Taking stock of the new UK-EU Trade and Cooperation Agreement: governance, state subsidies and the level playing field

The UK-EU Trade and Cooperation Agreement (TCA) has a complex bureaucratic structure, at the apex of which is a Partnership Council. The Partnership Council has powers to amend most of the TCA by mutual agreement, and there will be five-yearly reviews of the operation of the TCA. The UK regime for managing subsidies will be very similar to the EU system; the TCA will allow the UK and EU to challenge each other’s subsidies, ultimately referring disputes to arbitration. On labour standards and the environment, the EU and UK have committed not to weaken standards in ways that affect trade or investment and there is a fairly rigorous procedure for addressing violations. In addition, there are highly innovative procedures for rebalancing the trade elements of the TCA (and ultimately cancelling them) if one side changes its standards in ways that materially affect trade. Such rebalancing can be triggered in several circumstances, including via periodic reviews of the whole trade relationship. While these last provisions create scope for the relationship to develop, they also create considerable uncertainty and could cause almost constant negotiation and tension between the EU and the UK.