By George Candon, Founder and CEO at My Friday
The European Partnership Bill announced in the King’s Speech is intended to provide an enabling framework to implement current and future UK-EU agreements. It is a clear indication of the Labour government’s push for greater collaboration with the UK’s largest and nearest trading partner – specifically in important areas of electricity, emissions trading, food and drink, and sanitary and phytosanitary (SPS) agreements.
Closer cooperation in security and defence is important to both jurisdictions, in light of the Iran conflict, Russian war of aggression on Ukraine, and Trump’s unpredictability. The US threat of pulling troops out of Europe and testing the NATO alliance adds extreme urgency. Defence is the low hanging fruit as the UK remains closely aligned with the EU through NATO, and a UK defence and security deal with Brussels is also in progress.
Rich rewards
A particular priority for British business is the removal of checks on food and drink exports to the EU. In March the UK government published a list of 77 EU regulations and directives with which businesses would need to comply once a new Sanitary and Phytosanitary agreement with the EU came into force.
This would eliminate most of the post-Brexit costs and bureaucracy UK food and agriculture exporters to the EU have had to deal with – and is likely to give a significant boost to UK-EU agrifood trade. There’s much lost ground to be made up – DEFRA has estimated a lost value to UK exporters of some £4bn/€4.6bn in the past eight years.
Avoiding payments under the EU carbon border measure is also an important driver of the ETS talks. Linking emissions trading schemes could save £7 billion of UK exports from exposure to the EU Carbon Border Adjustment Mechanism (CBAM).
Progress is going to be tougher on youth mobility and Erasmus+ because of the implications for the very contentious freedom of movement rights both imply.
Positive pragmatism, Brussels style
EU figures welcome the UK’s move towards a “reset”. And while reaction has been broadly positive, it comes with a serious dose of pragmatism.
The mood is warm, but conditional on delivery. This demonstrates the limits of EU enthusiasm. Closer partnership is welcomed, but on EU terms, not a restoration of the pre-Brexit bargain. This is perhaps best reflected in the terse, tight-lipped comment from a European Commission spokesperson that “there are discussions on closer cooperation on a number of areas. That is where we are.”
Brussels will insist there will be no more UK exceptionalism and cherry-picking of the rules: it has reportedly dismissed out of hand a floated British idea for a single market for goods only. The EU will be vigilant in protecting the four, integral, freedoms of the single market – freedom of movement in goods, capital, services and people.
The EU is however extending a branch to the UK in SPS and energy trading, both the heart of UK ambitions, but only with the caveat of dynamic alignment. This means that changes to the rules made in Brussels will have to be directly implemented in the UK.
Politics at play
Probably also tempering European policymakers’ enthusiasm are political developments in the UK. They recognise the UK government’s EU ‘reset’ as an effort to revive weak growth and repair post-Brexit economic damage, but are sanguine about how Starmer is constrained by domestic politics.
With the King’s speech followed hot on the heels by the king of the north’s manoeuvring, Brussels can be forgiven for holding its breath for the next month or so. While Starmer may still be in office by the time of the next EU-UK summit, slated for mid-July, he may be a lame duck, no longer in power.
The Makerfield byelection is reviving Brexit-era politics. EU leaders will be wary and worried of the old divisions and debate political machinations in the UK could reopen. As Georg Riekeles, former adviser on the EU’s Brexit taskforce was quoted in The Guardian, “the EU would need to see a durable national consensus that the UK has really changed its mind”.
It’s apparent that consensus doesn’t exist even within the governing Labour party. The EU Reset Bill probably represents the lowest common denominator that most sections of the party can get behind. The main current challengers to Starmer, Andy Burnham and Wes Streeting, are both on record to be significantly more ambitious in their future dealings with the EU. Clearly playing to the Makerfield electorate, Burnham has recently said he won’t seek to rejoin the EU.
From Brussels’ perspective, progress on the ‘reset’ is in the UK government’s gift.
Whether British politics will allow it to avail of it is another question.