What impact will the TCA have on charities, and what impact might charities have on the TCA?

Published on
7 min read

We now have a Trade and Cooperation Agreement (“TCA”) between the EU and the UK, and the Transition Period for the UK’s departure from the EU is over.

The agreement addresses many areas, but still leaves much to discuss for the future, and includes the prospect of domestic advisory groups and a Civil Society Forum in which some charities and sector umbrella bodies may become involved.

This article aims to set out where we are now in key areas that affect the sector, and what influence, if any, the sector may have in future discussions around the agreement as a result of the governance structures created in the TCA.

A summary of the TCA

The TCA, running to over 1,200 pages including annexes and protocols, is intended to provide a framework for the UK’s relationship with the EU for many years to come.

It covers a broad range of issues, including not only trade in goods and services, but also: investment, competition, State Aid, tax transparency, air and road transport, energy and sustainability, fisheries, data protection, and social security coordination.

It also, however, devotes a considerable amount of text to governance of the TCA, including the establishing of a Joint Partnership Council which will ensure the TCA is properly applied and interpreted, and binding enforcement and dispute resolution mechanisms.

Which sections of the TCA do charities need to look at more closely?

There is no easy answer to this question. The TCA provisions cover a very wide range of areas, so the extent to which each charity is affected will depend on its organisation and activities.

Some areas of the TCA clearly affect charities more than others, and key areas of interest for many charities will include the following:

  • People
    The new EU/UK relationship has loosened the ties between EU-wide employment rights and the corresponding rights in the UK. But they are still likely to remain closely aligned for the foreseeable future. For more on the impact of the TCA on employment rights, read our article. For those needing to know more about the post-Brexit immigration system, in particular, we also have a one minute read from Partner Alex Russell. 
     
  • Data
    The Agreement reached in principle on 24 December 2020 between the EU and UK includes an article providing that for a 4 month period (automatically extended to 6 months, unless either party objects), the transmission of personal data from the EU to the UK will not be considered as a transfer to a “third country” under GDPR.

    It does not affect other obligations under GDPR that are triggered by the end of the Brexit transition period, however – for example the obligation on some UK entities to appoint an EU representative. For more on data protection and related issues and the TCA, read our article.
     
  • Goods and Services
    The headline news is that the Agreement provides for the continuation of tariff and quota free trade in goods between the UK and the EU. However, certain non-tariff barriers to trade will arise in consequence of the UK’s decision to leave the single market.

    The Agreement’s provisions in relation to services are more limited than those relating to goods. As a result, UK service providers will lose their existing rights to offer services across the EU, meaning that as a general rule they will need to comply with the separate rules of each member state where those services are provided.

    For more on issues arising from the TCA relating to goods and services, read our article.

This is of course just a brief overview of some of the many areas covered by the TCA, however, and the activities of some charities will mean that they will have to dive into the enormous detail of the TCA – for example, those with a focus on the environment, or welfare benefits, or health.

For more on some of the other areas affected by the TCA, such as life sciences and State Aid rules, head over to our Brexit hub.

VAT: a possible benefit?

An area of possible benefit to charities following the end of the Transition Period exists in relation to VAT. The Charity Tax Group and Charity Finance Group, for example, are hoping to persuade the Government to change the VAT regime in the UK to reduce the impact of irrecoverable VAT on the sector.

“Civil society” involvement in future governance of the TCA

As mentioned above, the TCA is concerned to create a framework for the governance of the future relationship between the UK and the EU. In order to do so, there are many provisions relating to the creation of bodies such as committees and working groups to support the work of the Joint Partnership Council.

There are some provisions of the TCA in this regard that will be of particular interest to charities. Article INST.6 of the TCA states that the parties to the TCA “shall consult civil society” on the implementation of the TCA and any supplementing agreement.

This is intended to be achieved through government interaction with newly created or existing domestic advisory groups, and a UK / EU “Civil Society Forum”.

  • Domestic Advisory Groups
    The TCA states that the UK and EU shall consult on issues covered by the TCA and any supplementing agreement with its domestic advisory group or groups.

    Such groups will comprise a representation of independent civil society organisations, including non-governmental organisations, business and employers' organisations, as well as trade unions, active in economic, sustainable development, social, human rights, environmental and other matters.

    The UK and EU shall “consider views or recommendations submitted by its domestic advisory group or groups”, and representatives of the UK and EU must “aim to consult” with their respective domestic advisory groups at least once a year.

    ​The UK and EU are to promote both:
    • Public awareness of the domestic advisory groups, by endeavouring to publish a list of participating organisations and as well as a contact point for each group, and
    • Interaction between their respective domestic advisory groups, including by exchanging (where possible) contact details of the members of their advisory groups.
       
  • Civil Society Forum
    The UK and EU are required to “facilitate the organisation” of a Civil Society Forum, which will “conduct a dialogue” on the implementation of Part Two of the TCA – which contains, amongst others, provisions relating to trade in goods, services and investment, digital trade, intellectual property, public procurement, energy, transparency, good regulatory practices, and level playing field for open and fair competition and sustainable development.

    The Joint Partnership Council is responsible for adopting operational guidelines for the conduct of the Civil Society Forum, which is intended to meet once each year, unless the UK and EU agree otherwise.

What might membership of domestic advisory groups and the Civil Society Forum achieve?

The creation of domestic advisory groups (DAGs) and Civil Society Forums has now been a normal part of an EU FTA for many years.

At first glance, these bodies seem promising for the sector, as a way of potentially influencing the direction of discussions between the UK and EU in relation to the TCA in areas that matter to the sector.

These bodies have recently been criticised for a lack of influence and impact by those involved however.

In 2019, for example, representatives from the European Economic and Social Committee (EESC) felt obliged to argue for an enhanced supervisory role for DAGs across the entire FTA, a guaranteed balanced representation of civil society interests, the ability for DAGs to involve and consult with external stakeholders – and budgetary support from the EU for the cost to the EESC of being present in DAGs.

There have also been complaints made by other civil society organisations around the low frequency of meetings, and issues surrounding information sharing by government bodies.

In some cases there has been a lack of transparency in the selection mechanism for membership of such bodies, and sometimes it has seemed as though the membership of DAGs and the Civil Society Forum has been weighted heavily in favour of business interests rather than “civil society” as we would understand the phrase in this country.

It is possible that the DAGs and Civil Society Forum created by the TCA may offer a way to build links with other civil society forums in the EU, and to exert influence around the TCA indirectly. It may not be possible to have as great an impact as might be hoped initially, however.

Charities and umbrella organisations wanting to be involved will need to watch out for steps the UK Government takes to fulfil its obligations under the TCA in relation to both the DAGs and Civil Society Forum.

In particular, the publication of the selection mechanism for membership of the UK DAG(s) may well provide an indication of how seriously the UK Government takes in the involvement of civil society and charities in the future direction of the TCA.

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