Is A UK Rapprochement With the EU Possible?

Economic

Summary:

The new British prime minister, Sir Keir Starmer, led the Labour Party to an impressive victory in July, capitalizing on Britain’s economic problems and mounting backlash over its troubled exit from the European Union. In his campaign, Starmer vowed to “reset the relationship” with Europe, and he recently travelled to Brussels for talks with EU leaders, but nothing much concrete came out of these discussions.

Future historians may classify Brexit as one of the United Kingdom’s biggest mistakes in its postwar history. It has certainly had a great impact on Britain and to a lesser degree on the EU. European leaders are still in transition mode, waiting for the new European Commission to be installed, and appear to be in no mood for ambitious negotiations to reconcile with the UK. But with some effort and political will there are quite a few things that could be done, notably when it comes to mobility, security, and migration.

While Prime Minister Starmer promised to try to reset relations with the EU and turn the corner on Brexit, he has been eager not to upset Brexiters in his own party, making clear that a new referendum and rejoining the EU are not in the cards.

Starmer has spoken about improving cooperation on security and trade, as well as the need to facilitate travel for individual groups, such as touring musicians. Beginning next year, the EU will impose visa requirements on citizens from the UK, and the UK will put in place an electronic travel authorization system next spring. This will further complicate travelling across the English Channel.

The EU has been reluctant to reopen the Trade and Cooperation agreement that took five years of negotiations and two British prime ministers to reach. Brussels is also of the view that London has not yet done enough to implement the existing agreement. The European Commission has, however, offered to discuss free travel in both countries for persons 18 to 30 years old. This offer has been rejected by London.

The prime minister has also been travelling to Paris, Rome, and Berlin to repair relations. In Brussels he met with European Commission president Ursula von der Leyen and other EU leaders. Not much came out of these meetings, though; the press release from the meeting with the Commission president was vague, stating the unique relationship between the UK and the EU, the aim to work together on the situation in the Middle East, and their joint support for Ukraine. On the idea of “resetting” the relationship, not much was said, apart from a commitment to have regular joint summits at leaders´ level and to take the agenda forward in areas “where strengthened cooperation would be of mutual benefit.”

The proponents of leaving the EU in the 2016 referendum argued that the British economy would prosper and the UK would conclude a lot of trade agreements with the rest of the world. Neither has happened.

A report from the mayor of London earlier this year claims that London´s economy alone has shrunk by more than £30 billion and that the cost of Brexit to the British economy is £140 billion. Other estimates point to a 5 percent drop in growth because of Brexit. Trade has diminished, but the EU is still the most important market for the UK, and the UK is the EU's second biggest trading partner.

A clear majority of Brits consider the decision to leave the EU a mistake. A You Gov poll from August this year shows 51 percent saying that the negatives of Brexit have outweighed the benefits; only 17 percent think the opposite.

THE WAY FORWARD

Despite the obstacles, it is in everybody´s interest to deepen relations. Improving economic, political, and security cooperation would benefit both sides. The UK and the countries of the EU are neighbors and allies. In gloomy and uncertain times, you need all the friends you can get. The possibility of a second Trump administration in Washington is likely to put pressure on transatlantic relations and increases the need to work closely with other partners. So what can realistically be done?

The UK will not be joining the internal market, and it cannot freely cherry-pick specific sectors to join. The EU is negotiating future enlargement with nine countries and putting hard demands on them on aligning with EU law, so the UK cannot expect VIP treatment for its own interests.

For the time being it also seems that there is no clear, consistent agenda for what the British government wants. Brussels is skeptical about negotiating something that is not clearly defined. It would be wise for London to come up with a consolidated agenda of what it wants and what it would be ready to give that is broadly agreed in the British parliament and among key stakeholders.

The future relationship will therefore have to be based on a new model, and the EU must be a bit more flexible when it comes to alignment of standards and conformity assessments—for instance, in the agricultural sector. Progress would be possible if the UK agrees to follow the European Court of Justice in agriculture disputes. The checks on UK exports of agricultural products to Europe are cumbersome and expensive, and the UK farming sector has suffered hard. A solution for agriculture issues would be a clear victory with immediate benefits to show for the prime minister.

Areas outside the internal market should be easier to negotiate, for instance on Ukraine and security. Support and coordination on Ukraine have worked very well so far and could be furthered deepened in coordination for the future reconstruction of the country. A stronger defense and security pact could be developed with increased interoperability in this sector. Migration is an area where cooperation is already ongoing, especially with France. As the EU implements its own internal migration pact, there is scope for further collaboration.

On carbon pricing, the UK has a model very similar to the one the EU developed (CBAM, the carbon border adjustment mechanism). But the British one is a little bit more flexible vis-à-vis third countries. This is something the EU could learn from.

Mobility should in theory be easy to solve if both sides make an effort. If London is prepared to allow young people from Europe to work and study in Britain, facilitating the same rights for British youth in the EU, the European Commission should give in on the touring visas for musicians. Furthermore, the UK should rejoin the student exchange program known as Erasmus, adding recognition of qualifications in several professions. In a global quest for skills, such a step would be mutually beneficial.

The UK has just joined the Comprehensive and Progressive Agreement for Transpacific Partnership (CPTPP), a trade agreement covering 12 countries. It would be in the EU´s interest to join this agreement as well and work together with the UK to strengthen cooperation. Within the CPTPP, countries are actively working on trade liberalization and rules and standard setting, acknowledging that neither China nor the US is a member.

Clearly, deepening cooperation is of mutual benefit for the UK and the EU. But compromise and bold thinking will be needed from both sides. With upcoming EU enlargements to include Ukraine, Moldova, and the Balkans, the EU will have to try to find a unique model of cooperation with its former member state without jeopardizing the credibility of the accession process. There are areas that could clearly benefit from deeper cooperation and alignment. But so far, their reconciliation efforts have been more talk than action.

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Is A UK Rapprochement With the EU Possible?

THE WAY FORWARD

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