Comment

Future UK-EU trade deals are inevitable, the real focus should be on their impact

David Henig / Oct 2023

Image: Shutterstock

 

Travelling between London and Brussels, the mismatch in trade policy conversation is not about developing the UK-EU relationship, but how much the subject is raised. In Brussels the UK will almost never be mentioned, whereas in London the conversation will almost always go to matters EU.

Such is the lot of EU neighbours, for the same happens with Turkey, Switzerland, Norway, and accession countries. Of course, the UK is special as an ex-member, large economy and security partner, but Turkey is also special as the longest serving accession state with a significant integrated economy. Switzerland is the only country landlocked by the EU, and Norway as the most important country in the single market but not the EU.

Other special third-country relationships for the EU clearly include the US, probably China, and those with whom there are Free Trade and Association Agreements in place or being negotiated. One can indeed argue that virtually all third countries are in some way special, meaning none of us really are.

Having a review clause in the Trade and Cooperation Agreement equally does not distinguish the UK. Such clauses are seen in numerous EU treaties, enough to entirely occupy the negotiating capacity of the Commission were they to mean full renegotiations, a reason this isn’t what they mean.

Insofar as there is a place in which all EU third-country relationships come together, it is the weekly meetings of the Trade Policy Committee of Member States and the Commission. Once a month senior officials will mostly come from their capitals to discuss substantive issues at a full meeting. As important are the meetings in between of ‘deputies’, usually from their permanent representations, where they are consulted on progress across all files.

Equivalent in the European Parliament is the International Trade Committee, where a range of topics are discussed in each regular meeting. Members typically go into greater detail than their UK equivalents on the details, setting out positions and quizzing officials. Just as per Member States, MEPs must broadly or specifically approve the proposed courses of action.

However, while Member States and MEPs express opinions and agree outcomes, the Commission deliberately maintains an iron grip on actual third country negotiations, to maintain unity. Direct Member State involvement is strongly discouraged, though the EU itself often likes to confuse third countries by suggesting otherwise. When it comes to improving relations with any third country, Brussels is the key city, not Berlin, Paris, or Warsaw even though they have influence.

At least in the Trade Directorate-General, the Commission has its own personality and goals distinct from Member States and MEPs, though shaped to be acceptable to them. This broadly can be seen as maintaining strong third-country relations that support EU business while also meeting other objectives such as those around the Green Deal. Working with other directorates, they are thus instinctively disposed to supporting deals.

As EU official Lucian Cernat (in a personal capacity) has recently written in a policy brief for ECIPE, agreements with third countries increasingly comes in the form of ‘mini-deals’ that can nudge forward specific elements, without going through the full and formal Free Trade Agreement process. Looking at the EU Treaty Database, there are numerous agreements with important trade partners. In this sense, almost all third countries have a ‘Swiss-style’ relationship, and evolving global trade politics suggest this is likely to continue.

Adding complexity, overall ownership of neighbourhood relations sits with two other Commission DGs, with one handling western Europe including the UK, under Maros Sefcovic. Here, a dedicated UK team repeats public lines that closer relations are not on offer, in large part to discourage suggestions of single market levels of access without equivalent commitments. This should not be confused with a resistance to mini-deals, as we have seen with the Windsor Framework and probably will on electric vehicle rules of origin. For responding to requests from neighbours is necessary to a stable relationship.

Thus, should a future UK government actively want stronger relations with the EU, the Commission will not just say no. This would not be in their institutional interest, and as one of the relevant team once told me, “our door is always open, that is one of our problems.” This of course does not mean that the UK gets everything asked, as per the Windsor Framework which included considerable legal protection for the single market in easing checks from Great Britain to Northern Ireland.

Given the current relatively EU-hostile UK government is asking for deals, the same can be assumed for those in the future. Relevant questions are then what agreements are sought, when, their content, linkages, and most importantly, impact. Quite possibly the series of agreements the Labour Party proposes, such as on SPS, have little economic impact. In this situation, will UK public and political sentiment swing towards rejoining, settle for a limited relationship centred on the TCA enhanced with mini-deals, or even revert to a more hostile stance?

Much will depend on the specific deals and their political context, how this in turn affects investment as well as trade, and whether a stronger, more durable partnership is established. These are not known yet, but also obscured by focus on the wrong issues such as the TCA review, whether there will be deals, or whether the UK was right to vote leave.

Perhaps as important as resetting EU relations will thus be to educate politicians and the media as to how the EU works in regard to third countries. Then again, as one sceptic suggested to some of these ideas on social media, that hasn’t been a strong point in the UK for 70 years. Most likely then, we will be continuing multiple conversations, but the one recognising an evolving relationship of mini-deals with uncertain outcome will deserve the greatest focus. For there will be deals, that is the way of trade politics particularly between neighbours.

 

David Henig

David Henig

October 2023

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