Where now for UK-EU relations or why this isn’t a reset moment - yet

(text of a talk given on 15 July)

Introduction

For the first time since 2016 the UK does not have a government that is actively suspicious of EU institutions. Similarly there is no longer a significant presence of backbenchers who believe that the EU needs to be undermined, that Brexit wasn’t just about the UK leaving but seeking to weaken or break that institution.

Well they didn’t do a very good job of that anyway. The prevailing version of Brexitism that was escape from a uniquely bureaucratic institution come slightly evil empire that was preventing buccaneering Britain from ruling the waves was of course so far from reality that it could never be a success. Not that this will stop those at its heart from continuing to mourn the loss of their true fantasy Brexit.

Back to the real world of the importance of trade with neighbours, of shared policy challenges like migration, security, and net zero, of the world’s second largest trade flow, of a shared responsibility for Northern Ireland. Though to be fair previous governments always had to let down the fantasists by signing a Withdrawal Agreement, Northern Ireland protocol, Trade and Cooperation Agreement, Windsor Framework, because those were necessary.

And in a way why this isn’t yet a reset moment for the UK and EU, because there still isn’t enough of a realistic view on both sides about the parameters of the new relationship, of what is possible now and for periods of the future. There is still too much of an expectation of dramatic change in the EU, of the UK having more influence than we do, that trade barriers can be significantly lifted, that rejoining the EU, customs union, or single market would be easy.

What we have now is a moment of opportunity, of creating better, but as before this will be part of an ongoing process rather than a single event. There is no renegotiation moment planned, the review of the TCA is a minor matter unless politicians want it otherwise, and there are already numerous ongoing engagements whether they relate to fish, energy, migration or most of all security.

Let us briefly rake over some history before turning to the immediate opportunities, the longer-term choices, and what is likely to happen during this government and Commission. In doing so this will be quite UK centric, so let’s also take a brief opportunity to ask what will be the EU’s approach to the coming years, speaking as someone who has the privilege to have conversations in London and Brussels. In truth, there will be plenty of common ground.

A potted history of Brexit

Notwithstanding the number of folk who would simply like to go back there, 2016 does now feel like a lifetime ago. The UK voted for an unknown model of Brexit a few months before the election of President Trump marked the end of US attitudes towards trade and security that had largely persisted since the second world war. Meanwhile the EU held out until 2019 before carrying out its own major change in the name of open strategic autonomy in trying to regulate the global economy to the advantage of its own companies. But lest that anyone calls this the death of globalisation, actual global exchange continued healthy and strong through a covid crisis it helped spread and then defeat, and a Russian invasion which also brought about huge changes but also showed the continuing strength of global companies operating under particular constraints.

Against this backdrop, several UK governments floundered with an issue too sprawling for the narrow ways in which it has been handled. Given the EU and strongly associated countries account for over 50% of UK trade, are central to regulatory policy now a core part of every government, important in migration and energy, and crucial for stability in Northern Ireland, there is a need for a big-picture understanding and approach that has simply not been present.

Instead we’ve had four distinctive phases of slightly different forms of Brexit denial. First came the post-2016-referendum confusion, the simplicity of Brexit means Brexit, and the setting of red lines such as leaving the single market that hadn’t been fully thought through. Coupled with the red lines, the vacuum allowed the extreme Europhobes to set the agenda for their hardest possible Brexit which would be no deal or a fairly light one.

Next came the extreme secrecy as a small team tried to negotiate a special deal with the EU while making this acceptable to MPs and largely failed on both counts. No deal was never realistic given certain businesses like Nissan would simply leave the country, leading to a massive crisis of confidence, and the Commission eventually tired of UK incompetence and basically took over the steering of what they thought could work, but which was never actually going to meet the UK politics.

Boris Johnson could play the UK politics and mixed that with a combination of aggression and capitulation which delivered deals that were publicly supported and which he then denounced leading to no great desire on either side to ever talk again. This was the most traumatic period from the point of view of the EU, and it isn’t yet over.

