EU warns London: post-Brexit reset may crumble over "Made in Europe"

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LONDON — The U.K. risks blowing up its Brexit reset if it ties it to guarantees on Made in Europe. That’s the message EU capitals want London to hear.

Europe’s protectionist push has the British government worried — and it wants assurances that U.K. businesses won’t be hit.

But Brussels says it can’t be done.

The EU’s Made in Europe legislation isn’t finished and is currently passing through the bloc’s cumbersome legislative process.

“Trying to link the [Industrial Accelerator Act] to the reset summit and delaying it for that is quite counterproductive,” said one EU official who, like others quoted in this story, was granted anonymity to discuss ongoing negotiations.

The bloc’s Industrial Accelerator Act and its wider Made in Europe push are about shielding and rebuilding European industry from heavy foreign competition, not all of it perceived as fair. European leaders agree on the principle, but there are unresolved questions about what that means in practice, and who is inside the tent.

The EU says it can’t negotiate on legislation that isn’t finished — and that how Made in Europe rules end up treating the U.K. is one small part of a big and ongoing debate among EU countries.

In the meantime, the planned summit between the U.K. and EU to wrap up the rest of the Brexit “reset” is still hanging without a date.

The meeting, originally conceived by Keir Starmer, was meant to be held in July and conclude negotiations on an agri-food deal, a visas scheme for young people, and emissions trading linkage — and set the stage for more.

But it was postponed after Starmer’s government collapsed, and a new date has yet to be named.

The latest chance to pick a date — at a meeting between new U.K. Prime Minister Andy Burnham and EU Commission President Ursula von der Leyen at the U.N. General Assembly on Tuesday — came and went without an announcement, despite widespread expectations that a day in November has been penciled in.

The delays are starting to raise eyebrows among diplomats who fear the two sides may be playing hardball over the issue and putting the whole “reset” at risk.

High-risk game

An EU diplomat from a member state which supports the U.K’s inclusion in Made in Europe warned: “My advice to the U.K. is don’t put yourself in a corner and tie progress on a closer relationship to the IAA.”

“This is not settled and there is a live debate internally between countries and institutions. This is much bigger than the U.K. There are a group of countries trying to keep the possibility of including the U.K. open, but they may not succeed,” they said.

A second EU official said the U.K. would be playing a high-risk game if it delayed the summit over the subject, stating bluntly: “The U.K. needs Made in Europe more than Made in Europe needs the U.K.“

The final form of the legislation is far from certain. The European Commission’s proposal for the Industrial Accelerator Act would have the U.K. inside the tent in most sectors — with only car manufacturing affected, officials point out.

But the law is going through a “trilogue” process among the member countries, the EU’s executive and its Parliament — with some states pushing for harsher treatment of those outside the bloc.

The EU diplomat quoted above said France, Poland, Italy, and Greece were the main countries pushing for a harder line. “I think the U.K. should lobby these countries, and the Parliament,” they added.

The U.K. says the plan breaches its Brexit trade deal by erecting new trade barriers and that it isn’t looking for an exemption — more a guarantee that its existing agreements are respected.

Asked whether the U.K. was delaying the summit over Made in Europe, the prime minister’s spokesperson told journalists after the meeting with von der Leyen at the U.N. General Assembly in New York: “We won’t provide a running commentary on those ongoing discussions, but no date for a summit has yet been set.

“We’re engaging closely with the EU on its Made in Europe agenda. The U.K. is committed to playing its part as a close and trusted European partner, focused on economic and security cooperation. The U.K. and Europe face common pressures, from security threats to the overproduction of steel. The best response to those pressures is a collective one.”

Rather than seeking to reshape Brussels’ rules from outside the bloc, former U.K. Prime Minister Tony Blair is calling on Burnham’s government to scrap its red lines in negotiations and to set out a path for rejoining a reformed EU in its 10-year plan later this year.

In a report published Thursday, the Labour grandee said the U.K. “must be in the room shaping Europe’s future.”

“We should be clear that we want back into a formal relationship with the EU,” Blair wrote. “But it must be a Europe on a credible path to reform, a Europe of nation states, a Europe capable of being a genuine global power.”

This article has bee n updated. Dan Bloom contributed reporting from New York.