JUSTICE - No. 66

43 Spring 2021 The Continuity Agreement The UK government was keen to ensure that trade flows between the UK and Israel would not be disrupted following Brexit. On February 18, 2019, the UK and Israel signed a trade continuity agreement in Tel Aviv (“the Continuity Agreement”). 9 The primary intention behind this agreement was to replicate the existing EU-Israel trading relationship and to thereby ensure continuity in trading relations, once the UK ceased to be a member of the EU. This is made clear in Article 1 of the Continuity Agreement. In keeping with this objective of continuity, the Continuity Agreement is a short form treaty that incorporates the relevant provisions of the underlying EU-Israel Agreements (to be interpreted mutatis mutandis), with modifications as specified. 10 The Continuity Agreement incorporates the following EU- Israel trade agreements, as amended (collectively,“the EU-Israel Agreements”): a The Association Agreement. 11 b The Procurement Agreement. 12 c. The Protocol to the Association Agreement (“the CAA”). 13 The Association Agreement (as amended) removes tariffs on a number of goods, and also removes non-tariff barriers. The Association Agreement provides, inter alia, for reciprocal duty-free movement of industrial goods and preferential access to some agricultural products. The provisions of the CAA have also been incorporated into the Continuity Agreement. This provides for mutual recognition of each party’s inspectorate results for Good Manufacturing Practice with respect to pharmaceuticals. This means that Israeli inspectors do not need to inspect UK facilities, and vice versa, and achieves continuity of the existing obligations set out in the CAA. In relation to services, the Continuity Agreement adopts the (somewhat limited) provisions set out in Title III (Right of Establishment and Supply of Services) of the Association Agreement. In addition, commitments on public procurement that relate to the UK and Israel have been retained in the Continuity Agreement. In respect of agricultural goods, commitments on tariffs for both the UK and Israel have been transitioned from the EU-Israel Agreement, such that on the date the UK ceased to be bound by the EU-Israel Agreements, tariff preferences applied by the UK for products from Israel will remain the same as those applied by the EU. Likewise, Israel will continue to apply the same preferences to products from the UK that it is applying to products from the EU (see below in relation to changes to tariff-rate quotas). The Continuity Agreement also attempts to reproduce the effects of the EU-Israel Trade Agreements by including the establishment of institutional arrangements (namely, the Joint Council and Joint Committee) between the UK and Israel based on existing structures that allow for the ongoing management and updating of the Agreement. 14 In free trade agreements generally, rules of origin are used to determine the economic nationality of a good. In order to qualify for preferential tariff rates, a good must “originate” in one of the parties to the agreement. When the UK was a member of the EU, all UK content was considered as“originating”in the EU, and UK exports were designated as “EU origin.” That meant that originating materials from, and processed in, the UK and the rest of the EU could be used interchangeably in bilateral trade between existing EU Free Trade Agreement (“FTA”) partners. This is no longer the case, as existing EU FTAs do not apply to the UK. In the interests of continuity, it was agreed that EU materials can be recognized (i.e. cumulated) in bilateral UK and Israel exports. Furthermore, EU processing can be 9. Trade and Partnership Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the State of Israel, Feb. 18, 2019, available at https://assets. publishing.service.gov.uk/government/uploads/system/ uploads/attachment_data/file/781440/CS_Israel_1.2019_ Trade.pdf 10. Ibid. , Art. 3. 11. The Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the State of Israel, of the other part, done at Brussels on Nov. 20, 1995 (“the Association Agreement”). 12. The Agreement between the European Community and the State of Israel on government procurement done at Brussels on 10 July 1997 (“the Procurement Agreement”). 13. The Protocol to the Euro-Mediterranean Agreement establishing an Association between the European Communities and their Member States of the one part and the State of Israel of the other part, on Conformity Assessment and Acceptance of Industrial Products, done at Brussels on May 6, 2010 (“the CAA”). 14. Supra note 9, Art. 7.