How to strengthen UK-EU relations

Summary

The Government has described raising growth as its number one mission and has a target for the UK to achieve the highest rate of sustained growth in the G7. Before the Liaison Committee in December 2024, the Prime Minister clarified that the Government aims to reach this target by the end of its first term in office.¹

Current forecasts suggest that the UK is not on course to reach this target. Over the medium-term, the International Monetary Fund (IMF) expects the UK economy to grow faster than other advanced European economies but slower than the United States and Canada.² The Office for Budget Responsibility (OBR) in October 2024 expected real GDP to “grow by just over 1 per cent this year before rising to 2 per cent in 2025”.³ When asked about the IMF’s forecasts, the Secretary of State told the Committee in November 2024 that “it is absolutely the commitment of this Government to outperform all of those forecasts, based on the combination of measures that we are committed to.”⁴ This was echoed by the Prime Minister when he appeared before the Liaison Committee in December.⁵

A closer relationship with the UK’s largest export market, the EU, is mission critical to helping realise the Government’s ambitions for growth. It has been more than five years since the UK left the European Union and the National Institute of Economic and Social Research estimates this has reduced the size of the UK economy by approximately 2–3 per cent (compared to a scenario where the UK remained within the EU).⁶ A closer relationship with the EU will be essential to unlocking stronger mutual economic growth, not least because the implementation of the new Border Target Operating Model, and the Carbon Border Adjustment Mechanism could significantly damage trade with the EU still further, holding back UK economic growth significantly over the next two years.

The future of our trading relationship with Europe is heavily limited by the red lines set by the Government: no return to free movement, and no membership of the single market or customs union. The Secretary of State acknowledged to this Committee that the Government’s priorities “will not be the same as being a member of the European Union. We just have to be frank about that.”⁷ While what the Government hopes to gain from the reset is opaque, it is clear the EU has its positions ready on fishing, youth mobility and regulatory alignment and they have been repeatedly raised. There is a risk that some in Brussels will see the reset as transactional and the Government should, then, proceed with caution.

But the world has changed in fundamental ways since the Withdrawal Agreement and the Trade and Cooperation Agreement were signed. The full-scale Russian invasion of Ukraine has sharpened the need to increase defence spending and coordinate defence industrial strategy. The re-election of President Trump has come with new tariffs, and security challenges and potential withdrawal from multilateral treaties and institutions; China’s accelerating military build-up heightens concerns about the security of our supply chains. There are new strategic imperatives for closer ties with the European Union and our European NATO allies.

These imperatives set the stage for the UK-EU reset and the UK-EU Leaders summit between Prime Minister Sir Keir Starmer and President Ursula von der Leyen in May.⁸ However, the Government has not published a Green Paper in advance of this summit to stimulate debate and gather wide stakeholder input. The Minister for EU relations, Nick Thomas-Symonds told this Committee “I am not proposing to publish a road map [as] our position is set out in our manifesto”.⁹

Given the strategic significance of the UK-EU reset, we believe that a roadmap would be helpful. As such, we have decided to publish a report setting out what we believe such a Government Green Paper should have said. To maximise consensus, we are taking the unusual step of publishing a report for consultation with business, trade unions and consumer groups. We will listen to feedback before publishing a final version of our report—the Green Paper we believe the Government should have published—ahead of the Summit meeting of the Prime Minister and the President von der Leyen.

Our report sets out the key trade agenda of a potential reset. But the purpose of our work is to inform Parliament and the public about the key issues the UK and EU are facing in negotiating what a future relationship could look like.

Context

1. On 15 January 2025, we launched our inquiry on export-led growth, aiming to identify policies and priorities to facilitate trade and support UK exporters.¹⁰ The first part of this inquiry has been on the reset in UK and EU trade relations. We visited Brussels and the World Trade Organisation in late January 2025. During this visit, the Committee engaged with trade experts, industry representatives, European Parliament colleagues, and government officials. The Committee would like to thank all those it spoke to in this initial programme of work.

2. In his evidence to the Committee on 21 January 2025, Nick Thomas-Symonds, Paymaster General and Minister for the Cabinet Office (Minister for the Constitution and European Union Relations),  told the Committee he saw three ‘pillars’ to the UK ‘reset’ of relations with the EU: security, safety, and prosperity.¹¹ This report will focus on the ‘prosperity’ pillar, in line with our role scrutinising the work of the Department for Business and Trade.

3. Trust between the UK and the EU has dramatically improved since the Windsor Framework for Northern Ireland was signed. But we heard in Brussels that progress in the reset will be easier if the EU has full confidence that the UK is a partner that honours its agreements. A critical test is full UK implementation of citizens’ rights and the Windsor Framework. The Committee was therefore glad to hear the Government agrees with this principle because the world has now changed in such fundamental ways since the Withdrawal Agreement and the Trade and Cooperation Agreement were signed.¹²

4. The Russian invasion of Ukraine, and the United States’ reconsideration of its security guarantees highlight the need to increase sharply investment in defence capabilities, to coordinate defence industrial strategy, establish new arrangements for coordinating our defence policy in Europe, and sustain support for Ukrainian victory, and accession to the European Union.

5. Conditions for international trade have continued to deteriorate. Dispute resolution at the World Trade Organisation has been impaired by the United States’s reluctance to appoint judges to the appellate authority, and new tariffs have been introduced, heightening the risk of trade diversion of China’s excess industrial capacity to Europe and the UK.

6. China has continued to accelerate its military build-up, posing new questions about the safety of our shared UK and EU supply chains.

7. This analysis is shared by the EU. We note President of the European Commission Ursula von der Leyen’ s account, in her Political Guidelines for the next European Commission, warns of a new era of geostrategic rivalries, citing the wars in Ukraine and the Middle East, and China’s transition “from cooperation to competition” with the EU. President von der Leyen said that the EU’s foreign policy must adapt to this reality in many ways, including by collaborating with like-minded partners, stating that: “We will work to strengthen relations with the United Kingdom on issues of shared interest, such as energy, security, resilience and people-to-people contacts.”¹³

8. We also note the Joint Statement of the UK Prime Minister and the President of the European Commission following their meeting on 2 October 2024, in which both leaders describe an “altered strategic context” for Europe, particularly Russia’s invasion of Ukraine, as well as “wider global challenges including economic headwinds, geopolitical competition, irregular migration, climate change and energy prices.” In their analysis, these developments “pose fundamental challenges to the shared values of the United Kingdom and the European Union and provide the strategic driver for stronger cooperation.”¹⁴

9. On this basis the Prime Minister and President von der Leyen “agreed to take forward this agenda of strengthened cooperation at pace over the coming months, starting with defining together the areas in which strengthened cooperation would be mutually beneficial, such as the economy, energy, security and resilience, in full respect of their internal procedures and institutional prerogatives.”¹⁵ We look forward to seeing more detail as some reports suggest the UK, US and Turkey are excluded from the €150bn rearmament fund unless a formal security pact is agreed, and others stating that a further condition would be the UK paying in to the fund.¹⁶

10. We agree with this preliminary assessment: the changing world around us has changed the context of our relationship and the need for a more robust defence of our shared democratic values which run much deeper than our occasional disagreements. Moreover, the best guarantee of our mutual security is economic growth. Yet both the UK and the EU are confronting stubborn challenges to growth. Leaders in both the UK and the EU recognise that we must both become more competitive, more innovative, and better able to create new jobs and lead new industries. These create a new powerful incentive for us to cooperate more closely together in a wider range of areas, where our values and interests align, to protect and preserve the hard won gains we have made and to create a future in which our ideals prosper and the freedom of our citizens’ is safer and more secure.

