UK trade with the EU

The Common Understanding is a significant positive step to improve UK-EU relations. Thirteen months on, however, an underwhelming amount of progress has been made. So far, the Reset has delivered limited meaningful impact. (Conclusion, Paragraph 9)

We recommend that Government act quickly to make more progress on the Reset. It must also ensure future such agreements are accompanied with clear policy workplans and milestones for delivering outcomes. (Recommendation, Paragraph 10)

Failure to secure UK participation in SAFE was a disappointing outcome. It should not preclude further defence cooperation between the UK and the EU. The Committee agrees that the cost of UK participation, if reported correctly, was too high. On that basis, we agree with the Government’s decision not to participate at this stage. (Conclusion, Paragraph 15)

We recommend that the Government re-open negotiations on UK participation in future rounds of SAFE and prioritise inclusion in the EU’s “Loan for Ukraine”. In the interim, it must continue to pursue bilateral defence partnerships with EU Member States, building upon previous successes such as the Trinity House Agreement and explore the case for seeking a consolidation of the Multilateral Defence Mechanism and the Canadian-led Defence Security and Resilience Bank. We ask the Government to outline its plans for enhanced defence cooperation with Member States going forward. (Recommendation, Paragraph 16)

A Sanitary and Phytosanitary (SPS) agreement with the EU is on balance in the UK’s interest. It will help support increased trade in agricultural goods. However, greater transparency and guidance is needed on its potential impacts on affected businesses. Clarity is also required on the future implications of EU legislation for UK business under an SPS arrangement, particularly under dynamic alignment. Business decisions are being made now which risk falling foul of the deal’s eventual requirements. (Conclusion, Paragraph 21) 52

We recommend that the Government commit to consult with businesses on SPS throughout the Reset. At the conclusion of its SPS negotiations with the EU, ministers must publish a detailed and comprehensive SPS agreement implementation plan. This plan should set out how it will provide support for businesses to ensure compliance with SPS requirements. (Recommendation, Paragraph 22)

We welcome the ambition to conclude talks on an Emissions Trading Scheme agreement by the time of the 2026 UK-EU summit. Linking UK-EU Emissions Trading Schemes will deliver mutual benefits to businesses. Mutual Carbon Border Adjustment Mechanism (CBAM) waivers will also support trade in emission-intensive sectors and support joint progress towards environmental commitments and greenhouse gas reductions. (Conclusion, Paragraph 25)

We recommend that the Government move as quickly as possible to conclude the ETS linkage agreement. Once negotiations have concluded, it should seek provisional application of the agreement before its formal ratification. This would allow industry to feel its benefits, as soon as possible. (Recommendation, Paragraph 26)

The current electricity trading arrangements with the EU have caused market inefficiencies and increased UK energy costs. Reducing these costs through an agreement with the EU will provide significant benefits to UK businesses and consumers and support the broader UK and EU energy transitions towards renewables. (Conclusion, Paragraph 30)

The need for a UK-EU agreement on energy trading is clear. The current situation in Iran has compounded the need for a rapid agreement to be reached. We note that negotiations have been too slow to start and the timelines for completion are too long. (Conclusion, Paragraph 31)

We recommend that the Government prioritises negotiations on a UK-EU agreement on energy trading, with the aim of reaching an agreement as soon as possible. (Recommendation, Paragraph 32)

We note there are potential benefits for the UK from a Youth Experience Scheme with the EU, economically and culturally. We recognise however there is a mismatch between the UK and the EU ambitions. (Conclusion, Paragraph 35)

We therefore recommend the Government sets out the UK ambitions for the agreement on a Youth Experience Scheme. This should set out the overall numbers of participants allowed, the visa timeframes, visa requirements, and its position on access to home fee rates at UK universities. (Recommendation, Paragraph 36) 53

We welcome the UK re-joining the Erasmus+ scheme. To support transparency, we recommend that the Government set out the underlying data to support the UK’s decision to rejoin, a full cost- benefit analysis of long-term membership of Erasmus+, and its view on continued UK association as part of the 2028–2034 budgetary cycle. (Recommendation, Paragraph 39)

We are concerned that, despite the Government’s stated commitment to support touring artists, the Reset has yet to deliver any meaningful improvements for a sector that plays a key role in driving UK growth. (Conclusion, Paragraph 41)

We recommend that the Government uses the Reset to urgently prioritise improved mobility and visa arrangements for touring artists, moving beyond commitments to further dialogue, and delivers practical, measurable outcomes that support the UK’s creative industries. (Recommendation, Paragraph 42)

We welcome the commitments made in the Common Understanding to seek improved business mobility arrangements. However, we note that progress on this issue is unlikely until after the planned UK-EU dialogues in the second quarter of this year. This is far too slow. (Conclusion, Paragraph 45)

Commitments to continued dialogue without defined objectives and timelines are inadequate. We recommend that the Government clearly identifies the priority services sectors for improved business mobility and sets out, in precise terms, the specific outcomes it is seeking from the EU. The Government should also define clear timelines for their delivery. (Recommendation, Paragraph 46)

We welcome the commitments from the Government to seek improved outcomes on the Mutual Recognition of Professional Qualifications (MRPQ) arrangements. The existing Trade and Cooperation Agreement (TCA) framework is clearly unfit for this purpose, having delivered no real benefits since the agreement took effect in 2021. The Summit outcomes however lacked sufficient ambition and precision. (Conclusion, Paragraph 51)

We recommend that the Government pursue an alternative route, outside the TCA, to secure EU-wide Mutual Recognition of Professional Qualifications (MRPQ) agreements and prioritise concluding these deals at pace. We ask that the Government set out whether the UK-Switzerland MRPQ Agreement could serve as a practical template for their delivery. (Recommendation, Paragraph 52)

We welcome the concept of a Security and Defence Partnership to establish a bespoke framework for shared security and defence. The Committee is concerned, however, that it contains no meaningful 54 commitments to specific action or a reporting mechanism through which to judge progress. Significant omissions include a joint defence industrial strategy, coordination against bad behaviour by non-market states, and work to improve economic and supply chain security. (Conclusion, Paragraph 56)

The UK and the EU face shared challenges and risks to domestic steel production from global steel overcapacity. The Reset presents a clear opportunity for both sides to work together on addressing this issue, building upon the limited progress of the initial May 2025 summit’s steel agreements. (Conclusion, Paragraph 60)

We recommend that the Government urgently seek to reach an agreement with the EU on steel tariffs before 1 July 2026 or as soon as possible thereafter, to minimise harm to domestic industries. We urge the Government to ensure UK country-specific import quotas with the EU are not further reduced and current UK market access levels are maintained. (Recommendation, Paragraph 61) Building on the Foundations

We are disappointed by the limited progress the Government has made against several of the Committee’s previous recommendations. We ask that the Government, in further discussions with the EU, re- double its efforts to secure meaningful improvements for the UK. (Recommendation, Paragraph 83)

The current pace and ambition of the reset is insufficient to address the challenges faced by both sides. Without a firm UK strategy and meaningful commitments, the reset increasingly risks being blown off course by other global events. The 2026 Leader’s Summit should act as a critical moment for both sides to dramatically increase the levels of both shared ambition and pace. (Conclusion, Paragraph 84) 55