23 April 2024

Whoever wins the forthcoming British General Election will seek improvements in the UK’s relationship with the EU. Rishi Sunak would move more hesitantly than Keir Starmer, but were the Prime Minister to win the election against all current expectations, his authority over the Conservative Party would be hugely strengthened.

Starmer, keen to win back former Labour voters who supported Leave in 2016 and Johnson in 2019, talks about Europe as little as possible – and with great caution.

In office, he would be bolder (the more so if he were to win by a landslide) but may overestimate the EU’s willingness to offer significant improvements on the current Trade and Cooperation Agreement (TCA).

In office, Labour would seek:

• A strategic partnership with the EU on security and defence. This would include some kind of institutionalised cooperation on EU Common Foreign and Security Policy (CFSP) and Common Security and Defence Policy (CSDP). In the light of the Ukraine crisis, the EU and Member States will welcome this initiative. The challenge will be to devise a workable institutional structure and to do a deal on defence industries, where some Member States (led by France) and key voices in the Commission (most obviously Thierry Breton) favour a “buy EU first” policy to build EU “sovereign security”.
• Closer cooperation on policing, criminal justice and migration, including easier UK access to relevant EU databases.
• Cooperation on climate and net zero, including effective alignment of the UK’s Emissions Trading and Carbon Border Adjustment policies with those of the EU (an approach already begun under Sunak). Starmer will also explore options for closer energy market cooperation with the EU.
• A UK/EU veterinary treaty, based on common approaches to plant and animal health and SPS checks. The alternative models are the EU/New Zealand agreement, based on mutual recognition, and the EU/Swiss agreement, based on Switzerland aligning dynamically with EU standards.
• Alignment with EU standards for some sectors of industry. Chemicals and pharmaceuticals are possible examples. Dropping requirements for firms to meet both EU and separate UK standards would ease business costs.
• Deals on movement of people (though expect Labour to avoid this subject ahead of the election). Targets are likely to include: children, students and young people; performers and creative artists; possibly intra-company transfers and travel by technicians to carry out repair work on a product exported to the other jurisdiction.

Starmer has ruled out rejoining the Customs Union (CU)

It’s hard to see this policy changing. The TCA already provides tariff- and quota-free trade. Rejoining the Customs Union would require the UK’s post-Brexit trade deals to be amended or abandoned to ensure compliance with CU rules and would mean the UK having to provide preferential trade terms to countries that had agreed a customs deal with the EU on the same basis as provided by Brussels, but with no guarantee of reciprocity. 

Alignment with EU standards will not automatically give greater preferential access to the Single Market. Were Starmer to accept dynamic alignment, UK exporters would still need to provide proof that they’d met EU standards and complied with Rules of Origin regulations.

UK regulators are not authorised to determine whether EU standards have been met and it’s hard to see the Commission agreeing to any market-wide change. It is possible that sectoral deals could be struck, the most likely being on human and veterinary medicines, where the EU has already agreed some mutual recognition of conformity assessments with the United States, Australia, Canada and Japan.

Historically, the EU has been reluctant to liberalise services, with Germany, anxious to protect its meister system, particularly resistant. So a deal on services, such as the mutual recognition of professional qualifications, would be tough to agree.

Starmer, like any British Prime Minister, would also hesitate before committing to dynamic alignment with the EU on financial and professional services when the UK, as a third country, would have no say in the drafting of those rules.

The same risk applies to dynamic alignment with the EU on new technologies. Starmer would have to decide whether (like Sunak) to look for commercial advantage from divergence in AI, life sciences and data, or to opt for Britain’s best interests being served by alignment, even as a rule-taker.

Since the UK already has, by global standards, an open economy, there are few concessions of value Starmer could make on trade and investment in return for a move from the Commission. Nor, given the existential threat from Russia, could he plausibly make defence cooperation conditional on trade concessions by the EU. 

Concessions on free movement, UK participation in a European scheme to manage migration, or concessions on fisheries would play badly with the domestic audience in Britain.

As a result, changes in the UK/EU relationship are likely to be incremental rather than revolutionary.

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