Securing Prosperity

A shared defence industrial policy

11. Ensuring the security of citizens is the foremost duty of any government. The UK must stand resolutely with Ukraine in the face of an existential threat to its sovereignty and European stability. The Prime Minister has made clear that the UK “must now change our approach to national security so [the UK is] ready to meet the challenges of our volatile world.”¹⁷ In response, the UK has committed to increased defence spending and is working urgently to build a ‘coalition of the willing’ to provide concrete security guarantees for Ukraine and uphold European stability.¹⁸ In a recent speech, the President of the European Commission, Ursula von der Leyen, outlined four priorities for European security: increased defence spending, pan-European cooperation to address gaps in priority areas, increasing support for Ukraine and strengthening Europe’s defensive industrial base. In addition, the President stated the EU “was working to break new ground on security with the United Kingdom and other partners within Europe, in our neighbourhood or within the G7”.¹⁹

12. Forecasts of the increase in Euro-NATO defence spending remain speculative. But indications are that it will increase significantly between now and 2030. A substantial portion of this will be spent on equipment.²⁰ Moreover, the lessons from the battlefield in Ukraine point to the absolute criticality of integrating the defence industrial base, and its innovative capabilities, into war-fighting capability.

13. To maximise defence spending efficiency across Euro-NATO partners, we have heard that the UK and Europe should deepen defence industrial cooperation. In written evidence to this Committee, the ADS Group, the trade organisation representing the UK aerospace, defence, security and space industries, stated they “would welcome steps towards improved trading arrangements with the EU, which should include a strategic agreement with the EU on defence and security.”²¹

A plan to safeguard Critical National Infrastructure

15. A new and significant emerging threat is the risk of attacks on shared critical national infrastructure. Key vulnerabilities include submarine data cables, such as the transatlantic cables that land on the Irish continental shelf, power lines and offshore and onshore energy and data infrastructure, including wind turbines. The European Commission’s 2025 Action Plan on Cable Security acknowledges this challenge, committing the EU to “cooperate in promoting the development of secure, trusted, and resilient submarine cable infrastructures with neighbouring countries, strategic partners, other third countries, and in multilateral and multistakeholder fora.”²² The UK’s military capabilities, not least the anti-submarine warfare capabilities of the Royal Navy and Royal Air Force, play a significant role in monitoring and deterring threats to these assets.²³ Enhancing coordination in monitoring and deterring threats to these critical assets should therefore be a priority, with special reference to Ireland, whose waters contain much critical subsea infrastructure.

Enhancing economic security

17. The UK and EU share common economic security challenges, such as supply chain vulnerabilities, geopolitical instability, and unfair market distortions. While the UK-EU Trade and Cooperation Agreement (TCA) lacks a formal economic security dialogue, the Foreign Secretary has proposed a structured mechanism as part of the ‘reset’ package.²⁴ The European Commission’s Economic Security Strategy also calls for intensifying engagement with third countries, presenting an opportunity for structured UK-EU coordination on issues such as supply chain resilience, competition policy, and global trade governance.²⁵

Economic Crime Cooperation

19. Both the UK and EU recognise the value of working together on tackling cross-border criminal activity, including economic crime. The Trade and Cooperation Agreement already contains extensive provisions on UK-Europol cooperation,²⁶ as well as exchange of crucial data on DNA, fingerprints and vehicle registrations based on the EU ‘Prüm’ system.²⁷ There is also a mechanism for exchange of information on beneficial ownership of assets to counter money-laundering.²⁸

20. There is scope to go further. The Government rightly has a focus within its “safety” pillar of the reset on seeking reinforced cooperation with EU partners on addressing organised crime, through improved intelligence sharing mechanisms and operational collaboration. This would be a win-win, improving the safety of citizens on both sides and supporting the fight against fraud and money-laundering. We recognise the importance in this context of an extension of the EU’s data adequacy decision for the UK under its Law Enforcement Directive beyond 2025.

Supporting international institutions

22. The UK sees the WTO as a central element of a multilateral free trading system that provides stability and predictability.²⁹ However, the WTO has faced many recent challenges due to changes in the global economy and geopolitical context. In 2016, the US began blocking appointments to the WTO Appellate Body, the third stage of the WTO dispute settlement system, arguing that it was overreaching its original mandate.³⁰

23. In response to the paralysis of the WTO Appellate Body, a group of WTO members, including the European Union, established the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary mechanism to preserve dispute resolution. While the UK has not joined the MPIA, it continues to support efforts to restore a fully functioning dispute settlement system at the WTO. The Society for Motor Manufacturers and Traders told this inquiry:

The UK government should also consider joining initiatives aimed at preserving an effective rules-based system and seek to include as many counties as possible. One of these initiatives could be joining the Multi-Party Interim Appeal Arbitration Arrangement (MPIA).³¹

Prosperity in Goods

25. Since 1 January 2021, trade between the UK and the EU has been governed by the TCA, as the UK has departed from the Single Market and Customs Union.³² As a result, the UK is an autonomous customs and regulatory territory. The TCA provides that there will be no tariffs or quotas imposed on goods traded between the two territories.

26. In the four quarters to the end of September 2024, the UK’s exports of goods to the EU were valued at £346.1 billion, representing 41% of all UK goods exports.³³ The value of UK goods exports rose by just 0.3 per cent each year since 2019, far below goods export growth across the OECD of 4.2 per cent annually over the same period.³⁴ Despite the TCA being comprehensive, evidence submitted to this inquiry suggests that non-tariff measures (NTMs)—particularly Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT)—impact negatively on UK trade performance.³⁵

An ambitious Sanitary and Phytosanitary (SPS) agreement

27. One of the Labour Party’s manifesto commitments was to negotiate a Sanitary and Phytosanitary (SPS) Agreement with the EU to remove newly introduced checks on agri-food goods, plants and live animals (see Box 1).³⁶

Box 1: Sanitary and Phytosanitary (SPS) Checks

28. However, details on the exact nature of this agreement are unclear. It is well understood that the degree to which SPS agreements remove border requirements are proportional to the regulatory alignment achieved.³⁸ It is still to be determined what level of regulatory alignment the UK Government is comfortable with. When appearing before the Committee, the Minister for EU relations recognised previous precedents such as the agreements that New Zealand and Switzerland have with the EU, but told us that the Government will be looking for a bespoke agreement and their starting point is a “position of wanting to promote the highest of standards”.³⁹ In addition, during our visit to Brussels, we heard that negotiating such an arrangement would likely be a more time-consuming undertaking than is widely understood. The difficulties are exemplified by the impasse over UK-EU trade in seed potatoes, halted by lack of a mutually agreeable SPS deal, and the Government should have due regard to a deal which benefits this and other UK sectors.⁴⁰

29. The International Meat Trade Association, Horticultural Trades Association, National Farmers Union and Salmon Scotland referenced additional checks in place since the UK left the EU as contributing to significant disruption.⁴¹ For example, the International Meat Trade Association said:

“The UK should seek to make trade with the EU easier through a bespoke agreement on veterinary issues which removes some of the current SPS barriers to import and export. A bespoke SPS agreement could include reducing or eliminating the need for veterinary checks and certification on trade with the EU. The agreement should not be based on an existing model and should account for the UK’s regulatory starting point as a former EU member state and the close commercial ties between UK and EU; while maintaining the UK’s regulatory independence on its import regime and food regulation. The UK should work in accordance with international standard setting organisations like WOAH and the WTO”.⁴²

