Preparing for a Pivotal Moment in UK-EU Relations
Part of a series of monthly updates in which UK Trade and Business Commission Expert Adviser David Henig brings updates and analysis on the evolving trade relations between the UK and EU.
Summit Opportunity
President Trump has in effect ended eighty years of close partnership between North America and Europe. While there have been tensions before, all previous US administrations thought of European relations as an essential security and economic alliance. Second time round, President Trump does not. His Vice-President seems to treat Europe as the enemy.
Europe is responding. Various emergency meetings are bringing together leaders and other senior figures. Security – and Ukraine in particular – is the pressing topic. Underpinning this is the question of economic power.
After the US, the UK is the EU’s largest economic and security partner. May’s Summit to be held in London is thus a crucial moment. More than any other single event it will be examined as to whether Europe can stand together without outside help.
If there is not a significant outcome to the UK-EU Summit, then this will be judged accordingly as a failure, with all this would entail. There will be other opportunities in the future, but perhaps none so crucial.
Progress is steady but unspectacular
There are mixed signs of progress in relations between Brussels and London. Defence and security is being seen as the priority, and there is confidence in both the UK and EU that there will be a deal agreed. This is likely to be the main summit deliverable.
With energy security similarly being a priority for both the UK and EU there is also expected to be progress on this issue. Formal talks are expected to commence on linking Emissions Trading Schemes to avoid the need for any payments to be made under the Carbon Border Adjustment Mechanism. There may also be wider discussions on energy trading.
On other trade issues there has been slightly less movement. UK asks for an SPS agreement and those of the EU on youth mobility are expected to be taken forward to the next stage, including joint scoping and seeking of mandates. Importantly, it seems like the UK has decided on aligning food and drink rules with the EU’s, perhaps in the hope of more narrowly scoping the youth mobility scheme. Fish is also likely to feature, perhaps in an acknowledgment that the current situation is the starting point for future discussions.
Such a set of deliverables would of course have been unthinkable a year ago. Even a couple of months ago there was disquiet on the EU side while the UK team were talking up prospects. Events are leading to some level of rethink in Brussels.
Redefining UK-EU relations
Given a difficult inheritance even this progress made in restoring a functional trade relationship is significant. More is however needed to meet the mood of the moment, and in particular, a shared vision for the relationship. Ruthless pragmatism, as Cabinet Office Minister Nick Thomas-Symonds has described his approach, is not sufficient. Effective implementation of existing agreements, as often repeated by EU Commission Maros Sefcovic, likewise.
What the UK and EU should be committing to is to support growth and security across Europe through the deepest possible trade partnership consistent with mutual red lines. Neither side has yet come close to this point.
In particular the opportunity is for the UK to commit to alignment with EU rules, and for the EU to respond by providing far greater market access through mutual recognition. This would provide a significant economic boost to both, as shown by analysts Frontier Economics for Best for Britain.
What is really needed is a partnership programme spelling out aspirational timelines for negotiations on subjects including fish, SPS, wider alignment, mutual recognition, mobility, and the UK accession to the Pan-Euro-Med convention on Rules of Origin. There should also be a regular schedule of ministerial level dialogues on subjects of common interest including on economic security, regulatory cooperation, and protecting global trade rules.
Two months to reset nine years
Both the EU and UK are nervous of making such commitments. Memories remain sore, of the UK’s political meltdown in 2019, and of the EU having to deal with hostility from UK Ministers and officials until 2022. Suspicions remain, that the EU will lock the UK into burdensome commitments, or that the UK is too unreliable, or too close to the US. These should not be easily dismissed, but can be overcome with mutual goodwill and more regular contact.
What leaders should bear in mind is that the process of negotiating specific deals such as on SPS and youth mobility is always difficult, as decisions inevitably bring criticism. There was never a moment as propitious as that of political convergence prior to the start of talks. That opportunity is provided unexpectedly by events in the US.
Most likely the summit will deliver a result just enough to satisfy the doubters, keeping the ball rolling but with some regret as to what didn’t happen. Just possibly though there will be a step change that redefines the UK-EU relationship for the years to come. That is what needs to be decided in the next two months.