The Trade in Services under the UK-EU Trade and Cooperation Agreement (TCA)

The service sector accounts for around 80 percent of the UK economy and makes up more than 40 percent of the UK’s exports to the EU.  It is unfortunate then that although the TCA makes some loud commitments to liberalising services the devil in the detail of the Annexes is far more defensive and that is where many EU Member State restrictions are to be found. As the UK has left the EU Single Market, UK service suppliers have lost the automatic right to offer services across the EU. Instead they will have to comply with a patchwork of rules in each Member State.  To counter-act this service suppliers, as many already have, may need to establish themselves in the EU to continue operating.

Having said that the TCA does have substantive things to say on particular sectors such as professional, telecoms, computer, digital, financial architectural, transport and environmental services.  Unlike other “third countries” UK suppliers will be treated no less favourably than EU suppliers and vice-versa.

The actual level of market access will depend on the way the service is supplied.  For example:

  • supplied cross-border from the home country of the supplier, e.g. over the internet (“mode 1”);
  • supplied to the consumer in the country of the supplier, e.g. buying services whilst travelling abroad (“mode 2”);
  • supplied through a locally-established enterprise owned by the foreign service supplier (“mode 3”); or
  • supplied through the temporary presence in the territory of another country by a service supplier who is a natural person (“mode 4”).

Financial Services

As was largely anticipated “passporting rights” will no longer apply for financial services firms.  There is relatively little substantive detail on financial services to replace this which will cause inevitable friction.

Specific examples of easing friction are:

  • market access on a non-discriminatory basis if firms are appropriately established in their home jurisdiction;
  • implementing agreed international standards; and
  • a commitment to put in place a Memorandum of Understanding by March 2021 for establishing a framework of regulatory cooperation on financial services.

Of more concern are the following:

  • financial services are excluded from the most-favoured nationclause in terms of a future trade deal with a third country;
  • financial services are excluded from the requirement to review trade in services and investment relations in the future;
  • equivalency decisions are not covered.  Instead it is a unilateral decision of the European Commission and of HM Treasury in terms of making such decisions to grant third country access to their markets.

Professional Qualifications

There is no mutual recognition of qualifications. Instead, broadly, UK nationals, irrespective of where they acquired their qualifications and EU citizens with qualifications acquired in the UK, will need to have their qualifications recognised in the relevant EU Member State on the basis of that State’s domestic rules.

There is however the prospect that the UK and EU will agree mutual recognition of specific qualifications on a case by case basis.

For help or advice on this or UK EU legal technical issues, please speak to Baljit Chohan 0808 166 8827