From competition to cooperation on fisheries

31. The fruits of the sea around our borders are a part of our shared ecology, and like any commons must be managed carefully to protect the livelihoods of future generations. The fisheries provisions of the TCA lapse in June 2026 and must be renegotiated.⁴³ Under the TCA, 25% of the overall existing EU quota in UK waters will be transferred to the UK over a five-and-a-half-year period to 30 June 2026, with percentage changes agreed for the total allowable catch (TAC) for each fish stock in each fishing area. Mutual access to each other’s waters is now through a licencing system for individual fishing vessels. After 2026 negotiations on access and share of stocks will take place on an annual basis, although provisions exist for multiannual agreements.⁴⁴

32. According to the ONS, in 2021, the fishing industry represented 0.03% of the UK’s economic output, and around 5% of the broader agriculture, forestry and fishing sector.⁴⁵ Salmon Scotland told us that in 2024, exports of Scottish salmon to France alone were worth £462 million.⁴⁶

33. These numbers do not, however, capture the reality that many fragile coastal communities are heavily reliant on fishing, both its at-sea component and the less visible onshore processing jobs. It is obvious the EU has eyes on the valuable resources in our pristine waters and the Government must not regard these as a mere bargaining chip, but do its utmost to safeguard their future.

34. On 21 January 2025, the Minister for EU relations told us:

“Our position is obviously to stand up for our fishers, most definitely. It is a hugely important industry, particularly in particular parts of the United Kingdom. I would just observe, though, in relation to fish, that the existing review period will end in 2026. As the trade and cooperation agreement stands at the moment, it would move into some sort of annual negotiations. I do think that having something that is more stable would be in our interests, going forward.”⁴⁷

We note that the EU-UK Parliamentary Partnership Assembly issued a recommendation on 17 March 2025 that underscored the value of “providing a signal at or before the Summit that a fair deal on fisheries will be reached, building on current arrangements.”⁴⁸

Cutting maximum red tape at the border

36. The European Commission and the UK Government are currently engaged in the process of reforms to the operation of their customs and regulatory regimes for goods crossing the border (see Box 2). Both within and outside of the TCA, there are opportunities which, if used to their full potential, could reduce friction at the border for economic operators from the EU and UK.⁴⁹

Box 2: UK and EU customs reforms

37. The Food and Drink Federation told the Committee that “unilaterally, the UK can modernise border systems through reviewing the decision to suspend the development of the Single Trade Window,⁵⁰ delivering on the SPS trusted trader schemes outlined in the BTOM, and creating a permissive import regime for the import of product samples. In the long term, these can become interoperable with similar EU schemes.”⁵¹ The Society of Motor Manufacturers and Traders (SMMT) also supported similar recommendations regarding enhanced cooperation on border management and alignment of single trader windows.⁵²

38. There are three clear opportunities for the UK and EU to maximise the amount of red tape which they together cut at the border to help businesses trade more freely: trusted trader schemes, safety declarations and cargo facilitation. Such measures would reduce friction at the border without touching on the applicable tariff or regulatory regimes and would be of clear mutual benefit to operators from both markets.

Trusted Trader Schemes

39. Mutual recognition between the UK and EU of respective trusted trader “Authorised Economic Operator” (AEO) schemes for customs simplifications, in addition to the existing mutual recognition of the UK and EU AEO schemes for security and safety purposes.⁵³

Safety Declarations

40. Negotiating a bilateral waiver on the need for traders to submit safety and security declarations on goods moved between Great Britain and the EU, as Norway and Switzerland have done.⁵⁴

Cargo facilitation

41. Cooperation to facilitate roll-on, roll-off cargo traffic, particularly across the Channel, as envisaged by the Trade and Cooperation Agreement.⁵⁵

Rejoining the Pan-Euro-Med Convention

43. Rules of origin are the rules which determine in which country a product was sourced or made - i.e. its ‘economic nationality’. Only if a product is ‘made’ in the UK (or the other Party, for example the EU), as defined by rules of origin, can it receive lower tariffs through each free trade agreement.⁵⁶ The UK and the EU have agreed to a set of rules of origin under the TCA.⁵⁷ In written evidence to this inquiry, stakeholders such as luxury goods trade association Walpole and chemicals producer Dow have suggested that the UK should additionally join the Pan-Euro-Mediterranean (PEM) Convention on rules of origin to enhance flexibility and facilitate trade for businesses operating across multiple markets (see Box 3).⁵⁸

Box 3: Pan-Euro-Mediterranean (PEM) Convention Rules of Origin

44. Joining PEM, and thus its expanded cumulation provisions, could help UK exporters by making it easier to meet rules of origin requirements and thus avoid tariffs when trading with both the EU and other PEM countries. However, the Committee notes this would be a significant change for both UK and European traders in an already turbulent trade environment, whilst not reducing the amount or cost of paperwork required to import or export goods. The benefits of re-joining the PEM Convention may also be limited for specific sectors. For example, the rules of origin for batteries and electric vehicles under the TCA were designed to encourage a gradual increase in EU and UK production of EV batteries. Whereas, until at least 2027, PEM rules are more difficult to meet for this important nascent industry.⁵⁹ In written evidence, the Society of Motor Manufacturers and Traders (SMMT) notably recommended joining the PEM Convention alongside the current TCA, rather than instead of it.⁶⁰

Maximising compatible regulation

46. Product requirements in Great Britain for most industrial and consumer goods remain very similar to the EU requirements (which continue to apply in Northern Ireland). This is often because UK product law is ‘assimilated law’ inherited from time as an EU Member State. The UK and EU have also shared membership of pan-European standards bodies that set technical standards adopted by both, even where laws, regulations and conformity assessment procedures differ.^{61 62} We note some decisions the UK Government has taken regarding product requirements in Box 4 below.

Box 4: UK Government decisions on product requirements

47. However, as the UK operates outside the EU’s regulatory framework, regulatory divergence is an inevitable consequence, creating potential barriers to trade over time. The UK sits in a unique position outwith the EU, allowing a freedom of decision not seen in decades. The Government should not allow alignment with the EU to damage or preclude free trade with other blocs. Divergence can come in two forms: active divergence where the UK changes its rules, or passive divergence, where the EU changes its rules and the UK does not automatically update its rules alongside, often described as ‘alignment’. With regards to automatic alignment, at our oral evidence on 26 November 2024, the Secretary of State told us:

As a country and as an economy, we are too big and too important to outsource the regulation of any part of our economy to another body. If you want that to be setting the rules, you have to be part of the organisation that sets the rules.⁶³

48. The Committee has received many differing views from stakeholders on the question of maximising compatible regulation. But we note the strong evidence that closer links produces clear economics gains. Tom Brufatto, Executive Director of Policy and Research, Best for Britain, told us that deep alignment in goods could grow UK GDP by 1–1.5%, and the UK and EU can expect a boost in exports of around $20bn, whilst still remaining within the negotiating lines of no return to the single market or customs union.⁶⁴

49. We also heard from a wide range of sectors that there were significant commercial gains from maximising compatible regulation.

a. The Chemicals Industries Association told this inquiry:

The UK should remain “closely connected” but any decisions on Swiss type or any other alignment model, must guarantee friction free access to respective markets. In addition, alignment with EU REACH cannot be considered in isolation given the interconnectivity to other chemicals legislation.⁶⁵

b. The Food and Drink Federation stated:

Dynamic alignment should not be seen as a silver bullet to solve UK-EU/NI trade. A strategic way forward is required in the form of a regulatory development action plan alongside much more effective information sharing and technical exchanges with the EU. We should avoid passive divergence by making timely, active decisions on the applicability of new measures to UK interests and production patterns.⁶⁶

Energy Prosperity

51. Cooperation in energy trading is essential to achieving the UK’s and Europe’s shared energy and economic objectives. These include, but are not limited to, reducing carbon emissions in line with respective climate targets, decreasing reliance on Russian gas, and lowering energy costs for consumers. In particular, the UK and North Sea countries have huge ambition: 300 gigawatts of offshore wind potential by 2050.⁶⁷ To facilitate clean energy trade and support economic growth, this chapter will explore whether and how the UK and EU may be able to strengthen cooperation in infrastructure planning and address barriers to trade.

