# EN 20 EN