The Government’s “reset” with the European Union confirmed many people’s fears. While it is less comprehensive than expected, the policies announced amount to the British government handing sovereignty and policymaking powers back to the EU for little in return.
After many rounds of negotiations, the documents published last week suggest more negotiation is required in the months and, possibly, years to come. This week’s summit marks the return of the EU to British politics. Once again, EU Commissioners will have a direct role in British politics and the laws that British people follow.
At the heart of this deal is the decision to align British regulations on food standards and sanitary and phytosanitary (SPS) regulations with those in Europe and match the EU’s prices for industrial carbon by aligning the UK’s Emissions Trading Scheme (ETS) with Europe’s. These policies will operate under so-called dynamic alignment, overseen by the European Court of Justice, which means the UK will automatically follow the EU’s regulations if they change. This is reminiscent of the Chequers deal proposed by Theresa May which ultimately ended her premiership.
The Prime Minister claims this deal will add £9 billion to British GDP by 2040 by reducing trade friction on British exports to the EU. The main benefits, the Government claims, come from the reduction in trade frictions on British exports to the EU and ensuring that British manufactured goods are not hit by the costs associated with the EU’s Carbon Border Adjustment Mechanism (CBAM), which is essentially a tariff.
These are implausible claims, based on false premises and misunderstandings of UK-EU trade. First, the Government’s suggestion that Brexit has damaged trade between the UK and the EU is uncertain at best and false at worst. Global trade between 2020 and 2022 was shattered by the pandemic and the war in Ukraine. Despite this, UK-EU trade grew from 2022 onwards. Agrifood exports to the EU have continued to grow overall, and the variations in the particular type of agrifood trade cast doubt on the supposed negative effects of post-Brexit customs and sanitary arrangements.
For example, the UK’s largest individual type of agrifood export to the EU is alcoholic spirits and liqueurs, which has been the case for many years. These do not require SPS checks to cross the border so will not benefit from this deal. It is a mixed picture when it comes to meat and dairy products, both of which do require SPS controls and would be covered by the reset. Dairy exports to the EU — which make up around 8 percent of British agrifood exports to Europe — declined between 2021 and 2023, but British dairy production also declined in that time. One can only export what one produces. Sheep and lamb exports to the EU have boomed, reflecting Britain’s competitive advantage in this sector, while beef exports have done less well because British beef prices spiked following lower production in the last couple of years. This varied picture says more about yields, farming conditions, weather and consumer demand than it does about customs declarations and form filling.
So, it remains uncertain that British food exports will boom to the EU following this deal, but what about the trade-off for this supposed victory for the Prime Minister? The UK has pledged to join a Common Phytosanitary Area with the EU. This means Britain must align with EU food standards, which will apply across the entire United Kingdom, regardless of whether producers are selling to the EU or not. The UK is a net importer of food, and the vast majority of produce created in the country is sold within the domestic market. This will now be overseen by rules set in Brussels. This means that various fungicides and pesticides which have been approved for use in the UK but not in the EU may have to be taken off the market. It also means that the UK may have to repeal its legislation to allow the development and sale of gene-edited crops and livestock. Thanks to the EU reset, British crop yields may decline and British farms will get less productive.
Dynamic alignment with EU food standards also raises the spectre of officials from the EU Food Safety Authority inspecting British farms and British ports to monitor compliance. The EU infamously applied these checks to a disproportionate degree in Northern Ireland — subject to dynamic alignment thanks to the Windsor Framework — so it is reasonable to assume they will take place in the UK too. Do British farmers want EU officials looking through their barns and their fields? This is the reality of surrendering sovereignty to a foreign organisation.
The decision to align with the EU’s carbon prices raises a similar issue, too. The Prime Minister claims that aligning with the EU’s ETS policy, British manufactured goods will be able to avoid the costs of the EU’s CBAM. However, this means the UK will increase its own carbon pricing from around £40 per tonne to closer to £60 per tonne, to match the EU’s prices, a 50 per cent increase. This locks the UK into the EU’s environmental policy and removes Britain’s ability to compete with the EU on energy costs. By bringing the UK within the EU’s CBAM, it brings the UK into the EU’s economic orbit, even though British trade with the EU has been declining as a proportion of total British trade since 2011. It is a remarkable decision in the wake of the nationalisation of British Steel, which was made economically unviable by high energy costs. Now all British industry is at the mercy of the EU, which is determined to increase its carbon price further, and even expand ETS to cover household heating. We can add a Reset Tax on top of the green levies on British families’ energy bills soon.
Britain’s trade partners should take note. Dynamic alignment means the UK will have to raise trade barriers for imports coming into the UK which might not meet EU standards. British restaurants serving Australian wagyu steaks may now find it unviable to do so, apples en route from South Africa may be barred from sale in British shops, and these rules will stand in the way of the UK agreeing a comprehensive trade agreement with the United States. Meanwhile, the EU will be able to treat the UK like a captive export market, selling its own subsidised produce to Britain, as was the case before 2021.
Beyond dynamic alignment, the rest of reset is thin, and much remains unconfirmed. The eGates agreement is a mirage and will be superseded by the EU’s eventual implementation of a fully digitised border. The security agreement is still to be negotiated and the commitments to cooperate to reduce illegal immigration seem fanciful considering Europe’s own failure to tackle illegal immigration, and the French navy’s continued escorting of illegal immigrants over the English Channel, even at the expense of the commemorative flotilla of the boats which assisted in the evacuation of Dunkirk.
Two of the Government’s main requests — the mutual recognition of professional qualifications and easier travel in the EU for British touring musicians — have been kicked into the long grass. Despite the supposed goodwill generated by this reset, Sir Keir has been unable to overcome the EU’s protectionist instincts, particularly when it comes to two of Britain’s great strengths: professional services and the arts. All the Government has really achieved is the surrender of legislative power from Parliament to Brussels.
Ultimately, the British and European people will suffer
As more details get confirmed over the following months of negotiations, this deal will sour. The British government will agree to pay into EU projects and to fund EU agencies. Unelected commissioners and bureaucrats from the continent will resume their role dictating rules and regulations in Britain.
Ultimately, the British and European people will suffer. Britain will be unable to pursue the sort of deregulatory reforms it needs to revive its economy, and the EU will continue its drift into protectionist decline. This makes the eventual mission to repeal and reverse decades of bad decisions more urgent. Brexit was about restoring democratic accountability to the British state. This week’s Reset is a large step backwards and a low point in recent British history, but it should be seen as one of the last actions of a dying, technocratic establishment. If political currents across the West are anything to go by, the calls for a democratic restoration are getting louder and stronger as every month goes by.
