President Trump’s Administration has changed the multilateral world. We can now see that the last three months are likely to be the new normal: we are in a transactional environment, where investment, trade and regulatory issues can no longer be negotiated separately from wider political and security relationships.
While bilateral discussions with the US are important there should be no illusions about how much stability they can deliver, given the disproportionate economic power of the US compared with the UK and the willingness of the Trump Administration to ignore or revoke a range of existing Treaties in pursuit of their political objectives.
The UK is right to engage constructively with Washington. However this must be in terms consistent with UK values. Nor is it in the UK’s interests to endanger the economic relationship with the European Union, our closest and largest trading partner, in pursuit of a bilateral deal with the US which may be short-lived and legally insecure.
The 19 May EU-UK Summit is therefore taking place against a uniquely challenging and uncertain backdrop. This meeting can be the formal start of a much closer cooperative relationship, no longer constrained by the UK referendum and its contested aftermath.
To move successfully into this new relationship requires a reaffirmed political commitment by the UK and EU to those shared values and interests which are the basis of mutual trust and a long term partnership. The first priority is therefore to commit together to the shared security and defence requirements and budgetary costs needed to defend our continent and deter further aggression. This is the Summit’s immediate challenge.
A commitment to defend our continent and its freedoms is made more credible and more effective through economic solidarity. The UK and EU share a commitment to rules-based relationships, with mechanisms to deliver what has been agreed. Encouraging growth in the EU and UK is key if we are to meet the increased costs of defence without cutting spending in other priority areas.
It is therefore important for EU and UK leaders to state that they will resist attempts to divide Europe through economic or trade pressures on one or more European countries, while building a shared defence industrial base within a wider single European framework. Joint work on innovative financing structures for defence can build on the strengths of the UK and EU financial sectors.
A declaration on 19 May of common values and interests allows a more constructive approach to resolving the detailed issues which stand in the way of closer economic ties between the UK and EU. These require both political ambition and a willingness to engage and negotiate on the detail to a clearly agreed timetable. The 2020 Trade and Cooperation Agreement was not designed to respond to current global events, and must now be incorporated into a more ambitious trade and investment relationship.
Progress will be made step by step, through detailed legally binding agreements. An early agreement by the UK to accept EU phytosanitary rules with a shared dispute resolution procedure based on ECJ jurisprudence and equality of treatment should open food and animal markets across both the Channel, and the Irish Sea.
A similar approach to medical devices and pharmaceuticals would deliver significant benefits for both the UK and EU. This will require close regulatory collaboration by the UK authorities with the European Medicines Agency to allow for free movement of pharmaceutical products, a single drug licensing system, and joint projects to strengthen Europe’s research collaboration in this key knowledge based industry.
Removal of barriers to trade in chemicals should be a further mutual benefit, facilitated by UK acceptance of the REACH Registration, Evaluation, Authorisation and Restriction of Chemicals Regulations, which is closely copied by the UK’s own REACH rules. To ensure mutual recognition of standards protecting human health will require agreement on a shared dispute resolution procedure and inspection of UK decision-making by EU authorities. This should not be technically difficult to achieve, and the economic benefits in terms of cutting costs and integrating cross-border supply chains will be immediate.
Detailed negotiations on the phytosanitary, pharmaceutical and chemical sectors should be a priority for agreement at a further Summit by the end of 2025, as the first mutually beneficial outcomes being delivered within this new UK-EU relationship. Further sectors for cooperation can then be identified in negotiation, reflecting the priorities of both the EU and UK. Simplification of trade with Northern Ireland across these sensitive sectors would be a specific early win.
Two wider workstreams should be commissioned to report back within 12 months. First an agreed assessment of the benefits to the EU and UK available from a UK return to a shared Customs Union, and a detailed road map with a timetable as to how this may achieved. The work would provide a robust basis for any political decision on a Customs Union, and contribute to better mutual understanding of the UK and EU’s economic interests. This work will take time, and any agreement would require unanimous agreement within the EU as well as a positive decision by the UK Government.
Second, an examination of how a UK -EU agreement to liberalise provision of services in agreed sectors could take place, including freer movement of relevant workers with mutual safeguards to control overall levels of cross-border migration. This would require a structure of collaboration between individual EU and UK regulators, respect for existing EU law and a process to ensure formal input by the UK government to proposals for amendment, building on similar agreements with EFTA and Switzerland.
Such an agreement would require formal ratification by EU and UK authorities, and could be subject to review.
Progress in these areas will require detailed negotiation. But the prior condition is a relationship of mutual trust built on shared values and common interests between the UK and EU. Achieving this will meet EU concerns that the UK is simply seeking a transactional deal for its own national advantage, ignoring EU interests in maintaining the integrity of its institutions and internal market; and UK concerns that the EU has not fully accepted the UK’s sovereign status as a third country close to but outside the EU. It will facilitate the compromises required to reach a deal of benefit to both sides, and require frank political as well as technical dialogue over the months ahead.
The importance of deepening solidarity between the UK and EU makes 19 May a potentially historic occasion to build the mutual confidence needed to provide the lasting security and economic benefits that can be achieved together. Its success will be judged by how far both sides are prepared to follow up with the detailed negotiation needed to achieve these benefits in practice. Launching that process will be the key challenge for the 19 May Summit.
Sir Martin Donnelly is a member of the European & International Analysts Group and was Director, Foreign & Commonwealth Office, 2004–08; Permanent Secretary, Department for Business, Innovation & Skills, 2010–16; and Permanent Secretary, Department for International Trade, 2016–17
