A contract with Brussels allows UK goods to be exported to the EU without further testing or certificates, and the UK has increased exports to the UK on an average of one tenth, with more than a quarter in some sectors, and new research has been discovered.
The “Mutual Recognition of Conformity Assessment” agreement allows products certified in one jurisdiction to be accepted in another jurisdiction without redundancy checks or costly duplications.
The UK government has pushed such measures vigorously to be included as part of the “reset” as part of the economic and security with the EU.
That proposal has been rejected by Brussels up until now – violating the UK’s own “red line” and is unhappy with the industry’s frustration on both sides of the channel, excluding re-joining the EU’s single market or entering a customs union with the bloc.
A new modelling by Aston University in Birmingham estimates that conformance assessment contracts could result in an average increase of 9.8% on UK exports, with sectors such as industrial machinery and electronics seeing an increase of up to 27.9%.
Jun Du, an Aston economics professor who has been modelling the impact of Brexit since the EU-UK Trade Cooperation Agreement, said the study would help “mutual recognition of conformance assessments,” or MRCA transactions specifically help to access the EU without “not owning the deficit.”
“Our research shows that MRCA can significantly alleviate the burden, especially in sectors where compliance is complex, such as food, textile, and machinery. It’s a low-politics, highly influential amendment that allows small exporters to return to business,” she said.
UK negotiators hope that the conformity assessment agreement will form part of a much deeper reorganization with the EU single market, including industry standards and other regulations to smooth trade with the BLOC.
However, analysts warned that achieving such a settlement would present a formidable challenge given Brexit’s politics, adding that economic benefits from the trade components of “reset” negotiations are likely to be limited.
Through the BREXIT process, the EU has consistently rejected UK demands for such transactions, with EU chief negotiator Michel Barnier warning in a 2020 speech that the UK cannot become a “regulatory and certification hub” for Europe.
The Labour Government has pushed a new MRCA contract after being elected last July, but the request was denied by Brussels in recent negotiations ahead of Monday’s summit, citing “institutional and economic reasons,” according to internal EU documents seen in the age of finance.
Nearly 20 industrial organizations on both sides of the channel, including the UK CBI and the UK Chamber of Commerce and the European Union of Small and Medium Enterprises and Swedish businesses, have also lobbyed for the EU-UK MRCA agreement, but have so far not been successful.
In a joint statement last month, they called on both London and Brussels to agree to the MRCA trade, calling it a “practical and achievable measure to reduce unnecessary barriers to trade.”
William Bain, the head trade policy at the BCC, said the transaction “will bring the necessary labs and testing capabilities to the UK and also boosts export capabilities.”
Trade experts added that he would be reluctant to sign an EU contract with the UK.
John Springford of the European Reform Think Tank Centre said the decision was a matter of “pure politics” rather than a legal barrier, and that the potential benefits of both sides are important.
“It’s strange that the EU is willing to allow the US to determine the suitability of goods to EU standards, but despite its continued alignment with EU regulations in the sector of goods, it is not the UK,” he added.
Prime Minister Rachel Reeves relies on the EU reset to provide filling to grow as he faces ongoing weaknesses in the fiscal year and the outrageous outlook for government budget liability for budget responsibility in this fall budgetary budget.
