UK-EU Summit kick-starts negotiations to “reset” relations

Speaking alongside EU leaders at the inaugural 19 May EU-UK Summit in London, UK Prime Minister Sir Keir Starmer announced a “landmark deal with the EU – a new partnership between an independent Britain and our allies in Europe”.

The deal marked the first tangible results of ongoing efforts to deepen cooperation between London and Brussels. The Summit led to the three key outputs:

• A Renewed Agenda for European Union – United Kingdom cooperation Common Understanding (Common Understanding), highlighting the key areas of cooperation.
• A new EU-UK Security and Defence Partnership, outlining new commitments to cooperation in the field of defence and security.
• The Joint Declaration – issued in the aftermath of the Summit – outlining the key priorities for the newly agreed Strategic Partnership, and welcoming the agreement on the Renewed Agenda and the EU-UK Security and Defence Partnership.

But this milestone is just the beginning of a cautious process to “reset” relations between the UK and EU, with details to be worked out and negotiations far from over. In this alert, DLA Piper’s trade and government affairs specialists in London and Brussels detail the progress made in the deal and areas to watch for further development.

 

DEFENCE AND SECURITY

Defence has become the “low-hanging fruit” of EU-UK cooperation, with both sides incentivised to work together amid pressures to ramp up defence spending. Brussels views the reset as confirmation that post-Brexit Britain cannot afford to go it alone in today’s volatile security landscape, while London emphasises retaining control of its borders and laws, a key message for domestic audiences.

The UK and EU have a Security and Defence Partnership, setting a framework for enhanced cooperation and collaboration on issues ranging from space-related security policy to resilience of critical infrastructure, disruptive technologies, cyber threats, foreign information manipulation and more. UK and EU officials will meet every six months for further discussions to coordinate defence and foreign policy.

The text of the agreement lacked a detailed description of the UK’s role in the EU’s developing European Defence Industrial Strategy. The separate Common Understanding agreement did note the potential for UK participation in EU joint defence procurement programmes, stating that the UK and EU “should swiftly explore any possibilities for mutually beneficial enhanced cooperation created by the SAFE instrument”.

Further negotiations are required to align the UK with other Security Action for Europe (SAFE) partner countries, contingent on a UK budget contribution in exchange for formal access for UK companies to the EUR150 billion SAFE rearmament fund. Successful negotiations could exempt UK defence companies from a rule limiting arms companies in third countries to 35% of the purchase value of any joint procurement under SAFE.

 

EU-UK COMMON SANITARY AND PHYTO-SANITARY AREA

The EU and UK have agreed the scope of negotiations for a future EU-UK Sanitary and Phytosanitary (SPS) Agreement to establish a Common Sanitary and Phytosanitary Area. This will cover the SPS, food safety and general consumer protection rules governing the trade of agri-food products and regulation of live animals and pesticides.

This was a key negotiating priority for the UK Government, which hopes to reduce costs for businesses with the removal of Export Health Certificates, plant health certificates and Certificates of Inspection for organic products, and the ending of routine border checks on agri-food and dairy products. The Agreement will also educe friction in the trade of goods between Great Britain and Northern Ireland under the Windsor Framework Agreement.

The text of the Common Understanding commits the UK to following dynamic alignment with EU regulations, while making provision for the SPS Agreement to include "a short list of limited exceptions" to these rules, to be negotiated in upcoming discussions.

With formal negotiations between the UK and EU on the EU-UK Sanitary and Phytosanitary Agreement to begin in the coming months, now is the time for businesses to raise their commercial priorities with policymakers in both London and Brussels in order to influence the trajectory of negotiations, and, where relevant, secure necessary exemptions for certain products.

 

FISHING RIGHTS

Under the current Trade and Cooperation Agreement, the UK and the EU have reciprocal fishing rights in each other’s waters until 2026. Under the Common Understanding the parties agreed to extend this access by 12 years, until 2038. The UK maintains the ability to pursue its own fishing policies as it does not fall within the EU’s Common Fisheries Policy, as well as the 25% of EU quota shares to the UK fleet. UK fisheries exports will also benefit from the SPS which removes export health certifications, removes documentation checks and reduces physical checks.

 

YOUTH MOBILITY AND EDUCATION

The EU and the UK agreed to work towards a “balanced youth experience scheme” under a dedicated visa pathway which would allow young people to work, study, au-pair, volunteer and travel for a time-limited period (to be agreed). The parties also agreed to work towards the UK’s association to the Erasmus+ programme offering exchanges, work placements, language courses, semesters abroad, international youth work projects and trainings.

The EU and the UK will further negotiate the terms under which both the youth experience scheme and the association to Erasmus+ would be conducted, including the number of participants from both sides and the financial terms. The UK has made it clear that any scheme must be coherent with its existing schemes including participants having no access to welfare benefits and not being able to bring dependants.

Youth and educational mobility remains a “work in progress” according to an EU diplomat. While the Common Understanding does not refer to a cap, the UK Government has indicated that it would only agree to a scheme which is capped and limited in duration.

 

CARBON AND ELECTRICITY MARKETS

The EU and the UK have agreed to a possible participation of the UK in the EU’s internal electricity market, including the EU’s trading platforms. The overall goal is reducing the cost of electricity across the UK and EU and – for the UK – developing new renewables in the North Sea. For now, the participation of the UK in the EU’s internal market for carbon and electricity is framed in the Common Understanding as an option, for which details still need to be defined.

The Common Understanding also touches upon the emissions trading schemes (ETS), with the EU and the UK agreeing to explore relinking their respective schemes. Following Brexit, the UK left the EU ETS and established a separate market. If this part of the Common Understanding is finally agreed, the UK will be exempted from EU’s carbon border tax coming into force in 2026, which could otherwise hit GBP7 billion worth of UK trade and lead to UK exporters paying up to GBP800 million. The main expected outcomes are increased stability in prices and streamlined regulatory barriers, with consequences expected especially on the CO2 storage growing industry.

Both rejoining the single market for electricity and relinking its ETS scheme to the EU means that London will have to follow EU regulations and would be subject to the jurisdiction of the European Court of Justice. This is likely to be one of the most contentious topics, attracting criticism from the euro-sceptics in the UK. However, the wording of the Common Understanding also leaves room for a “dynamic alignment” with decision-making procedures in the UK.

 

NEXT STEPS: NEGOTIATIONS CONTINUE

The Common Understanding agreed sets out the underlying principles and a roadmap for negotiations to come. The European Commission will now propose negotiating mandates which must be approved by Member States before formal negotiations begin. These discussions will likely take time. Negotiations on similar topics between the EU and Switzerland based on a Common Understanding agreed in October 2023 concluded over a year later, in December 2024. Inevitably, some points remain contentious and are likely to draw criticism in their respective constituencies.

 

HOW WE CAN HELP

Businesses with a commercial interest in any aspect of the international trade and policy discussions taking place in the coming weeks and months should consider proactive engagement with policymakers in London and Brussels.

Our Global Trade and Government Affairs team supports companies to take a proactive approach to addressing the risks and opportunities arising from geopolitical and policy change, combining legal know-how and political and international trade experience with an in-depth understanding of the workings of Brussels, Westminster and Whitehall.

Get in touch with partners Richard Sterneberg, Head of Global Government Relations, and Paul Hardy, UK Head of Government Affairs, to find out how DLA Piper can support your business to shape policy outcomes to your commercial priorities.