The Future of UK – EU Relations
To reset or not to reset?

 

Brexit has been traumatic for both the UK and the EU.  The UK has lost its privileged access to the EU market and its influence in EU affairs.  The EU has lost a valued Member State, feels insulted by the UK and certainly does not want to encourage others by allowing Brexit to be seen as a success. Now that the dust has settled, what are the prospects for improving relations?

The Trade and Cooperation Agreement

The UK left the EU without any form of agreement establishing the future relationship with its partner for the past 50 years.  There was only a "Withdrawal Agreement" setting the financial consequences of withdrawal and dealing with some of the disruption that would be caused to legal relationships – ranging from the residence and social security rights of persons to the fate of the UK Sovereign Base Area in Cyprus (and of course Gibraltar).  The EU insisted (rather cleverly) that it could not negotiate a trade or association agreement with a Member State and could only do this once the UK had become what it terms a "third country". The EU made an exception for Northern Ireland where it did have an interest in negotiating a trade agreement called the Northern Ireland Protocol (an inconsistency that we commented on at the time). The UK did not appear to attach importance to securing a trade agreement with the EU, let the EU determine the process and was content with a political declaration on the Future Relationship.

As a result, the UK needed to negotiate a trade agreement under threat of a "cliff-edge" separation that would have impacted it much more than the EU. The resulting Trade and Cooperation Agreement (TCA) that was negotiated in record time was distinctly unambitious compared to recent landmark trade agreements such as the Comprehensive Trade and Cooperation Agreement with Canada.  Due to the short time available, the TCA also contained numerous loose ends requiring future negotiations to establish a framework for cooperation. These ranged from the future of the recognition of judgments to the UK's participation in the Horizon research programmes. There were also numerous areas where some basic rules were established but many details needed to be filled in – such as in financial services, energy and fisheries. 

The TCA therefore has numerous joint (or specialised) committees tasked with continuing the work and also numerous rendez-vous and review clauses, ranging from requirements to report on progress in implementation through to automatic expiry of certain chapters in the absence of a decision to prolong them.  It also provides for periodic general reviews of implementation, the first of which is scheduled for mid-2026.

Progress on tidying up the loose ends and developing closer cooperation under the TCA has been painfully slow.  The UK has tended to shy away from a politically toxic subject and the EU has been unwilling to devote resources to the TCA and was content with the arrangements it had skilfully negotiated during the transition period.  The EU has indeed been at pains to play down expectations for improving the relationship at the review in 2026 pointing out that this is to review progress in implementation, not to revise the agreement.

Modest corrections were made to Northern Ireland Protocol which was renamed the Windsor Framework (with Mrs Von Der Leyen taking tea with King Charles in Windsor Castle). Other reforms are being talked about – but not yet negotiated.

A Possible Reset?

With the passage of time and a new government in the UK, there has been talk about a "reset" in relations involving other possible reforms – but so far no negotiations.  We briefly review below some of the ideas that are circulating.

Youth Mobility

One achievement of the EU that is universally praised is its Erasmus programme that allows students to spend up to a year in another EU country and the Erasmus+ program that extends the Erasmus exchange concept more generally to education, training, youth and sport. The UK does not participate in these programmes, to the regret of many in the UK's universities, and there is also a lot of pent-up demand in the EU for renewed exchanges with the UK.

The first recent suggestion from the EU for improving relations was for a youth mobility agreement but this met a cool reaction from the UK government, which has made "free movement" (of persons) one of its red lines.  The UK apparently considers that a youth exchange programme would open the door to increased immigration, although the proposal only involves temporary residence. 

There is an interesting contrast with the UK request for improved access for artists and professionals.

Musicians, touring artists, and professional services

While an improvement in youth mobility is perceived as being in the interests of the EU, a possibly related improvement that is sought by the UK relates to the barriers that withdrawal from the EU has created for touring artists (especially musicians) and for professional services.

Current EU customs rules make it extremely difficult for touring artists to travel to the EU from the UK with their equipment. Burdensome declarations and bonds are required even for short visits.  It is reported that journalists travelling from the UK to the EU prefer to rent recording and other equipment locally rather than bring their own. For performing artists (properly so-called) this is often not acceptable.

