The European Union is reportedly demanding a compensation clause in the Brexit 'reset' agreement being negotiated by Sir Keir Starmer, which would require the UK to pay if a future government reneges on the deal. Dubbed the 'Farage clause' by EU diplomats, the provision is seen as a safeguard against potential withdrawal by a future administration led by Reform UK leader Nigel Farage.
According to the Financial Times, a draft text on agricultural trade aims to remove post-Brexit checks on farm produce. It stipulates that any party pulling out must cover the cost of reinstating border and infrastructure controls, potentially running into billions of pounds. The clause is named after Farage, who has threatened to cancel any UK-EU sanitary and phytosanitary (SPS) agreement if he wins a general election.
UK sources have dismissed concerns, stating that such clauses are routine in international deals and work both ways, meaning the EU would also have to compensate the UK if it backed out. 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 are due to commence this month but may take months to complete. The reset package also includes a return to the Erasmus programme, agreed before Christmas, and talks on carbon emissions, which have proven complex. Hopes for an agreement on the carbon border adjustment mechanism before Christmas were not realised.
Anand Menon, director of UK in a Changing Europe, commented: '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.' The EU previously set up a €5.4bn (£4.7bn) adjustment reserve in 2020 to help member states cope with Brexit disruption, with Ireland, the Netherlands, and France receiving significant allocations.