Connecting Electricity Trading Systems

52. The UK-EU TCA recognises that despite the UK’s withdrawal from the Internal Energy Market and exit from the EU’s electricity trading arrangements (‘market coupling’), there is a necessity for UK-EU electricity trading to take place as efficiently as possible in the new legal context in order to reduce costs for UK and EU consumers.⁶⁸ This is also key to ensuring there are no barriers to the efficient development of cross-border energy infrastructure, an essential part of the development of the North Sea.⁶⁹ The National Grid told us UK’s exit from Single Day Ahead Coupling (SDAC):

has reduced the efficiency of electricity trading. The existing trading rules also make developing trading arrangements for Offshore Hybrid Assets extremely complex. Essentially, the wind farm is party to two different sets of trading arrangements (operating with different rules and different timings) and the ability to make efficient decisions is significantly reduced.⁷⁰

53. The National Grid estimates that the loss of efficiency due to explicit trading results in a 25% loss of value when capacity is sold to the market, equating to an estimated €350 million annual cost. This inefficiency raises costs for consumers and complicates the deployment of renewable energy in the North Sea, making large-scale offshore projects more difficult and expensive to deliver.⁷¹

54. In October 2024, UK and EU industry representatives jointly wrote to ministers on North Sea Energy Cooperation to ministers to outline that a price coupling mechanism is essential and proposed an alternative solution based on a commercial extended price coupling service,^{72 73} arguing that:

The solution would require only limited changes to Annex 29 of the TCA, which is within the remit of the Specialized Committee for Energy [ … ] and fully respect the existing EU regulatory framework.⁷⁴

Joining together our Carbon Border Mechanisms & Linking Emissions Trading

55. On 17 May 2023, the EU adopted the Carbon Border Adjustment Mechanism (CBAM), which is currently in a transition phase.⁷⁵ CBAM aims to prevent goods produced in countries with weaker climate policies from gaining an unfair competitive advantage over EU-produced goods by imposing a carbon tariff on imports of certain carbon-intensive goods, like steel, aluminium, fertilisers and electricity. The UK plans to implement its own CBAM by 2027, with similar objectives but different in design and scope.

56. As things stand, the UK CBAM will apply to imports from the EU and vice versa.⁷⁶ This means that trade in certain goods will face additional paperwork and potentially a carbon tax, as the UK and EU carbon prices have diverged.⁷⁷ The UK’s total exports of regulated products to the EU amounted to around £6.7 billion in 2021. At £4.8 billion and £1.2 billion respectively, exports of iron and steel and aluminium contributed more than 88% of these exports, and estimates suggest that more than 32,000 people are directly employed in producing these exports to the EU.⁷⁸ Box 5 below contains a case study of the impact of the EU CBAM on Great British electricity exports.

57. One way to mitigate the trade impact of these mechanisms is for the UK to link its Emissions Trading System (ETS) with the EU ETS, which would help align carbon pricing in both markets and allow for carbon border taxes to be waived. Exports from Iceland, Norway, Switzerland, and Liechtenstein are already exempt from EU CBAM because they are either part of the EU ETS, or linked to it.⁷⁹ In addition, a UK/EU ETS linkage would avoid harm to the island of Ireland’s energy market.⁸⁰

58. Rebecca Sedler, Managing Director, National Grid Interconnectors, told us that the National Grid is “incredibly keen for the UK Government, as part of the reset [ … ], to ensure that energy, specifically CBAM, is one of the topics covered, so we can work towards closer collaboration and ensure that this is sensibly implemented.”⁸¹ The Minister for EU relations told us that: “There is already a commitment in the existing trade and cooperation agreement to look at linking our carbon border adjustment mechanism … linking our respective systems—that is what the ambition is.”⁸²

Box 5: Carbon Border Adjustment Mechanism and electricity trading

Prosperity in Services

62. UK services growth has, in recent years, been the strongest of the G7, ending 2023 at around 12% above pre-pandemic levels. The remaining G7 countries, at the end of the third quarter of 2023, reached around 9% on average.⁸³

63. The Trade and Cooperation Agreement (TCA) established the new foundational framework for services trade between the UK and the European Union. Key provisions include national treatment, local presence, and visa free entry up to 90 days.⁸⁴ However, these provisions are subject to exceptions outlined in annexes, which vary by member state. For example, a UK national cannot sell actuarial services in Italy or construction services in Cyprus.⁸⁵

Protecting digital services from imminent threat and expanding digital trade

64. Digital technology is a key driver of productivity growth, and the UK’s regulatory environment plays a critical role in incentivising innovation, investment, and technology adoption. The European Commission’s recent ‘Draghi Report’ on European competitiveness highlighted concerns over regulatory complexity in the tech sector, suggesting that an overly precautionary approach could inhibit innovation.⁸⁶ The subsequent EU Competitiveness Compass proposes the development of a Data Union Strategy to improve secure private and public data sharing, simplify the regulatory regime, and accelerate new technological developments.⁸⁷

65. The EU’s decision on data adequacy regarding the UK’s personal data protection regime is set to expire unless renewed by the European Commission.⁸⁸ While adequacy decisions do not require full alignment with EU GDPR, they require an adequate level of data protection. During our engagement in Brussels, we heard that positive discussions between UK and EU institutions were occurring about the Data (Use and Access) Bill, which is currently before Parliament.

Boosting financial services exports

67. As the largest net exporter of financial services and the second-largest financial services exporter globally, the UK enjoys a clear competitive advantage in this sector. Financial services trade generated a surplus of £92.2bn in 2023 which is equivalent to over half the entire UK services trade surplus.⁸⁹ UK trade in financial services with EU countries has changed significantly between 2017 and 2023. The proportion of financial services exports going to the EU was 40% in 2017 compared to 34% in 2023.⁹⁰

68. Academics from the UK Trade Observatory (UKTPO) told us that although the TCA is ambitious in a few selected services sectors such as telecommunications, international maritime transport and digital trade, there is a general sense that TCA provisions are a major setback for many services sectors that have hitherto relied on UK regulation being recognised in other EU economies. This is particularly the case for financial services with the loss of passporting rights, and generally the limited mobility business personnel affecting many services professions.⁹¹

69. City UK told this inquiry that “The Government should use the EU-UK Financial Regulatory Forum to ensure that the issues of greatest importance and consequence to the UK industry continue to be discussed and that the Forum focusses on forward-looking issues.” Similarly, the City of London Corporation “welcomed the Forum’s role in ensuring aligned approaches to T+1 settlement, for example, and want the Forum to build on this best practice.”⁹²

Deepening research cooperation

71. The UK is associated to the Horizon Europe, the EU’s ninth Framework Programme (FP9) for research at the start of 2024. Association has been of obvious benefit to both parties, bringing together the best experts from both communities and driving cutting-edge innovation.

