Yesterday, the European Parliament formally approved the trade and cooperation agreement that structures the EU’s new relationship with the UK. This is a deal to keep an eye on, as it defines the new rules of the game for travel, shopping and the use of services.
First and foremost, it creates a new EU-UK relationship out of an erstwhile integrated consumer market. At the same time, it is also a trade agreement that sits in the wider context of the EU’s commercial policy towards third countries, such as Australia, Chile and the United States. Consumer organisations have been following the EU’s trade policy for years, as it affects consumers – and consumer policy – in both positive and negative ways.
It is therefore important to look at the lessons we can learn from the EU-UK divorce in terms of overall EU trade policy, putting aside the recent issues around the implementation of border controls.
What to replicate in wider EU trade policy
‘No tariffs and no quotas’ are a good result that has emerged from the negotiations. It should give European and British consumers continued access to a range of goods at affordable prices. It also harks back to the core, old-school nuts-and-bolts of trade deals. That is to say: while beneficial, it is perhaps not the most exciting or novel part for a trade policy wonk like myself.
Rather more noteworthy is that both sides agreed to have laws in place to inform travellers about air passenger rights, to offer the possibility of reimbursement and compensation, and efficient handling of complaints. This is a first in terms of information commitments secured in the context of an international trade agreement.
Another first – and a great precedent for future deals – is that the EU and UK commit to having minimum rules in place to protect consumers when they buy online. These should require e-commerce traders to inform consumers about the origin of the product, the seller, the full price, the applicable consumer rights, as well as to ensure access to redress. This is positive as European consumers often end up buying products from foreign traders without realising they are not EU-based. And that might lead to situations where consumers end up paying unexpected extra fees such as custom duties.
An ambitious plan on product safety has also been agreed. Market surveillance authorities will be able to cooperate and conduct joint investigations to prevent dangerous goods from harming consumers. It’s definitely an indispensable plan, as consumer organisations across Europe often find non-compliant products on the market – ranging from toxic jewellery to hackable security cameras.
The above shows that trade agreements can deliver for consumers if there is enough political will on both sides to make it happen. This should be replicated in future trade deals. For one, it may improve the contested standing of ‘trade negotiations’ among citizens.
Sorting out the online shopping and customs duties confusion
The precise day-to-day effects of the UK’s departure from the EU single market will likely only become visible over time. After reading the text of the agreement in January, we shared a number of observations. Here we urged for more clarity regarding customs duties and fees. These concerns quickly materialised as reported in the media: Consumers are suddenly faced with surprise fees. This is confusing as they are told no tariffs apply.
Let’s imagine a typical online order in a globalised context. An Austrian consumer buys Chinese-made headphones sold by a UK trader on a German e-commerce platform for a listed total price of €160. Imagine that person’s surprise when an extra invoice arrives for payment of customs duties, VAT and administrative fees. Why customs duties? Well, because the product does not ‘originate’ from the UK but from China, so the zero-tariff preference between the EU and UK does not apply. Why VAT? Because the product comes from a third country and is above the threshold of €22. On top of that, some delivery companies and postal couriers are charging extra fees for handling the new custom formalities. Consumers generally only learn about these fees when their package is delivered.
We have seen an increase of consumer complaints about all these surprise fees. And have asked the Commission to look into the issue. We cannot expect consumers to be customs experts and anticipate all such fees. While the European Commission has created a good information tool to help consumers, we need to make sure that traders inform consumers about the full price to pay, at the time of purchase – as both EU and UK law require. This is an important lesson for future EU trade deals where rules to enhance consumer trust online are discussed.
The missed opportunities in the EU-UK deal
Whatever broader geopolitical relations might be, the EU and UK are political ‘exes’ who must learn to live next door to one another. Proximity dictates that supply chains will continue to stretch across the EU-UK border, and people will be crossing this border for their post-COVID travels.
Together with our British members, we will keep a close eye on developments and flag any pressing consumer issues in EU-UK relations. A clear miss is that nothing was agreed to prevent roaming fees rising from the dead. Authorities will cooperate on ‘transparency of fees’ instead. This is disappointing: The EU should be ambitious on international roaming, as it could illustrate how global trade – with, say, Australia – might benefit consumers.
Also missing is cooperation between enforcement authorities to make sure consumer rights are respected. We will advocate for this cooperation to become a modus operandi with the UK. The EU should integrate this type of cooperation in its ongoing trade negotiations with countries such as Australia, New Zealand and the broader World Trade Organization.
And finally, there is a problem related to personal data protection and privacy. For the first time, the EU has agreed on rules about how data can flow in a trade deal. All EU institutions agreed a few years ago on model clauses to enable data to flow as freely as possible between countries via trade deals, without lowering the protection of people’s personal data and their privacy. But the text agreed with the UK deviates from this and could limit the ability of the EU to protect its citizens’ fundamental rights. The European Data Protection Supervisor (EDPS) echoes our concern and says the change “creates legal uncertainty”. The European Commission, Parliament and Member States must take a close look at the data flows text so that trading partners do not use it to obtain EU concessions on data protection and privacy.
In sum, and as I wrote before, the EU-UK deal is one to keep an eye on.
- Seven recommendations to secure positive outcomes for consumers after Brexit (2019)
- Making open trade and global markets work for consumers (2017)
- BEUC recommendations to improve EU trade policy (2021)
- BEUC letter to Executive Vice-President Valdis Dombrovskis on data protection and the EU-UK deal (2021)