06 September 2023

CER's Spisak: What approach should Labour take to the 2026 TCA review?

A Labour government will want to reshape relations with the EU. The 2026 review of the trade deal offers only limited scope for change – but that should not constrain Labour’s ambitions.

 

As the opinion polls point to a Labour victory in next year’s UK general election, one question is often asked more than any other: what would a Labour government do regarding Brexit? The party’s leader, Sir Keir Starmer, has ruled out any return to the single market or customs union but has expressed a desire to “improve” the current deal if he becomes prime minister. Some in his team are hopeful that the pre-agreed review of the Trade and Co-operation Agreement (TCA), which will automatically start in 2026, could fix the “botched deal” that they will inherit from the Conservatives. Yet it is far from clear how this process alone could provide such an opportunity.

That attention has quickly turned to what is now commonly known as the ‘TCA review’ is unsurprising. The costs of Brexit have been significant, and improving the current trading arrangements with the UK’s biggest market will be crucial for any government that is serious about reviving economic growth. Moreover, the review process is a ready-made mechanism within the trade deal – a timely and politically convenient hook that will allow both sides to discuss how their post-Brexit agreement is functioning without either having to proactively put that question on the table.

The risk lies in overstating the significance of the review process. Article 776 of the TCA, which contains the review clause, merely states that the parties “shall jointly review the implementation of this Agreement and supplementing agreements and any matters related thereto five years after the entry into force of this Agreement and every five years thereafter.” It would be a mistake to read too much into the language here. Similar review clauses are included in many comparable treaties: at least 27 EU agreements with other third countries contain some form of review and monitoring clause.

In practice, most reviews amount to little more than a meeting of a joint committee – or, in the case of the TCA, the ‘Partnership Council’ – and result in officials writing up a report with trade statistics and occasional suggestions for improvements. At best, reviews serve as a guide to establishing a shared agenda for the years ahead and, at worst, they are an exercise in futility.

EU officials have made it clear that the review process will be about a review of the implementation of the agreement rather than a review of the treaty itself, in line with what the treaty text says. Maroš Šefčovič, the vice-president of the European Commission who oversees UK relations, has said that the TCA had not been used to its “full potential” but warned that the review “does not constitute a commitment to reopen the TCA or to renegotiate the supplementary agreements”. Another EU official was adamant that the process is “a review, not a revision, not a renewal or even amendment of any sort”. The EU has a clear position on what to expect from the review: not very much...

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