For the implications of the TCA have still never been fully implemented by the UK in terms of import checks, and that has left a trust deficit which does not go away with a change of government. To listen to Brussels folk talk, there were probably also many threats made during negotiations which left scarring, but it is hard to get an exact picture of this. Stories will probably emerge, but among my least favourite is that of external advisors with little knowledge of the EU telling UK diplomats what to do, and lines dictated from London that bore no resemblance to anything that would be helpful for Brussels to hear.

Most recently we had the attempt to forget the whole trauma ever happened under the Sunak government, in which some progress has been made not least on stabilising the Northern Ireland Protocol with the Windsor Framework. Even then it was not widely reported that the UK only eventually decided to do this because otherwise it could not have acceded to the CPTPP. Once that was done, and Sunak lost interest, technical relations have improved, but the politics have remained rather frozen.

We can’t and shouldn’t rake over that past because it has affected the way the UK is seen by Brussels, as having been ignorant, greedy for maximum trade ties with minimum respect for why this isn’t possible, and not attentive to its own politics. There are some counterweights to this view, but there is a lot of suspicion that Labour inherits. Suspicion that will not be allayed by the simple act of saying that we’re a different government, now let’s talk.

Opportunities for this term

So we know about the new government’s priorities. An SPS agreement, mutual recognition of professional qualifications, and better mobility arrangements to support touring artists. These have been Labour priorities for a couple of years, and are by now extremely familiar. That doesn’t however make them any easier to deliver. Recognition of professional qualifications outside of the single market, in Free Trade Agreements, is notoriously difficult, not least since governments aren’t actually the regulator. At best it is thought that a couple of professions may be possible. Touring artists are probably easier, first because there already has been more progress with member states, second that there is mutual interest.

A veterinary or SPS agreement is the most significant item here. The principle behind this is clear enough, that UK food and drink exporters have really struggled with new checks, and many of the smallest ones have stopped exporting altogether. The problem is that it isn’t obvious how recoverable this may be. Removing all checks would require complete alignment with the EU, and is the sort of cherry picking that the EU has been reluctant to allow in the past. It would also not necessarily be a quick process, agreement and removal of checks having taken sixteen years in the case of Switzerland. For this isn’t just about a new treaty, but trust that the UK will check imported food and domestic production sufficiently to protect the EU single market.

Alternatively there is an option where checks are merely reduced rather than eliminated, requiring less alignment, but potentially still making it hard for UK exporters. Some in the EU have also ruled this out, pointing out that in the case of New Zealand there were also many years of discussions leading up to such an arrangement, and that wouldn’t work for a much nearer market. But then you notice that there isn’t actually an SPS deal the EU currently think would work, and that both models would involve extensive trust-building and gearing UK systems around keeping EU inspectors happy. This is not low-hanging fruit, there’s a deal to be done which my sources suggest is a reduction in the first instance, but all as part of a process.

What may help these negotiations is a recognition among some in Brussels that the Windsor Framework arrangements on Northern Ireland are fragile particularly with regard to consent. Removing SPS checks between UK and EU also mean doing so for goods going from GB to Northern Ireland, and as importantly provide the impetus for the EU to talk.

On the trade side there are a couple of other areas often talked about, joining the Pan-Euro Med convention on Rules or Origin, and Mutual Recognition of conformity agreements. The first is probably the most significant as it will remove some barriers to UK participation in European industrial supply chains, as well as helping importation of goods from EU supply hubs, and is negotiable but not currently on the Labour list. Mutual recognition would also help with Labour’s industrial policy, and is based on one of the rare post-Brexit successes, of retaining our position in the European standardisation community. However, there is less interest for the EU in there as their products already have access to the UK market.

What is less of use is the TCA review, scheduled for 2026. This is a standard clause in EU agreements to look at implementation arrangements, but is not intended as any kind of renegotiation. If political leaders want this, it can happen at any time. Hence this is something of a red herring.

Separately to the considerations of trade, but linked, is the question of a security pact. Led by David Lammy as Foreign Secretary, this plays into the desire of many European countries for a more formal arrangement particularly given the renewed threat of Russian aggression. As something of interests to both sides, this is going to happen. The question is the extent to which it is able to grow. There have already been suggestions of linking various defence industry initiatives, and some of those around the Foreign Secretary talk of economic security cooperation, some of which is already in place around sanctions, and maybe a Trade and Technology Council modelled on the US-EU model, which encroaches onto the trade space.