72. Framework Programme 10, which is currently under development, proposes to strengthen the link between fundamental research and market capitalisation, and, in line with the wider redesign of the EU’s Multiannual Financial Framework, to considerably increase the focus on competitiveness. It is also anticipated that there will be an increased focus on scientific research the area of security (for example dual use technologies), an area in which intensified UK-EU cooperation makes obvious sense given our shared security interests, plans to grow our defence industrial base, and ambition to conclude a security partnership.

Pushing ahead with Mutual Recognition of Professional Qualifications

76. Regulated professions, such as medicine, nursing, and architecture, are overseen by national authorities, meaning qualifications obtained in one country are not automatically recognised in another. To facilitate the cross-border services provision, the TCA established a mechanism for sector-specific agreements on mutual recognition of professional qualifications (MRPQ).⁹³ However, the only formal proposal—submitted by UK and EU architects’ bodies—which has been made was rejected by the European Commission in 2023.⁹⁴

77. The UK Government has identified mutual recognition of professional qualifications (MRPQ) as a priority area for trade in services.⁹⁵ Speaking to this Committee, the Minister for Trade Policy and Economic Security stated:

Regulated professions are at the top of the list because, for the reasons that I described previously, ‘other business services’—that ONS categorisation that recognises non-regulated professions—is growing very strongly. We have not seen equivalent progress in relation to recognition of professional qualifications. In that sense, we are talking to the regulatory bodies at the moment, but it is a process both of understanding which bodies need the most help, given that some of them have bilateral relationships in place, and engaging in time with the European Union.⁹⁶

78. This priority is also reflected by UK industry as Lloyds of London told this inquiry that its priorities for an EU reset included “A strengthened UK-EU trading relationship in insurance could involve the EU granting the UK equivalence for reinsurance purposes, the UK and the EU delivering long term certainty on the adequacy of each other’s data protection frameworks, and both parties enhancing cooperation on the Mutual Recognition of Professional Qualifications”.⁹⁷ The European Commission has also addressed this issue in its 2024–2029 political guidelines, stating that it intends to propose “harmonised rules on the recognition of qualifications” to attract the right talent.⁹⁸

Backing Touring Artists

80. The UK Government has committed to supporting touring artists seeking to work in the EU.⁹⁹ The Minister for Trade Policy stated “the creative industries are hugely important to us. It is an issue that we frequently hear about as individual constituency MPs, and it is one of the areas that we are focused on”.¹⁰⁰

81. The end of free movement has introduced new administrative and financial barriers, particularly for musicians, theatre performers, and production teams. A report of the Independent Society of Musicians (ISM), based on a survey of 400 musicians, found that almost half of the respondents said that they had less work in the EU after January 2021, and the most frequently cited expense was for visas and work permits (23%).¹⁰¹ Further challenges included customs regulations affecting the transport of musical equipment and merchandise.¹⁰²

A creative and ambitious Youth Experience scheme

83. To foster growth in the UK’s trade relationship with the EU, it is essential that younger generations develop strong personal connections. The EU and many in the UK desire the establishment of a robust youth exchange programme, akin to those already in place with countries such as Australia. As the EU-UK Parliamentary Partnership Assembly expressed in its recommendation in March 2025, it:

Stresses that people-to-people contacts are at the core of the UK-EU relationship and that the UK leaving the EU has had a negative impact on touring artists and young people affecting their ability to benefit from youth, cultural, educational, research, employment and training opportunities. Recognises that cross border collaboration and cultural exchange drives intercultural understanding, innovation and skills sharing. Underscores the need for both the UK and the EU to facilitate travel for touring artists to the maximum extent possible, and to establish a youth opportunity scheme, including apprenticeships.¹⁰³

84. In sectors such as finance, technology, education, and creative industries, young professionals gain valuable experience through work placements, study exchanges, and short-term mobility programs. However, the Government has also prioritised lowering net migration across the course of the Parliament. When speaking to the Lords European Affairs Committee, on Tuesday 10 December 2024, the Paymaster General and Minister for the Cabinet Office (Minister for the Constitution and European Union Relations),  stated:

On youth mobility more generally, it depends on precisely what you mean by youth mobility. There is the university sector and Erasmus+, but obviously that has financial implications. There is an idea about something wider, but the Government are pledged across the course of the Parliament to bring net migration down, and that is an objective that we are determined to achieve. To your earlier point about youth mobility generally, it is a matter for the EU how it wishes to put that forward and seeks to negotiate it, but we will have to see.¹⁰⁴

Ideas on what the EU means abound, and the Government must have at the forefront of any discussions its red line over the return of free movement.

85. However, we note that Office for National Statistics (ONS) net migration statistics include individuals who intend to stay in the UK for at least 12 months. This aligns with the UN definition of a long-term migrant, which is someone who moves to a country other than their usual residence for a period of at least one year.¹⁰⁵ We note that these statistics are based on individuals’ stated intentions upon arrival. However, actual durations of stay can vary, and some individuals may leave before or after completing a 12-month period. The ONS adjusts its estimates accordingly as more comprehensive data becomes available.¹⁰⁶

Conclusions and recommendations

Securing Prosperity

1. The UK Government should undertake to ensure a new UK-EU Security Pact is agreed, including a shared defence industrial strategy to ensure that Euro-NATO allies are procuring the best equipment and most potent capabilities–without regard to country of origin within our pool of allies–in the most efficient and rapid way. (Recommendation, Paragraph 14)

2. Any new UK-EU security arrangements include an explicit recognition that it would be mutually beneficial to act together to guard the critical national infrastructure on which the UK and EU business community depends, from those who wish it ill. (Recommendation, Paragraph 16)

3. The UK should work closely with the EU to strengthen coordinated action against non-market economies that undermine the international trading system through unfair practices, including abuse of forced labour, industrial subsidies, state-owned enterprise advantages, and forced technology transfers. Enhancing cooperation on trade defence instruments—such as anti-subsidy and anti-dumping measures—along with alignment of safeguards against use of forced labour in supply chains will help ensure a more effective and consistent response to market distortions that threaten fair competition. (Recommendation, Paragraph 18)

4. To support the fight against economic crime, we urge the Government to explore with the EU where there are further opportunities for deepening law enforcement cooperation as part of the ‘reset’ and the upcoming review of the implementation of the TCA, in particular as regards real-time intelligence exchanges. We hope to see the announcement of clear roadmap for further negotiations in this area at the forthcoming UK/EU summit. (Recommendation, Paragraph 21)

5. The UK and EU both support a stable free trading system. Like the EU, the UK Government should join the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) to help uphold a functioning dispute resolution system while broader WTO reforms are negotiated. (Recommendation, Paragraph 24)

Securing Prosperity

6. We support the Government’s intention to negotiate a Sanitary and Phytosanitary (SPS) agreement with the EU to reduce the need for regulatory formalities and controls at the border for agri-food products, plants and animals. Ensuring smooth movement of these critical resources is essential not only for trade but also for supply chain resilience. A strong SPS agreement would also ease movement of goods between Great Britain and Northern Ireland, strengthening stability and ensuring the reliable flow of essential goods under the Windsor Framework. (Recommendation, Paragraph 30)

7. We concur with the recommendation of the EU-UK Parliamentary Partnership Assembly that there would be value in “providing a signal at or before the [UK-EU] Summit that a fair deal on fisheries will be reached” and call on the Government to enable a multi-year settlement. (Recommendation, Paragraph 35)

