UK–EU trade discussions continue as focus shifts towards practical regulatory cooperation

27 May 2026

 

Discussions between the UK and EU on closer trade cooperation are continuing, despite reports that the EU has rejected a UK proposal for a goods-only single market arrangement.

While the proposal itself is not moving forward in its original form, both sides remain actively engaged in negotiations aimed at reducing trade friction and improving business cooperation in several key areas.

Current discussions are focused on practical measures including:

  • A UK–EU Sanitary and Phytosanitary (SPS) agreement to reduce border checks and certification requirements on food and agricultural products
  • Linking the UK and EU Emissions Trading Schemes (ETS)
  • UK participation in aspects of the EU internal electricity market
  • Measures to ease customs and regulatory friction
  • Business mobility and recognition of professional qualifications

The UK government and European Commission have both publicly confirmed their intention to continue negotiations on SPS cooperation and ETS linking ahead of the next UK–EU summit.

For UK importers and exporters, the most significant potential development could be the proposed SPS agreement. According to the published UK–EU Common Understanding, this could remove many of the certificates and controls currently required for agri-food movements between Great Britain and the EU.

The proposed ETS linking agreement could also have major implications for manufacturers and carbon-intensive sectors. Both sides are working towards linking their emissions trading systems, with the aim of reducing trade friction linked to carbon pricing and Carbon Border Adjustment Mechanisms (CBAMs).

For businesses, potential benefits from closer cooperation could include:

  • Reduced border friction and delays
  • Lower compliance and certification burdens
  • More efficient trade flows with the EU
  • Reduced administrative and carbon-related costs
  • Greater certainty for energy-intensive industries

However, businesses should also be aware that some of these proposals involve forms of ongoing regulatory alignment with EU rules, particularly in SPS and carbon trading areas.

Overall, while a broader single market-style arrangement appears unlikely at present, the latest developments suggest growing momentum towards targeted UK–EU agreements designed to improve practical trading conditions for businesses.

 

By Carla Assunção, Chamber International

 

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