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07.01.2021 goods purchased from online portals will need to be declared. e same for goods purchased from the UK through Malta- Post's SendOn service. e UK's withdrawal from the EU will affect companies that sell goods or sup- ply services to the UK, buy goods or re- ceive services from the UK, move goods through the UK or use UK materials and goods to trade under preferential schemes with EU partner countries. In the area of tax and customs, this means, that companies: • May need to file customs declara- tions when importing or export- ing any goods to/from Great Brit- ain (the UK excluding Northern Ireland) or when moving goods through Great Britain. • May need to provide security and safety data, in addition to the cus- toms declaration. • May need a special licence to im- port or export certain goods (e.g. waste, certain hazardous chemi- cals, GMOs). Companies will need to comply with additional formali- ties if importing or exporting excise goods (alcohol, tobacco, or fuel) to/ from Great Britain. • May have to comply with differ- ent VAT rules and procedures for transactions with Great Britain than for transactions within the EU and with Northern Ireland. e deal also doesn't completely elim- inate the possibility of tariffs in the fu- ture. Both sides will need to stay close to shared rules in areas like workers' rights and environmental protection. If either the UK or the EU shift their rules too far, the other side could introduce tariffs. Initial Deloitte analysis e vast majority of the deal content has been widely anticipated and planned for by business for some months. e publication of both sides' negotiating mandates early in 2020 at least made it clear what the best case scenarios could be. e EU sought to protect the fun- damental freedoms of its single market while the UK prioritised limiting the ero- sion of sovereignty through its interna- tional obligations. In both respects each side can claim to have achieved their ob- jectives. Deloitte specialists are examining the full 1,246 pages of legal text according to each chapter but have highlighted a nu- ber of notable inclusions: • Tariff-free, quota-free trade in goods between the UK and EU. is goes further on tariffs than the EU has before in an FTA and is very good news for business, par- ticularly those in high tariff sectors such as food and agriculture. • Rules of Origin which recognise both UK and EU content as "origi- nating" (known as full bilateral cu- mulation), with a six year phase-in period for electric cars, allowing the UK time to build up qualifying components. ere are also helpful measures which permit businesses to self-certify as having met origin requirements and to provide a sin- gle statement of origin for multi- ple shipments over the course of a year. Outside the FTA the EU has also said statements of origin can be made from day one with the detailed proof not being required until 2022. • Minimal cooperation has been agreed in sanitary and phyto-san- itary (SPS) measures beyond de- fault WTO agreements. Each side will maintain autonomy of their animal and plant health standards with periodic reviews taking place through a new SPS specialised committee. • Mutual recognition of Authorised Economic Operator status and agreement on managing "roll-on, roll-off " trade at ports will facili- tate a somewhat more straightfor- ward process for the transport of some goods, particularly through Dover-Calais. ere is no require- ment for international permits for road haulage, and limited cabo- tage arrangements where drop off and pick up can be made in the EU. • In principle, service providers will not need to establish a local pres- ence to trade within each other's markets – and they will be able to avoid economic needs tests, resi- dency requirements and a range of other non-tariff barriers. However, there are very lengthy reservations listed to these headline provisions. e parties have agreed 'national treatment' to prevent discrimina- tion between nationals and 'most favoured nation' provisions to en- sure the treatment of service sup- pliers keep pace with either party's future FTAs. • ere is not much in the FTA on financial services, and what there is, is very much in line with previ- ous precedents. However there is a separate joint declaration where both sides agree to try and reach an agreement on regulatory dia- logue and stability around equiva- lence decisions in future. • Business mobility rights have been agreed (e.g. attending conferenc- es, seminars, meetings) for short- term stays, permitted for 90 days in any 180 day period. Intra-cor- porate transfers (with spouses and dependents), contract and self-em- ployed working are also support- ed. Travellers will otherwise rely on the rules of individual member states for the right to work as the free movement of people ends. • e agreement contains some modern provisions on data, in- cluding a ban on localisation re- quirements, commitments to protect personal data, support for electronic signatures and contin- uing to provide open government data. ere is a separate bridging agreement which will maintain personal data flows from EU to UK for up to six months until an ade- quacy decision is reached. • ere is wide-ranging protection and enforcement of intellectual property rights, including patents, trademarks and designs, at least in line with existing international agreements. • e agreement is limited to adher- ence to international frameworks and cooperation in areas such as tax and debt recovery including VAT, customs duties and excise. UK autonomy on tax rates and rules is preserved. • e FTA includes provisions on public procurement processes largely built on existing WTO agreements, but extended to oth- er sectors such as hospitality and education. e UK had previous- ly refused to include a chapter on procurement in the agreement. • A comprehensive system, similar to one we have today, is established covering liability for social securi- ty contributions when working or living outside of home country, avoiding dual contribution situa- tions. • e UK will participate in five EU programmes including the Hori- zon and Copernicus scientific pro- grammes, and leave others – such as Erasmus, which will be replaced by a new UK scheme. • Provisions on security include the exchange of criminal records data through a new infrastruc- ture which will replace existing real-time access to the European Criminal Records Information System (ECRIS) data; DNA, fin- gerprint and vehicle registration (Prüm) and extradition. However, the exchange of passenger name records is asymmetrical and UK law enforcement will lose access to the Schengen Information Sys- tem (SIS) II system on wanted or missing persons. ere are also some provisions on cyber security cooperation. • e deal includes agreement on a range of other specific topics ne- gotiated alongside generic trade chapters, including on energy (continued access to EU internal energy market); logistics and haul- age (continuity of haulage without permits); and aviation (compre- hensive provisions amounting to up to fourth freedom of the air and cooperation on aviation safety). ere are also specific provisions on telecoms, delivery services, chemicals, motor vehicles and medicines. • Arbitration of the agreement will be undertaken through a new Part- nership Council and there will be no role for the European Court of Justice. Financial services are ex- empted from potential retaliation in future trade disputes. What does this mean for business? e deal provides business with much needed certainty and a more stable start to 2021 than leaving without a deal. However, there is a lot of detail to go through and significant change to the trading landscape of the future that should not be underestimated. Immedi- ate changes include: • A return to full EU border formal- ities from 1 January 2021. Goods entering the EU from the UK will require customs declarations to be completed, including proof of origin (without which duties could become payable). Goods entering the UK from the EU will be subject to a phased implemen- tation of border controls over six months. • ere is treatment of the UK as a third country for regulatory pur- poses by the EU, requiring busi- nesses to undertake additional processes for EU and UK approv- als for product and manufacturing standards. is is especially the case for the food items which will be subject to the EU's SPS rules. Some food items, such as raw meat, will not be permitted at all in future. • ere is a loss of automatic market access into the EU's Single Market for services, particularly for UK regulated services firms which may need to establish an EU subsidiary in some countries which have res- ervations within the FTA. • No new recognition of profes- sional qualifications, even though a minimal framework, is included in the FTA – on the positive side, grandfathering provisions orig- inally agreed in the Withdrawal Agreement can be utilised. 5 ANALYSIS Free Trade Agreement

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