8. The Government should seek to maximise cuts to the red tape currently strangling free trade with the EU, thereby fulfilling the largely unexploited provisions in the TCA relating to customs cooperation. In particular, it should engage with the EU on mutual recognition of the UK and EU Authorised Economic Operator schemes for customs simplification, an agreement to waive safety and security declarations for imports and exports and cooperation on roll-on, roll-off cargo traffic. (Recommendation, Paragraph 42)

9. The Government should re-join the Pan-Euro-Mediterranean (PEM) Convention alongside the Trade and Cooperation Agreement (TCA). As part of this step, we urge the Government to encourage PEM members to replicate the TCA’s specific Rules of Origin for electric vehicles that encourage onshoring in both the UK and the EU. (Recommendation, Paragraph 45)

Securing Prosperity

10. We recommend that the Government consults with the business community, unions, workers and consumer groups and identifies sectors of the economy where, over the next ten years, there will be mutual gains from maximising compatible regulation with the EU. This should include an assessment of the flexibilities the UK might need to maintain membership of existing trade deals like CPTPP, and to agree the free trade deals currently under negotiation with Switzerland, the Gulf Cooperation Council and India. Where there is significant mutual gain from compatible regulation with the EU, the Government should commit to a regulatory roadmap that maintains compatible regulation with the EU and seek, where beneficial for both parties, mutual recognition of conformity assessments. (Recommendation, Paragraph 50)

11. Energy trade represents a major opportunity for enhanced UK-EU trade and cooperation. Given shared strategic objectives—reducing carbon emissions, improving energy security, and expanding renewables—both sides have a mutual interest in strengthening their partnership. (Conclusion, Paragraph 59)

12. To achieve the shared strategic objectives of reducing carbon emissions, improving energy security, and expanding renewables, the UK and the EU must prioritise energy cooperation in upcoming discussions. There is a clear need to move beyond the current state of implementation of Trade and Cooperation Agreement’s current electricity trading provisions, which industry has deemed unfit for purpose. The Government should review industry proposals for improving market coupling arrangements and seek to agree the most efficient electricity trading framework possible. (Recommendation, Paragraph 60)

13. To prevent the UK and EU’s respective Carbon Border Adjustment Mechanism schemes from becoming barriers to trade in electricity and carbon-intensive goods, the Government should seek to link, and keep aligned, the UK Emissions Trading Scheme with the EU Emissions Trading Scheme. (Recommendation, Paragraph 61)

Prosperity in Services

14. We note the extensive cooperation between the Government and the European Commission on the Data (Use and Access) Bill. We recommend that the Government continues and takes monitoring the EU’s Data Union Strategy upon its publication and assess any relevant implications for UK policy, and take whatever steps are required to ensure a permanent data adequacy agreement is secured. (Recommendation, Paragraph 66)

15. The Government should prioritise financial services in EU relations by using the EU-UK Financial Regulatory Forum to build on previous best practice and advance regulatory cooperation. (Recommendation, Paragraph 70)

16. UK participation in the EU’s research programmes is mutually beneficial: enabling the best researchers to work together across borders contributes to research excellence, which in a competitive global environment is essential for generating innovation and growth, and advancing our security interests. If we cooperate less in research, we will both be less competitive, less secure, and generate less growth. (Conclusion, Paragraph 73)

17. Research cooperation also ensures a deep mutual understanding of our approaches to emerging technologies at an upstream stage, which helps to maintain an overall compatibility of approaches including regulation. (Conclusion, Paragraph 74)

18. To achieve the best outcomes in terms of innovation and in turn growth, we urge that all elements of FP10 should be open to third-country participation, and urge the Government to engage with UK research communities to maximise UK participation. (Recommendation, Paragraph 75)

19. We recommend that the Government draws lessons from the slow pace of mutual professional qualification recognition negotiations to date, re-assesses which mutual recognition agreements would contribute most to our mutual economic gain, and publishes a new roadmap of negotiating priorities for mutual recognition of qualifications. (Recommendation, Paragraph 79)

20. We recognise the importance of reintroducing mutual recognition of professional qualifications between the UK and the EU and reducing barriers to trade for touring artists. Given the economic and cultural significance of these sectors, continued engagement between UK and EU regulatory bodies is necessary to facilitate smoother market access. (Recommendation, Paragraph 82)

21. The UK and the EU should consider the development of an ambitious, visa-based youth mobility scheme with a limited number of participants. This initiative would allow young people to spend up to 12 months in the UK or EU for cultural and educational exchange, facilitating language acquisition, fostering a deeper understanding of shared European history and heritage, and enabling work and apprenticeship opportunities. Such an initiative would contribute to the long-term strengthening of trust and cooperation, which are essential foundations for international trade relations and mutual security. (Recommendation, Paragraph 86)

Formal Minutes

Tuesday 25 March 2025

Members present:

Liam Byrne, in the Chair

Antonia Bance

John Cooper

Sarah Edwards

Sonia Kumar

Charlie Maynard

Gregor Poynton

Joshua Reynolds

Matt Western

Rosie Wrighting

How to strengthen UK-EU relations

Draft Report (How to strengthen UK-EU relations), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 86, read and agreed to.

Summary agreed to.

Resolved, That the Report be the Fifth Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Ordered, That embargoed copies of the Report be made available (Standing Order No. 134)

Adjournment

Adjourned till Tuesday 26 March at 3.45pm

Witnesses

The following witnesses gave evidence. Transcripts can be viewed on the inquiry publications page of the Committee’s website.

Tuesday 21 January 2025

Rt Hon Douglas Alexander MP, Minister for Trade Policy and Economic Security, Department for Business and Trade; Rt Hon Nick Thomas-Symonds MP, Minister for Constitution and European Relations, Cabinet Office; Amanda Brooks CBE, Director General for Trade Policy, Implementation and Negotiations, Department for Business and Trade; Niall MacEntee-Creighton, Deputy Director, UK-EU Economic and Trade Partnership, Cabinet OfficeQ1–94

Tuesday 25 February 2025

The Lord Hannan of Kingsclere, President, Institute for Free Trade; Mr Marley Morris, Associate Director for Migration, Trade and Communities, Institute for Public Policy Research (IPPR); Tom Brufatto, Executive Director of Policy and Research, Best for BritainQ95–130

Tom Wills, Director, Trade Justice Movement; Rosa Crawford, Policy Officer, Trade Union Congress (TUC); Eric Gottwald, Trade and Globalization Policy Specialist, AFL-CIOQ131–142

Sarah Williams, Head of Strategic Partnerships, Green Alliance; Frank Aaskov, Director, Energy and Climate Change Policy, UK Steel; Rebecca Sedler, Managing Director of National Grid Interconnectors, National GridQ143–157

Lord Mark Sedwill, Cabinet Secretary (2018–2020), Former National Security Adviser and Cabinet Secretary; Sean Sargent, Chief Executive Officer, Green Lithium; Sir Sherard Cowper-Coles, Chair, China-Britain Business Council; George Magnus, Research Associate, University of Oxford China Centre and School of Oriental and African StudiesQ158–178

Published written evidence

The following written evidence was received and can be viewed on the inquiry publications page of the Committee’s website.

ELG numbers are generated by the evidence processing system and so may not be complete.

