Comment

The EU-UK trade reset: how to move towards a higher ambition

Ignacio Garcia Bercero / Oct 2025

Maroš Šefčovič, Nick Thomas-Symonds and Keir Starmer. Photo: European Union, 2025

 

After the successful Summit of 19 May, EU-UK trade relations have moved away from the political limelight. The Council has adopted negotiating directives on youth mobility and are expected to be soon adopted on linking of emissions trading systems and on Sanitary and PhytoSanitary Measures (SPS). There is not yet a clear indication on when negotiating directives will be adopted for the participation by the UK in EU electricity markets. In any event it can be expected that for the next year both sides will be busy with the technical and highly complex negotiating processes required to agree on legally binding texts. Provided political momentum is maintained, some of the negotiations could be concluded before the next EU-UK Summit in 2026, which would then give an impulse to conclude the others and start a joint process of reflection on next steps.

What EU-UK trade relations lack is a politically attractive sense of direction that builds mutual trust and makes it possible to go beyond the achievements of the last summit. EU trade policy is currently heavily focused on managing the trade relationship with the US and China, ratifying and concluding a new generation of comprehensive trade agreements with major emerging economies and exploring closer cooperation with the members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Apart from the last topic, trade relations with the UK do not appear to figure amongst the EU’s trade policy priorities. As regards the UK, after successfully concluding negotiations with the EU, the US and India, trade policy appears to have entered into a process of consolidation with no major new initiatives envisaged.

The time is not yet ripe for a major rethink of the EU-UK trade relationship. The EU preference remains working  on the basis of the Trade and Cooperation Agreement (TCA) complemented by additional agreements that fall under its institutional framework. The Labour Party’s red line on freedom of movement makes it difficult to envisage additional single market agreements based on the Swiss model, also considering that the recent set of agreements concluded with Switzerland still need to be subject to ratification and likely to a referendum. In the more medium term, as a new institutional framework may develop to ensure the defence of Europe with the UK as a central player, there may be scope for both sides to think creatively beyond their red lines. But the time for such bold thinking is not yet now.

In order to maintain a momentum for closer economic integration there is a need to reflect on ideas that are both economically meaningful and attractive on both sides. This need not necessarily take the form, at this stage, of additional legally binding agreements and could be presented either in the context of the TCA review or of the strategic dialogues envisaged by the Summit Joint Statement. Ideas could also emerge from a process of reflection that involves both officials and think tanks. As a contribution to that reflection I would suggest that three initiatives are explored that build upon the interest of the UK to maintain a maximum of regulatory alignment with the EU and to engage in high level strategic dialogues on the green transition and global trade policy matters.

  1. A reinforced framework for regulatory cooperation

David Henig has recently suggested that the UK would have an interest in adopting the principle that it would align with EU rules as a default unless there is a compelling reason otherwise. In a policy brief published last year by Bruegel, I argued that both sides should agree on guiding principles for regulatory cooperation that facilitate the process of  UK alignment. A flexible non-binding agreement could be based on the UK notifying to the Commission its intention in principle  to align with a new EU regulatory proposal. The Commission would then keep the UK informed of discussions of the proposal in the Council and the EP and give an opportunity to the UK to put forward comments on the proposal, which would be transmitted to the co-legislators. At the end of the procedure, the UK would notify the Commission of its final decision on alignment. Since the process is voluntary and does not entail single market treatment, there is no reason why the EU should raise objections about “cherry picking”. At the same time closer alignment would give more predictability and stability for business and could create the conditions to develop new trade facilitating initiatives.

  1. Cooperation on green industrial policies

The EU Clean Industrial Deal envisages the promotion of lead markets for green products, including subsidies and preferential access to government procurement. Such initiatives risk entering into conflict with the procurement and level playing field provisions under the TCA. To avoid a potential source of tension in bilateral trade relations, both sides could agree on guidance for the implementation of the TCA provisions on environmental and energy subsidies and provide for mutual access to incentives relating to lead markets. This could go together with close cooperation on international discussions on carbon pricing as both parties process to link their emission trading schemes and align the design of border carbon measures.

  1. Cooperation on global trade challenges

The Summit Joint Statement called for regular high level meetings to consider joint strategic interest in the area of the economy and trade. So far this opportunity has not been taken despite the fact that the UK and the EU would have benefited from closer consultations in responding to US tariff threats. As both sides have now reached agreements with the US, and the UK has decided to join the Multi Party Interim Arbitration Agreement, there is scope for reinforced cooperation on global trade challenges. Issues that would call for strategic dialogue include EU-CPTPP cooperation, exchange of views on economic security as the EU prepares a new economic security doctrine and the preparation of next year’s WTO Ministerial meeting. Apart from regular Ministerial meetings a dialogue at senior official level could be established.

The three initiatives above are not intended to be transformative. They could however maintain the political momentum for a closer and more strategic trade relationship. They could go together with other trade facilitation initiatives, including mutual recognition agreements on professional qualifications and conformity assessment in sectors of mutual interest or exploring the possibility of a common protocol of rules of origin in the context of EU-CPTPP cooperation.

 

Ignacio Garcia Bercero

Ignacio Garcia Bercero

October 2025

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