Blow for British businesses as EU rules out renegotiating Brexit trade deal for years

Maroš Šefčovič says he does not want to put existing deal ‘in the shredder’

Jon Stone
Policy Correspondent
Monday 12 June 2023 13:35 BST
Related: Nigel Farage says Brexit has ‘failed’

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The EU’s Brexit chief has ruled out renegotiating Britain’s trade deal until 2026, dashing hopes it could be improved and prevent businesses fleeing the UK.

Maroš Šefčovič said that the trade and cooperation agreement had only been in force for two years and was not yet being used to its full potential.

The deal, signed by Boris Johnson on 30 December 2020, has been criticised by business groups for increasing costs and bureaucracy compared to membership of the EU single market and customs union.

“We have received quite a lot of questions and I’ve seen that there is increased interest in the TCA review. As far as our calendar goes, I think that it’s more for 2026,” Mr Šefčovič told the EU-UK forum on Monday.

He added that he did not want to put the deal “in the shredder”.

Labour leader Keir Starmer said last month he would seek an “improved” trade deal with the EU after car manufacturers warned about the future of their UK presence, thanks to Brexit.

Polls currently suggest Sir Keir could become prime minister next year, but Mr Šefčovič's warning means he would have to wait if he wanted to change the terms of trade.

But many problems caused by the looser trade arrangements would be difficult to overcome outside the single market and customs union, which Sir Keir has explicitly ruled out rejoining.

Make UK, which represents British manufacturers, say the threadbare nature of the deal compared to membership of the single market has “ramped up costs, caused import and export delays, and is hampering smooth trade”.

One of the most recent warnings comes from Stellantis, parent company of Vauxhall, Citroen, Fiat and Peugeot, which says so-called “rules of origin”, which apply now Britain is outside the EU, are making business difficult.

In a submission to a parliamentary committee inquiry, it said the current arrangements were “a threat to our export business and the sustainability of our UK manufacturing operations”.

In his speech on Monday, Mr Šefčovič said: “The [Brexit trade agreement] offers significant potential to further improve our partnership. However, it is not – and can never be – a replacement for EU membership.

“Trade can no longer be as frictionless and dynamic as it was before when the UK was part of the EU’s internal market. That inevitably means additional costs for businesses on both sides.

“Over time, increased divergence may bring even more cost and will further deepen the barriers to trade between the EU and the UK. This is regrettable but must be accepted.

“And it is why we are committed to making the most of the Trade and Cooperation Agreement, to our mutual benefit.”

A survey by the British Chambers of Commerce released in December found that more than three-quarters (77 per cent) cent) of businesses dealing with the Brexit deal said it is not helping them grow, with 45 per cent facing problems adapting to new rules.

Businesses say they are being made uncompetitive compared to firms in other European countries and losing out as a result.

Boris Johnson said the TCA was “a good deal for the whole of Europe” when it was struck with the EU in 2020 – avoiding a no-deal Brexit, which would have introduced even more major bureaucracy – including tariffs and quotas.

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