1 ADS Group ELG0016

2 AirportsUK ELG0021

3 Association of British Insurers (ABI) ELG0020

4 AstraZeneca ELG0011

5 Best for Britain ELG0007

6 British Educational Suppliers Association ELG0039

7 British Standards Institution ELG0025

8 Brown-Forman ELG0015

9 Centre for Business Prosperity and Enterprise Research Centre ELG0045

10 Centre for Cities ELG0030

11 Centre for Inclusive Trade Policy (CITP); and UK Trade Policy Observatory (UKTPO) ELG0019

12 Ceres ELG0009

13 Chemical Industries Association Ltd ELG0033

14 Collins, Professor David (Professor of International Economic Law, City St George’s, University of London) ELG0004

15 Dow ELG0028

16 Federation of Small Businesses ELG0032

17 Greater Manchester Combined Authority ELG0027

18 Horticultural Trades Association (HTA) ELG0029

19 Institute of Directors ELG0026

20 International Meat Trade Association (IMTA) ELG0001

21 Legrenzi, Dr Gabriella (Senior Lecturer in Economics and Finance, Keele University) ELG0038

22 Lloyd’s of London ELG0042

23 Manchester Airports Group ELG0002

24 Mandal, Dr Anandadeep (Associate Professor, University of Birmingham) ELG0005

25 National Farmers’ Union of England and Wales ELG0031

26 National Grid ELG0047

27 Quality Meat Scotland ELG0044

28 RenewableUK ELG0048

29 Rise Coalition ELG0013

30 Royal Institution of Chartered Surveyors ELG0040

31 Salmon Scotland ELG0041

32 Society of London Theatre & UK Theatre ELG0022

33 Tees Valley Combined Authority ELG0043

34 The Association of the British Pharmaceutical Industry (ABPI) ELG0046

35 The City of London Corporation ELG0034

36 The Food and Drink Federation ELG0012

37 The Growth Commission ELG0008

38 The Law Society ELG0010

39 The Society of Motor Manufacturers and Traders Ltd (SMMT) ELG0035

40 The Wine and Spirit Trade Association ELG0037

41 TheCityUK ELG0014

42 Trade Union Congress (TUC) ELG0049

43 UK Export Finance ELG0024

44 UK Trade Policy Observatory (UKTPO) ELG0018

45 UKTRF ELG0023

46 University of Surrey Business School – The Centre for the Decentralised Digital Economy (DECaDE). ELG0006

47 Walpole ELG0017

48 West London Chambers of Commerce ELG0003

List of Reports from the Committee during the current Parliament

All publications from the Committee are available on the publications page of the Committee’s website.

Session 2024–25

Number	Title	Reference
4th	Post Office Horizon scandal redress: Unfinished business: Government response	HC 778
3rd	Make Work Pay: Employment Rights Bill	HC 370
2nd	Priorities of the Business and Trade Committee	HC 423
1st	Post Office and Horizon scandal redress: Unfinished business	HC 341

---

Footnotes

1 Oral evidence taken by the Liaison Committee on 19 December 2024, Q7 [The Prime Minister]

2 International Monetary Fund, World Economic Outlook: Policy Pivot, Rising Threats, October 2024, p. 10

3 Office for Budget Responsibility, Economic and fiscal outlook, CP 1169, October 2024, p. 5

4 Oral evidence taken on 26 November 2024, Q4 [Jonathan Reynolds]

5 Oral evidence taken by the Liaison Committee on 19 December 2024, Q9 [The Prime Minister]

6 National Institute of Economic and Social Research, Revisiting the effect of Brexit, 16 November 2023, p. 1

7 Oral evidence taken on 26 November 2024, Q10 [Jonathan Reynolds]

8 Cabinet Office, Minister for European Union Relations speech at EU-UK Forum, 4 February 2025

9 Q30

10 Export led growth - Committees - UK Parliament Business and Trade Committee, BTC to question ministers on UK-EU trade reset as it launches new inquiry on export-led growth, 17 January 2025

11 Qq6, 29

12 Q45. See also: Joint Statement by the UK and the EU following the meeting of the Specialised Committee on Citizens’ Rights of 14 November 2024.

13 European Commission, Europe’s Choice: Political Guidelines for the next European Commission (Ursula von der Leyen, Candidate for the European Commission President), 18 July 2024, p. 25

14 Prime Minister’s Office, Statement by the President of the European Commission and the Prime Minister of the United Kingdom on Enhancing Strategic Cooperation, 2 October 2024

15 Prime Minister’s Office, Statement by the President of the European Commission and the Prime Minister of the United Kingdom on Enhancing Strategic Cooperation, 2 October 2024

16 The draft legal text makes close UK involvement conditional on a security partnership with the EU. European Commission document COM(2025) 122, “ Proposal for a COUNCIL REGULATION establishing the Security Action for Europe (SAFE) through the reinforcement of European defence industry Instrument” (19 March 2025), in particular Articles 16 and 17.

17 Prime Minister’s Office, PM statement on defence spending, 25 February 2025

18 Prime Minister’s Office, PM statement at press conference on the Coalition of the Willing, 15 March 2025

19 European Commission, Speech by President von der Leyen on European defence at the Royal Danish Military Academy, 18 March 2025

20 For example, NATO has a target that 20% of defence expenditure should be spent on equipment. NATO - Topic: Funding NATO

21 ADS Group (ELG0016)

22 European Commission, Joint Communication to strengthen the security and resilience of submarine cables, 21 February 2025, p. 16

23 Seabed warfare: Protecting the UK’s undersea infrastructure, House of Commons Library, May 2023

24 Remarks by the Foreign Secretary at the Chatham House event “Securonomics in the world” (22 May 2024). Specific avenues of dialogue and cooperation could include monitoring of inward and outbound investment, export controls on key strategic and emerging technologies; and shared supply chain analysis and warning systems.

25 European Commission, Joint communication to the European Parliament, the European Council and the Council on “European Economic Security Strategy”, 20 June 2023, p. 14

26 In particular Title V of Part Three of the UK/EU Trade and Cooperation Agreement (“Cooperation with Europol”).

27 Title II of Part Three of the UK/EU Trade and Cooperation Agreement (“Exchanges of DNA, fingerprints and vehicle registration data”).

28 Article 654 of the UK/EU Trade and Cooperation Agreement.

29 HL Deb, 6 January 2025, col 505

30 the first such instance was in 2016; see: https://www.wto.org/english/news_e/news16_e/us_statment_dsbmay16_e.pdf

31 Society of Motor Manufacturers and Traders (ELG0035)

32 Under the Windsor Framework in the UK/EU Withdrawal Agreement, Northern Ireland is treated for legal purposes as if it is still part of the EU Customs Union and Single Market for goods. This requires the UK to apply in respect of Northern Ireland a range of EU laws and regulations, including on goods moved there from the rest of the UK.

33 Latest figures – Section 2.3, UK trade in numbers (web version) – GOV.UK

34 Trading blows, Resolution Foundation, Trading blows: How should Britain buy and sell in a turbulent world?, December 2024, p. 3

35 Centre for Business Prosperity and the Enterprise Research Centre (ELG0043)

36 Q44

37 Jun Du, Gregory Messenger, and Oleksandr Shepotylo, Enhancing the Brexit Deal: Exploring the Impact of a UK–EU Veterinary Agreement on Agri-food Trade, April 2024, p. 4

38 Centre for Inclusive Trade Policy, An EU-UK SPS Agreement: The perils and possibilities of (re)alignment, 3 December 2024

39 Qq 52–53

40 https://www.britishagriculturebureau.co.uk/updates-and-information/continued-calls-to-find-solution-that-enables-eu-uk-trade-of-seed-potatoes/

41 International Meat Trade Association (IMTA) (ELG0001), Horticultural Trades Association (HTA) (ELG0029), National Farmers’ Union of England and Wales (ELG0031), Salmon Scotland (ELG0041).