There are various forms of cooperation which have been suggested such as on regulation, and this looks like promising territory on which something will happen. Quite what that will be with what level of formality and impact remains to be seen. Already we are seeing UK Ministers making a priority of speaking to their European counterparts and from that will almost certainly come deeper cooperation. If not a reset that is very much a change of tone from the UK government.

Where the security pact and deeper ministerial ties will lead is one or more summits between Starmer and von der Leyen which will be a particular opportunity. For it is in the meetings of the senior officials in the system empowered to deliver that the biggest changes can be made. An annual summit with deliverables would be a significant prize for the UK. Scoping exercises between key officials that come around these will help shape the relationship significantly.

There are many more aspects of the relationship that have not been mentioned. Cooperation on energy requires linkage of emission trading schemes and carbon border adjustment mechanisms. Energy though is currently linked to fish, with both sets of arrangements expiring in 2026. These need to be unlinked if possible, but that won’t be easy. There is renewed talk of UK rejoining Erasmus student exchange not least as something of particular interest to the EU. Then there’s data, financial services, youth mobility, and much more.

But underlying all of this is the expectation from the EU that the UK must implement properly what has been agreed, and the UK government red lines of no customs union, single market, or full mobility. There’s a busy agenda, but there are also limits.

A responsive but cautious EU

It is often said that the UK wishlist is fine, but the EU isn’t interested, it has other far higher priorities. The second part of that is true, but the first isn’t, and the EU is big enough to handle different things at the same time.

There is actually considerable interest in Brussels in UK plans, as I have personally found. They would welcome greater engagement, they want to hear from the UK. That shouldn’t however be mistaken for any generosity in negotiation.

The EU has interests. They asked for a mandate from member states on youth mobility, and were not amused by UK politicians immediately saying this was unacceptable. While this happened in the run up to the election campaign and there is a case that the EU were careless, they are not amused.

That builds into a larger problem of trust. Quite simply the EU does not believe that the UK has ever implemented the TCA in good faith, or understood that frictionless trade without single market checks is not possible. There is a view that cherry picking wasn’t just the Conservative government, even if the worst negotiating practices may now be passed. What happened in the past has however left trauma.

The EU will engage in pursuit of their own interests, specifically the Commission will as ever take the least in third country engagement. Security is clearly there, but there are plenty of other topics to pursue, and they will see how the new government approaches this. No more dividing and ruling, no more attempting to do the deals with Paris and Berlin, and that will on its own be an improvement.

The EU doesn’t in fact have a packed agenda with regard to third country relations, there are discussions ongoing with Switzerland, but problems in many of the other country files such as with Australia and Mercosur. A clever UK government could position the UK as the trading partner the EU needs right now, with similar interests, rather than one for example arguing against the deforestation regulation.

Some commentators have suggested that EU reform around the enlargement process and Ukraine’s application in particular may provide another source of impetus, as there is finally a need to construct a Europe of variable institutional arrangements. That however looks rather optimistic, since there is very little sign that an EU with increasing nationalist feeling is going to be able to have such serious conversations. Most likely the EU the UK is dealing with now will be similar of five years time.

The reset the UK needs – of internal arrangements

One could see the next few years of UK-EU relations as a landscape of opportunity. There is so much that could be done, so many policy areas of interest that have barely been mentioned whether migration or net zero. That would be in keeping with a relationship between neighbours of this size.

There is however one thing that stops this being a true reset moment, at least so far. That is the absence of any indication from the new UK government of how it needs to change its own operations to something more in keeping with the relationship they want. To be fair, ten days in, that’s not completely surprising. But there are also major hurdles to doing so.

Talk to major trading partners and neighbours of the EU, and they talk of their regulatory systems being set up around this relationship. It seems hard however to imagine the UK doing this. Then there is the question of honesty around the choices available, or rather the restrictions that come with UK red lines. Suggesting that trade could be easier while still outside of the single market does not always go down well in Brussels. Suggestions of special deals raise even more concerns.