Travelling professional service providers who do not need to carry equipment with them face complex rules on access and temporary residence that vary between Member States but are often not enforced. 

A constant request from the UK is for greater mutual recognition of professional qualifications but this faces the objection from the EU that the requisite trust for such mutual recognition can only be found between Member States. This may appear unjustified and even ideological but has recently been reinforced by a judgment of the Court of Justice in its infamous Alchaster judgment, which stressed that while the principle of mutual trust between Member States meant that respect for fundamental rights can be presumed, no such presumption could be made in the case of a "third country".

Reducing Sanitary and Phytosanitary Barriers

A major barrier to the important trade in food products between the UK and the EU is the need to repeat sanitary and phytosanitary tests and controls. While the standards remain largely the same on both sides of the English Channel, the regimes are now independent and have the potential to diverge.  Accordingly, the entire system of mutual recognition of sanitary and phytosanitary tests and controls ended with UK withdrawal – although the UK in practice still largely recognises EU controls and tests because it lacks the necessary infrastructure to repeat them.

Linking Emission Trading Schemes

Since climate change is a global problem that requires global solutions, EU legislation on greenhouse gas emission allowances has always stressed the importance of allowing the international exchange of allowances.  However, the EU Emission Trading Scheme (ETS), which covers the whole EEA, has so far only been extended to Switzerland through a linking agreement.  The EU Carbon Border Adjustment Mechanism (CBAM) exempts Switzerland and announces a desire for other countries to conclude linking agreements so that they can also be exempted and avoid the extensive bureaucracy and costs involved in CBAM.  Linking the UK ETS scheme, which only separated from the EU ETS scheme in 2021 and remains very similar to that in the EU/EEA, is something of a no-brainer that would benefit both parties by avoiding new trade barriers and costs and would also advance the fight against climate change by increasing the size, depth and fluidity of the carbon market.

Such a linking agreement should be independent of the TCA since this does not provide any legal basis to conclude such an agreement and because the EU has announced its willingness to conclude such an agreement with any country in the world, without requiring it to be linked to a free trade agreement, association agreement or any particular requirement of "mutual trust".

Trade in Electricity

Facilitating trade in electricity more generally was an intended objective of the TCA which envisaged the development of cooperation to facilitate exchanges.  However, those provisions remain unimplemented. In particular, the only progress towards the creation of the intended system of "multi-region loose volume coupling" is the establishment of more working parties.

To package or not to package?

Since achieving an agreement requires all sides to feel that the benefits outweigh the costs, it is often said, especially in the case of trade agreements, that they need to be broad enough to satisfy all important constituencies.  In the case of the EU, it is, in particular, considered necessary that each Member State, or at least each important Member State, consider that the agreement will be of benefit to it.  For example, it is not sufficient that one or other Member State will be able to sell more motor vehicles as a result of a trade agreement if other Member States will not experience an increase in trade but may face increased import competition for agricultural products (and therefore angry farmers).  That is why trade agreements these days are wide-ranging in coverage and also extend to more areas of cooperation.

However, broad agreements take much longer to negotiate and are more subject to being taken hostage by interest groups that feel that their interests are insufficiently catered for.

For example, the EU – Mercosur agreement, which seeks balance by including many other areas of cooperation than just trade, has taken 25 years to negotiate and is still far from entering into force (the recent announcement of signature of the agreement, was in truth merely a declaration that negotiations are concluded).  

Therefore, a question that will confront the UK and the EU if they pursue a reset is whether to link issues in a broad package. Effectively, there is a choice to be made between ambition and progress.

Conclusion

There are numerous ways to improve cooperation between the UK and the EU.  Some will build on the TCA and others can be pursued independently of the TCA.   The ones that are most likely to succeed are those that do not seek to replicate conditions of membership of the EU or suppose levels of mutual trust that can only be expected between Member States. It may also be that ad hoc agreements on limited issues will allow more progress to be made than if an attempt is made to link unrelated issues.

An ETS linking agreement, that the EU would be willing to conclude with any country that shares its climate ambition, may for that reason be the easiest to achieve in the short term.