42 International Meat Trade Association (IMTA) (ELG0001)

43 Article 331 of the TCA provides that the provisions on energy cooperation under the trade heading will cease to apply on 30 June 2026. On the same date, transitional provisions on access to fishing waters will expire as discussed in Annex 38 to the TCA, Articles 1 and 2.

44 Annex 38 to the TCA, Articles 1 and 2, UK-EU Trade and Cooperation Agreement, 30 April 2021

45 UK Fisheries Statistics, House of Commons Library, October 2022

46 Salmon Scotland (ELG0041)

47 Q53

48 EU-UK Parliamentary Partnership Assembly, Recommendation on strengthening the EU-UK partnership, 17 March 2025

49 For example, Chapter 5 (Customs and Trade Facilitation) includes provisions relating to Authorised Economic Operators / Trusted Traders (Article 110 and Annex 18), Facilitation of roll-on, roll-off traffic (Article 119).

50 A single window is defined as a facility that allows parties involved in trade and transport to lodge standardised information and documents with a single entry point to fulfill all import, export, and transit-related regulatory requirements.

51 Food and Drink Federation (ELG0012)

52 Society of Motor Manufacturers and Traders (ELG0035)

53 European Commission, Mutual Recognition [accessed 12 March 2025]

54 A recommendation on this issue is made in British Chambers of Commerce, The Trade and Cooperation Agreement Four Years On: A manifesto to reset UK-EU trade, December 2024, pp 10, 35. For details of the EU’s agreements with Norway and Switzerland, see: European Commission, “New customs agreements with Switzerland and Norway” (15 March 2021).

55 Article 119 of the UK/EU Trade and Cooperation Agreement designed to facilitate the high-volume of traffic on sea ferries.

56 For example, one ‘rule’ could be that at least 50% of the value of the good must be produced in the UK or the partner country to lower tariffs under the FTA. So, when exporting under the UK-EU TCA, under this rule, 50% of the value must come from the UK or the EU.

57 European Commission, The EU-UK Trade and Cooperation Agreement, 30 April 2021, Chapter 2

58 Walpole (ELG0017), Dow (ELG0028)

59 Customs Clear, Should the UK rejoin PEM?, January 12 2025

60 Society of Motor Manufacturers and Traders (ELG0035)

61 The UK’s National Standards Body, The British Standards Institution (BSI) is a continued member of the European regional standards organizations CEN, CENELEC and ETSI. British Standards Institution (ELG0025)

62 The UK has maintained the system of presumption of conformity through the use of ‘designated standards.’ The use of a common set of standards also supports trade between the rest of the UK and Northern Ireland which remains subject to EU single market product regulations, including the use of harmonised European standards, as part of the Northern Ireland Protocol as amended by the Windsor Framework. British Standards Institution (ELG0025)

63 Q11

64 Best for Britain (ELG0007) or Q106

65 Chemicals Industries Association (ELG0033)

66 Food and Drink Federation (ELG0012)

67 Q155

68 European Commission, The EU-UK Trade and Cooperation Agreement, 30 April 2021, Chapter 2

69 National Grid (ELG0047)

70 National Grid (ELG0047)

71 National Grid (ELG0047)

72 Energy UK, The time is now to pave the way for efficient electricity exchanges between the EU and the UK, 11 October 2024

73 The commercial solution described by energy providers suggests “The GB market would not become a member of SDAC but would instead procure a clearly defined (and limited) service provided by SDAC which remains under EU control. Once implemented in SDAC, it should be quickly followed by a roll out in the intraday timeframe (SIDC) considering its importance for the variable renewable energy sources. Such a solution would need to be accompanied by operational agreements between parties, guaranteeing coordinated and harmonized operations.” Energy UK, The time is now to pave the way for efficient electricity exchanges between the EU and the UK, 11 October 2024 (p.2)

74 Energy UK, The time is now to pave the way for efficient electricity exchanges between the EU and the UK, 11 October 2024, p.2

75 In February 2025, the European Commission proposed some technical simplifications to EU CBAM to assist its implementation, including delaying first payments of the tax until 2027. European Commission, Proposal for a REGULATION OF THE EUROPEAN PARTLIAMENT AND OF THE COUNCIL amending Regulation (EU) 2023/956 as regards simplifying and strengthening the carbon border adjustment mechanism, 26 February 2025.

76 The precise implications of EU CBAM for Northern Ireland under the Windsor Framework are unclear at this stage.

77 Bloomberg, UK Carbon Prices Surge as Minister Talks About EU Market Linkage, 12 March 2025.

78 Centre for Inclusive Trade Policy (CITP), The economic significance of the EU CBAM in the UK, 20 February 2024, p,2, p.12

79 KPMG, EU Carbon Border Adjustment Mechanism (CBAM)

80 Energy UK, Borderline Confusion: Carbon Border Adjustment Mechanisms in Northern Ireland, 29 January 2025.

81 Q149

82 Q69

83 Institute of Directors (ELG0026)

84 Firstly, a commitment to national treatment implies that each Party does not operate discriminatory measures benefiting domestic services or service suppliers. Secondly, local presence provisions require that neither Party shall require a service supplier of the other Party to establish or maintain a representative office or any form of enterprise, or to be resident, in its territory as a condition for the cross-border supply of a service.

85 Institute for Government, UK-EU future relationship: the deal: services. For the latest detail, please refer to the Reservations to the Services Chapter of the UK-EU TCA provided by the UK Government.

86 European Commission, The future of European competitiveness: Report by Mario Draghi, September 2024, p.30

87 European Commission, A Competitiveness Compass for the EU, 29 January 2025, p.6

88 On 18 March 2025, the EU Commission proposed to adopt an extension of the two 2021 adequacy decisions with the United Kingdom for a period of six months.  With this extension, the free flow of data with the UK would be maintained until 27 December 2025 [European Commission, Press corner, 18 March 2025].

89 City of London Corporation (ELG0034)

90 House of Commons Library, Financial services in the UK, 18 November 2024, p.23

91 UK Trade Policy Observatory (UKTPO) (ELG0018)

92 TheCityUK (ELG0014)

93 European Commission, The EU-UK Trade and Cooperation Agreement, 30 April 2021, Article 158

94 Joint Recommendation submitted in October 2022 by the Architects’ Council of Europe and the Architects Registration Board in the United Kingdom, pursuant to Article 158(3) of the TCA was rejected by the European Commission. A deal on mutual recognition of qualifications for architects between Canada and the EU was submitted in 2018 and approved by the EU in 2023.

95 Labour, Change: Labour Party Manifesto 2024, p.118

96 Q62

97 Lloyd’s of London (ELG0042)

98 European Commission, Europe’s Choice, Political Guidelines for the Next European Commission 2024–2029, 18 July 2024, p.17

99 Labour, Change: Labour Party Manifesto 2024, p.118

100 Q64

101 the Independent Society of Musicians, Paying the Price, August 2023, p.23

102 Touring Artists Case Studies, Touring with a Carnet ARA, August 2022

103 5th EU--UK Parliamentary Partnership Assembly, Recommendation on strengthening the EU-UK partnership, 17–18 March 2025, Brussels, p.3

104 Oral evidence taken by the House of Lords European Affairs Committee on 10 December 2024, [Rt Hon Nick Thomas–Symonds MP] Q9

105 Office for National Statistics, Understanding international migration statistics, 28 November 2024, p.3

106 Office for National Statistics, Understanding international migration statistics, 28 November 2024, p.4