Then there’s the internal structuring, the idea that there is a single point of contact rather than a complex modern relationship to be coordinated. The need to bring in stakeholders and use their expertise and experience. Talk to the EU and apart from trust the next thing they mention to getting things done is when groups on both sides come together to lobby for the same thing, as happened with the extension of generous rules of origin for electric vehicles. The UK government needs to be working with stakeholders to make this happen, and there’s plenty of time for this to happen. It isn’t however that Labour has even so much as hinted at.

More positive is the chat of finally correcting one of the worst 2016 decisions with regard to internal government, and restoring a strong Cabinet Office role as Head of European and Global Issues. Former holders of such posts such as Ivan Rogers and Jon Cunliffe were regarded as hugely important figures, running weekly meetings to coordinate extensive government activity. Just from the brief survey outlined, it is quite clear that we are still in a position where this is relevant.

Realistically, we’re likely to see the Labour government learning over the coming months how to better operate the EU relationship, and gradually move in a better direction. Once there is a properly restored central coordination function for EU matters then the UK will have had its reset, and finally started to make Brexit at least stable if not working.

Longer-term decisions

There seems reasonable grounds for expecting that UK EU relations will thicken over the coming years, that we will not be back in the crisis years, that there will be some new agreements even while others turn out to be more problematic than expected. What we will have, which a couple of informed commentators expected from the start, was our own version of the Swiss model that the EU always wrongly ruled out. For modern international relations rest of a web of agreements formal and less so between countries, and that is an inevitability of such an important one as UK and EU. The TCA may turn out to be the right high-level structure, or perhaps there will be a new form, but that is actually less important than the range of structures that mean struggles in one subject don’t affect the overall functioning.

The question will then arise, is this the long-term relationship, probably by the end of this Parliament. There are already those pushing for customs union and single market, and the dwindling band of sovereigntists will continue to insist we should walk away unless we get absolutely everything that we want.

No-deal turned out though to be an impossibility because it would just simply have seen the UK as an economic outcast, not to mention because of the US protection for the Northern Ireland peace process. There will continue to be too many arguments against this for it to happen.

More controversially perhaps either single market or customs union looks like a difficult sell, suffering from the same problems of having too many obligations with not enough say. An SPS agreement with the EU wouldn’t require the UK to denounce existing trade deals such as the CPTPP, but a customs union would, and leave the UK frustrated at not having a say over external trade policy. Similarly following the entire acquis of EU single market rules without a say would be problematic, ok perhaps for goods, less so for services.

So having achieved stability, as seems likely albeit with ups and downs, the question will then be as to whether a serious campaign starts for rejoining the EU. This is not going to be the easy sell as some would imagine, for the terms would have to be negotiated, and many politicians will think it best not to go through more trauma. That though will be for another generation to argue, as should be the case in a functioning democracy. But once we see a functioning relationship outside the EU we can compare that to what we had as members, and that should be the basis of further debate.

Without the expectation of the EU changing, for the next few years have to be about the maturing of the UK debate towards the EU. There’s a need to understand realistically the options, rather than hope something takes these away.

Concluding thoughts

That a new government brings new opportunities to the UK EU relationship is undoubted. But these are heavily constrained, by the past, by respective red lines, by politics. For the last couple of years though there has been a gradual thawing of relationships at away from public glare, and this is quickly going public as new Ministers speak to their EU counterparts. Such contacts will take on a life of their own, there will be new arrangements, easements of trade, dialogue. But there will also be frustrations, barriers not removed quickly enough, deals failing, the two sides talking past each other, because that’s what happens in international relations.

From a UK point of view, this will be enormously facilitated by a return of a coordinating function of what must be a complex relationship. Handling of EU relations has been haphazard, vague, and at times governed by rather bizarre ideas of international relations. That needs to change.

Whether what emerges as the strengthened relationship by the end of this Parliament is the end state remains to be seen. There are arguments both ways. But before we get to that point, some normalisation will be welcome.