After its failure to strike a deal to tap into the EU’s defence for loan scheme, the UK is now on a charm offensive to secure “Made in Europe” access for its industry.
UK Business and Trade Secretary Peter Kyle is in Brussels on Wednesday and Thursday to press the case for UK involvement in the European preference scheme the Commission is drafting, as speculation circulates that it will be limited to EU countries only.
“We have a shared challenge on the continent of Europe about economic security,” Kyle told journalists after meeting Commission Vice President Teresa Ribera, adding that “the continent of Europe should come together” to build “resilience” at a time of increasing worldwide economic tensions.
The UK fears Brussels’ push to favour “Made in Europe” products will shut London out of EU public procurement and state aid, escalating post-Brexit trade tensions.
London argues that the EU and UK economies are too deeply intertwined to withstand a strict EU-only European Preference.
The EU’s “Made in Europe” strategy is set to feature in the long-delayed Industrial Accelerator Act, held up for months by divisions among member states and within the European Commission. Baltic and Nordic countries have warned that the plan could curb innovation and restrict access to non-EU technologies, joining Germany in calling for a broad definition of “Made in Europe” that includes the bloc’s “trusted” trade partners.
France, by contrast, wants to limit eligibility to members of the European Economic Area – including Norway, Liechtenstein and Iceland – as well as countries with reciprocal procurement agreements with the EU.
Limits of participation
London has previously sought to secure preferential access to the EU’s €150-billion Security Action for Europe (SAFE) defence loan scheme – so far, to no avail.
That programme also contains a European preference, with member states required to ensure that at least two-thirds of the weapon systems they buy using loaned EU money are manufactured in an EU or EEA/EFTA country or Ukraine. Third-country participation is capped at 35%.
Talks to bring the UK to the same level as a member state collapsed last November when they failed to find a compromise over how much London would have to contribute financially.
Euronews understands that those talks fell apart over a major gap between the two sides: whereas the final offer on the table from the EU was around €2 billion, the UK estimated it ought to contribute just over €100 million.
But the UK also wants to participate in the EU’s €90 billion loan to Ukraine, two-thirds of which is earmarked for military assistance.
Starmer said last month that “whether it’s SAFE or other initiatives, it makes good sense for Europe in the widest sense of the word – which is the EU plus other European countries – to work more closely together.”
But the British premier is walking a difficult political tightrope. His Labour party is consistently polling several points behind the right-wing populist Reform UK, led by arch-Brexiteer Nigel Farage.
Yet, a recent YouGov poll showed that a majority of British people (58%) now believe that it was wrong for the UK to leave the EU, with 54% supporting rejoining the bloc. An even bigger majority – 62% – support having a closer relationship without rejoining the EU, the Single Market, or the Customs Union.
Brussels, however, has always been clear that the UK cannot pick and choose privileged access to the Single Market without accepting the EU’s “four freedoms”: the full freedom of movement of goods, services, capital and people – the latter of which would feed into Farage’s anti-immigration platform.