EU-Canada trade deal pressures UK PM Burnham to clarify post-Brexit policy toward Europe

As UK Prime Minister Andy Burnham cautiously plans the first steps toward resetting relations with the European Union, Canadian Prime Minister Mark Carney has already moved ahead in advancing cooperation with Brussels.

A comprehensive trade and security agreement being drafted by EU and Canadian officials is putting pressure on Burnham to formulate a clearer policy toward Europe. Although the new British prime minister has sought to reassure Brussels that strengthening ties aligns with his domestic agenda, European officials privately believe that relations with Ottawa may soon become closer than those with London.

Canada's Proactive Stance Overshadows UK-EU Summit

Canada's proactive stance could overshadow the UK-EU summit planned for early November, which was delayed by several months after Burnham ousted predecessor Keir Starmer. Negotiations are hampered by longstanding policy differences, including Burnham's adherence to Starmer-era campaign pledges not to reverse the 2016 Brexit referendum or rejoin the single market or customs union.

Freed from the baggage of Brexit, the EU and Canada are working to establish a new type of partnership to address major powers such as China and the United States. European Commission President Ursula von der Leyen is expected to announce this plan during her State of the Union address in Strasbourg, France, on September 16, with Carney set to attend.

Macron Visits Downing Street

Meanwhile, as Burnham begins to articulate his European policy, French President Emmanuel Macron became the first foreign leader to visit Downing Street following the July change of government. Although Burnham was once among the most prominent advocates within the Labour Party for reversing Brexit, the former Manchester mayor now says he is unwilling to "rehash" old debates.

In a speech to the House of Commons last week, Burnham expressed concern about the potential impact of Brussels' "Made in Europe" initiative on British industry. He said:

"I do want to build a closer relationship. I will continue building on the work of my predecessor. I think we must strive to secure good deals for British steel and British agriculture as part of any new agreement."

Economic Impact of Brexit

According to calculations published by Bloomberg Economics in June, Brexit may have cost the UK economy approximately 2.5% of GDP, equivalent to around £30 billion ($41 billion) in lost tax revenue annually.

Upcoming UK-EU Summit Agenda

At the upcoming UK-EU summit, both sides are expected to sign agreements simplifying the flow of food and agricultural products, connecting energy markets, and establishing youth exchange programs. A sticking point remains the extent to which the UK is willing to offer preferential university tuition fees for European nationals; the EU insists on equal treatment with British students, while the UK government states this is not under consideration.

Red Lines and Policy Constraints

British officials say newly appointed ministers have recognized the limitations imposed by the "red lines" in Labour's 2024 election manifesto, including not restoring freedom of movement. Europe is reluctant to agree to any measures that might be seen as rewarding the decision to leave the EU, having earlier this year rejected Starmer's proposal to rejoin the single market for goods.

Earlier this week, Burnham's newly appointed EU envoy, Hamish Falconer, held his first meeting with his counterpart in Brussels, Maroš Šefčovič, where the British side emphasized concerns over the negative impacts of the "Made in Europe" initiative. This policy aims to protect European manufacturing from global competition (particularly from China) by granting EU companies priority in public contracts and subsidies.

Concerns Over "Made in Europe" Initiative

There are fears that if the initiative excludes British firms, industries such as automotive manufacturing and steel will suffer. EU officials insist the move is intended to safeguard Europe's industrial base against external threats and is not aimed at the UK, but the British side worries it conflicts with what has already been agreed under the post-Brexit trade deal.

Burnham has publicly opposed parts of the policy and raised the issue directly during his meeting with Macron last week. The UK government is pushing for exemptions to be secured at the November meeting, with economic security rapidly becoming one of the most urgent issues in negotiations.

Security and Migration Cooperation

The British prime minister also hopes to address irregular migration and strengthen cooperation on security and defense. Although the UK has agreed to participate in the EU's €60 billion ($68 billion) defense procurement loan for Ukraine, Paris is unwilling to allow the UK to participate in broader EU initiatives, such as the SAFE defense borrowing fund, on terms equal to those of member states.

EU and UK Perspectives

Anonymous EU officials stated that Burnham has made clear that closer ties with the EU are important for his domestic agenda. UK government officials say both sides share common interests in domestic and European economic security, and that Burnham instinctively views this relationship as offering significant potential for Britain.

An EU spokesperson said in a statement:

"In today's geopolitical environment, our shared interest lies in strengthening cooperation to deliver results for our security, economies, and citizens. We are working to advance negotiations on key documents from last year's Joint Understanding as quickly as possible."

Burnham's Stance on Brexit

Compared with Starmer, Burnham has been more forthright in describing the negative impact of Brexit on the UK economy. In his first speech to the House of Commons, Burnham said Brexit had "exacerbated" decades of economic mismanagement, accusing it of bringing about "a decade of low growth and stagnant revival."

EU officials are closely watching how far these expressions of commitment and willingness can translate into breakthroughs in negotiations.

Source: Bloomberg