The Labour party has made a commitment to enhance the UK’s trading relationships with Europe if elected on July 4, with certain limitations in place. These limitations include avoiding measures that would result in increased migration, as well as not rejoining the EU single market or customs union.
Trade experts have cautioned that Labour’s manifesto pledges regarding reversing Brexit may yield only minimal economic advantages. Nevertheless, some experts believe that there is potential for improvements within the party’s outlined boundaries, which could bring tangible benefits to the UK.
Enhancing Exports through a Veterinary Agreement
Labour has committed to negotiating a veterinary agreement with the EU. Such an agreement could potentially streamline border processes for plant and animal products, although the extent of the benefits would depend on the UK’s level of ambition.
A ‘New Zealand-style’ agreement would offer partial reductions in checks and paperwork for goods entering the EU, while a more closely aligned ‘Swiss-style’ deal could significantly reduce red tape but would necessitate the UK’s compliance with EU laws and the European court of justice.
Recent research by Aston University suggests that a high-alignment agreement could boost UK food and plant exports to the EU by 22%, equivalent to around £2 billion annually based on current export figures.
Alignment on Industrial Regulations
Shadow chancellor Rachel Reeves has indicated that Labour might consider aligning with EU industrial regulations, particularly in sectors like the chemical industry, to lessen border frictions for UK exporters.
Experts caution that unilateral alignment may offer limited benefits as UK companies would still need to demonstrate compliance at the border. Full market access would likely require adherence to EU regulations and oversight by EU courts and regulatory bodies.
Exploring a New Customs Agreement
While Labour has ruled out joining a customs union with the EU, there is potential for alternative agreements to reduce checks outside of one. Suggestions have been made for the UK to consider joining the Pan-Euro-Mediterranean convention, which could benefit companies with supply chains spanning multiple member countries.
Joining such a convention could also facilitate the utilization of post-Brexit trade deals and improve trade opportunities. However, the economic impact of joining PEM remains uncertain due to limited data availability.
Fostering People-to-People Connections
Labour has proposed negotiating a ‘cultural touring agreement’ with the EU to facilitate easier touring for bands and orchestras, aiming to support the UK music sector. However, broader youth mobility schemes and initiatives to enhance professional mobility have been ruled out to avoid increasing migration.
Facilitating Professional Qualifications Recognition
Labour has expressed intentions to negotiate mutual recognition agreements for qualifications, allowing EU and UK professionals to utilize their credentials across borders. While such agreements are feasible, the absence of free movement of people may limit their effectiveness.
Collaboration on Carbon Taxes
Both the EU and the UK are set to implement carbon border taxes in the coming years to encourage global industries to reduce emissions. Labour is exploring ways to align with the EU’s carbon pricing regime to minimize border bureaucracy and costs for industries affected by these taxes.