On 12 February 2020, the European Parliament (EP) published the text of a resolution concerning the proposed mandate for negotiations for the EU’s new partnership with the UK.

The resolution notes that whilst the EP is supportive of the EU constructively negotiating a balanced, ambitious and comprehensive free trade agreement with the UK, by its nature such an agreement will never be equivalent to ‘frictionless’ trade. The EP also asserts that a non-EU country cannot enjoy the same rights as a Member State and the integrity of the Single Market must be maintained.

In terms of the negotiating Directives, the EP stresses that in order to safeguard financial and regulatory stability and to ensure the full respect of the EU regulatory regime and standards and their application, prudential carve-out and limitations in the cross-border provision of financial services are a customary feature of EU trade agreements and should be included in the free trade agreement concluded between the EU and the UK.

In terms of equivalence in financial services the resolution:

  • recalls that UK based companies will lose passporting rights;
  • considers that market access should be based on equivalence decisions, provided if the EU is satisfied that the UK regulatory and supervisory regime and standards are and continue to be fully equivalent to those of the EU, reflecting the provisions agreed upon for a level-playing field;
  • that once equivalence has been granted towards the UK, an effective mechanism has to be put in place to guarantee that equivalence is maintained over time and recalls that the EU can withdraw unilaterally the status of equivalence at any moment; and
  • considers that any future framework should safeguard financial stability in the EU and respect its regulatory and supervisory regime and standards and their application, while maintaining the EU regulatory and decision-making autonomy.

The Council of the EU is expected to adopt the Commission’s proposed mandate at a meeting of the General Affairs Council on 25 February 2020.