The EU is reportedly demanding guarantees the UK will compensate the bloc if a future government reneges on the Brexit “reset” agreement Keir Starmer is currently negotiating.
The termination clause is a stark reminder of the painful and costly divorce in which the EU set up a colossal €5.4bn (£4.7bn) fund to help its member states cope with the disruption caused by the UK’s exit in 2020.
According to the Financial Times, a draft text of an agreement on agriculture trade, aimed at removing post-Brexit checks on farm produce, calls for any party pulling out of the agreement to cover the cost of reinstating border and infrastructure controls in the future.
Nicknamed the “Farage clause” by EU diplomats, it is seen in some quarters as a means of ensuring the bloc is not left out of pocket should the Reform leader win a general election and make real his threat to cancel any UK-EU sanitary and phytosanitary (SPS)agreement.
However, UK sources dismissed this notion, saying such a clause was routine in international deals and was written “to work both ways”, and would therefore also force the EU to compensate the UK if it backed out of the deal in future.
A Labour source said: “Exit provisions are a basic staple of any international trade agreement. Pretending these routine legal contingencies constitute a democratic outrage [is] frankly exhausting.”
Negotiations on the SPS deal have not yet started but are due to commence this month. They may take months to complete, however, as the topic is one of the most complicated in the reset package that also includes a return to Erasmus, which was agreed before Christmas.
A deal on carbon dioxide emissions on goods exported to the EU has also proved to be complicated. Hopes that Labour could secure an agreement on the carbon border adjustment mechanism before Christmas came to nothing.
Anand Menon, the director of UK in a Changing Europe, said: “We shouldn’t be surprised that the EU is playing hardball. After all, they have decided that we need these agreements more than they do. As such, they will extract every last concession.”
According to the FT, the “Farage clause” states that if either side pulls out of the agreement, compensation would include the costs of setting up “the infrastructure and equipment, initial recruitment and training, in order to set up the necessary border controls”, which could run to billions of pounds.
When pricing the cost of Brexit, the EU put a €5.4bn adjustment reserve in place in 2020 to deal with disruption, with Ireland allocated €920m and the Netherlands more than €800m to put in place customs officers, veterinary officers and other controls, not seen since before the single market was set up in 1993.
France was allocated €672m and spent at least €200m putting customs officers, border police, plant and veterinary inspectors in Calais, Boulogne, Dunkirk, Le Havre and at the Channel tunnel including special checks for horses being transported to race meetings that cost Eurotunnel €20m.
The Netherlands employed more than 900 customs officials and an additional 145 veterinarians for the port of Rotterdam, while Spain hired an additional 860 employees for airports, ports and border control.
The European Commission and UK government have been approached for comment.
