The Commission presented the results of the first implementation report on the Trade and Cooperation Agreement (TCA) with the United Kingdom, entered into force in 2021, to the members of the European Parliament’s Committees on International Trade (INTA) and Foreign Affairs (AFET) on Wednesday 20 April.
A report published on 24 March in which the Commission, unsurprisingly, insists on the less favourable situation of the UK as a third country and gives statistics on the decreasing trade between the two partners.
Despite the TCA, trade and cooperation between the EU and the UK has become more complex and difficult than it was when the UK was a member of the EU, the Commission representative summarised, explaining that exports from the UK to the EU have fallen and that, in the opposite direction, “exports from the EU to the UK have not returned to pre-pandemic levels”.
There is also a “marked decline” in the services sector.
The Commission representative also noted new complications in the field of energy and electricity, with trade also becoming “more challenging”, and the implementation of the agreement in this area proving more complicated than expected.
According to the Commission’s report, “while it is still too early to assess the full economic impact of the United Kingdom’s exit from the EU single market, latest data shows that trade flows between the EU and the United Kingdom have partially stabilised in 2021 after an initial drop following the end of the transition period. However, they remained lower than in 2019 and earlier”.
In terms of trade in goods, Eurostat estimates for 2021 “146 billion euros of EU imports from the United Kingdom which is a marked decline both compared to 2020 (-13.6%) and to 2019 (-24.8%)”.
EU exports to the UK are estimated at 283 billion euros, an increase of 1.9% compared to 2020, but still 11.4% below the level recorded in 2019.
“Both EU imports and exports of goods with the rest of its partners sharply rose in 2021 compared to 2020 (+27% and +14.6%, respectively) and [were] above the 2019, pre-pandemic, levels (12.5% for imports and 4.7% for exports), while trade with the United Kingdom is still far from its pre-pandemic levels”, the report says.
Machinery and transport equipment, which account for a large share of bilateral trade, have been particularly affected. “In absolute terms, EU imports and exports in machinery and transport equipment with the United Kingdom, in 2021, was more than 52 billion euros below the level recorded in 2019”.
MEPs also asked the Commission on Wednesday about the social and regulatory dumping that the UK may already be engaging in. At this stage, the Commission has not yet seen a major pattern of regulatory divergence, its representative said, but it is monitoring this very closely.
On the issue of subsidies and discriminated European goods, the Commission recalled that a WTO consultation was already opened at the end of March (see EUROPE 12920/16) on British subsidies to green energy projects.
On the issue of fisheries, the Commission said that the issue of water sharing was the most complicated, but “good progress has been made” on licences for European vessels.
French MEP François-Xavier Bellamy (EPP) deplored that the Commission is not paying enough attention to the end of the transition in 2026 and the shock that the planned loss of 25% of current quotas will be for European fishers.
The Commission has indicated that the reduction in quotas will be phased in by 2026, but has acknowledged that a new difficulty will arise with the requirement to negotiate access for vessels to UK waters. “We are very vigilant” and aware that “it will be complicated”.
Link to the report: https://aeur.eu/f/1b6 (Original version in French by Solenn Paulic)