It takes two to renegotiate a trade deal – as Keir Starmer will discover with the EU

The Brexit deal is back in the news. 

Theresa May has chosen to point out that her deal would have been better than Boris Johnson’s, while failing to make clear that all she had was an exit agreement and a “political declaration” on the future.  She might have been able to leverage the Northern Ireland backstop into a deal with the EU that looked more like her Chequers ideas – but the EU made pretty clear that to them that smacked of unacceptable cherry picking, with alignment of rules on goods, not services, and being able to enjoy a lot of single market benefits without free movement.

It is possible that May could have used (as the EU feared) her backstop leverage to get these sorts of concessions. But it is equally possible she would have found the EU insisting that the integrity of the single market and the customs union meant they would not bend the rules for a departing member state, however large.  

Renegotiating the Brexit deal is not on the EU agenda at the moment 

She, at least, had some leverage. Boris Johnson and David Frost gave that away in their determination to prize regulatory autonomy above all else. Keir Starmer is right, as he told the FT ¹⁰
Parker G, Keir Starmer pledges to seek major rewrite of Brexit deal, Financial Times, 17 September 2023, www.ft.com/content/6bdc4e88-c2ed-44ad-aa7d-c70bc358e027 ¹¹ Keir Starmer pledges to seek major rewrite of Brexit deal | Financial Times (ft.com) , that the Johnson–Frost deal, although wide-ranging in coverage, is thin on trade. But it is also a deal that met almost all the EU’s asks. The EU retained tariff and quota free access to the UK market for goods where it has a surplus (made even easier by the UK’s willingness to continue to recognise EU accreditation, and failure to impose full border controls) while a limited deal on services, where the UK had a surplus, has allowed EU member states to erode the UK’s market share.   

It is little surprise therefore that “renegotiating the TCA” barely features on any EU member states radar. Ask an EU ambassador to the UK what its businesses think about the Trade and Cooperation Agreement and they tend to say its working pretty well – a view shared by the Commission in its latest assessment. Now that Rishi Sunak has concluded the Windsor Framework and the Horizon negotiations the UK has slipped down a long EU list of things it really wants to focus on – whether energy, Ukraine, de-risking China and the migrant crisis within the EU itself. The Commission itself is downplaying the significance of the review – pointing out that this is about looking at how the deal is being implemented, not a line-by-line reopening.

So how realistic are Keir Starmer’s hopes of achieving a “much better” Brexit deal?  ¹² Reviewing the Trade and Cooperation Agreement: potential paths - UK in a changing Europe (ukandeu.ac.uk)

A starting point would be to go back to ideas where the UK rebuffed the EU in Johnson’s negotiation.  

The Labour leader cannot expect the EU to turn round, pick up the sweets thrown away by the UK baby in late 2019 and just give them all back. But that does not mean nothing can be done. 

Starmer could go back to areas where the EU had earlier indicated it was prepared to negotiate. The EU itself floated the idea of a veterinary agreement with the UK to ease the implementation of the Northern Ireland protocol, something Starmer says he wants. That could take a long time to negotiate but it could offer benefits to quite a big sector. It would be welcomed by food exporters – particularly small ones – and dramatically reduce the significance of the Irish Sea border. The EU might demand some compensatory concessions over fishing rights and commitments on alignment and oversight. But those sectors are not game changers for the British economy.  

The EU also offered a more general mobility deal – that might be revivable and would be welcome for sectors which have been badly impacted by new restrictions. The EU was very disappointed that the UK rejected the idea of continuing to participate in its Erasmus+ student exchange programme – so a willingness to re-associate might buy some good will. 

It might also welcome a UK decision to link into its emissions trading scheme (with the added benefit for British business of avoiding any risk of having to comply with the Carbon Border Adjustment Mechanism) – though the bigger beneficiary would be UK business avoiding paperwork and potential taxes.  

But none of these moves would make much dent in the economic burdens created by Brexit for British business. 

Starmer can rebuild trust, but that does not guarantee a deeper economic relationship  

There is general consensus in Brussels that trust between the UK and the EU is now building again after reaching a nadir with the threat to renege on the Northern Ireland protocol. Agreement on the Windsor Framework and UK association with Horizon and Copernicus have started to move the relationship out of those doldrums.  

Starmer can go further. He has made clear he is up for more structured cooperation on a range of issues – including foreign and security policy, which was rejected by Boris Johnson and was a source of regret for EU negotiator Michel Barnier.  

That in itself does not offer the immediate economic dividend Starmer is seeking. Even the latest ideas from the Franco-German experts about “associate membership” as a possible future for “even the UK”, briefed as being designed to appeal to Labour, are based on the very single market membership Starmer has said he rules out. It is good the future relationship with the UK is edging onto the radar screen – even if not in a place where UK politicians (yet) want to go.  

If Starmer wants a deeper relationship outside the single market he needs not just to rebuild trust, but to influence the EU’s internal thinking about its future from the outside. That is a hard ask.