Trying to figure out what Brexit means is just another way of asking: What relationship should the UK have with Europe? While an ‘off-the-shelf-model’ may not be the final solution, it makes sense to consider what’s already out there. In my Brexit on a Plate menu, I focus mainly on economics and immigration. I’ve ordered them by my preference, but what’s your #BrexitFlavour?
Full EU Membership: The current situation
In this situation, you put a lot in, but you get a lot out. The UK makes substantial contributions to the EU budget and in return doesn’t have to worry about the lengthy and costly task of negotiating trade deals with individual countries. Instead, we automatically enjoy preferential access to the markets of 52 countries as well as access to the customs union. The customs union is basically an agreement from all member states to not set tariffs. This massively reduces the barriers to successful business across borders. On top of this, there is full free movement of services, capital and people and a strong say on the application of EU rules. We also have the power of veto in many policy areas such as foreign policy, security, and social policy.
The verdict: This model minimises uncertainty and ensures the continued stability and stress-free trading for the 74 percent of British exporters who operate in the EU market. Then there’s the fact that the UK is the second largest beneficiary of EU research funds which are vital for our world-leading universities and scientific institutions. I placed this model first because I think it’s better to fix something that in my opinion for the most part works, rather than throw it away altogether – especially when you don’t know what the new product will be, how much it will cost, or if it will even do the job better.
Norway – Access but not membership
In this model, Norway enjoys full access to the single market without being a member of the Customs Union. This means they can make their own free trade agreements with third party countries. But Norway must still make a financial contribution to the EU and accept most EU laws – including free movement of people.
The verdict: The advantage of this model for me is that it’s the closest to the current economic relationship, so this model would avoid economic uncertainty and minimise hurting the UK as a destination for foreign investment. It’s also helpful that this system that offers legal clarity. The downside is that it would not allow us to have any say in how single market policies are determined – even though we would still be bound by them.
Switzerland – lots and lots of agreements
This model is basically a series of agreements with the EU which started in 1992 and continued until 1999, with some updates later. Switzerland has only partial access to the single market, meaning that only some industries are covered. It also makes a financial contribution that is significant, but smaller than Norway’s. Also, it doesn’t have a general duty to apply EU laws but it does have to implement some EU regulations. Importantly – free movement of people still applies in Switzerland, even though the local people voted against it in the 2014 referendum: therefore, it is unlikely that we’ll be able to reject EU immigration laws and at the same time have full access to the single market.
The verdict: This model gets points from me because it’s selective and has built in wiggle-room. However, it falls down my list because the conditions under which the Swiss negotiated this deal no longer apply and the EU are hard-line about cherry-picking. Academic Michael Emerson from the Centre for European Policy Studies said: “the UK should have no illusion about the likelihood that the EU would find this acceptable”.
Turkey – The Customs Union option
Doing things this way means continuing to enjoy no tariffs on industrial goods we sell to the EU, but we would have to impose tariffs set by the EU on goods imported from non-EU countries (which we will have no say in setting).
The verdict: It’s good for business that exports will be able to pass freely into the EU without customs controls or expensive ‘rules-of-origin’ documentation. It will also be one of the simplest ways to retain free trade for goods compared to other models. Importantly, it would avoid the renewal of custom controls at the Northern Ireland/Ireland border, the abolishment of which was one of the main achievements of the Good Friday Agreement. However, I think this model would ultimately be insufficient because it doesn’t apply to non-industrial goods, gives us no real influence in EU trading laws and leaves us to establish trade deals alone.
Canada – Reduced tariffs and nothing else
Technically, The Comprehensive Economic and Trade Agreement (aka CETA) is not yet in force – but it’s a deal the EU and Canada have been working on for seven years. When it’s adopted, Canada will have no tariffs on most goods, meaning preferential access to the EU single market. It will also not have all the obligations of Norway and Switzerland. But, Canadian exporters will have to prove that their goods are entirely “made in Canada”, which creates extra costs for businesses over there.
The verdict: For me, a CETA-like relationship is as appealing as a Tinder date: There’s no obligation to make financial contributions or play by all their rules, and you enjoy access. However, like your date, it doesn’t have enough substance. First there’s the fact that we have a much more complex web of ties to the EU than Canada does; but most importantly, the services sector is only partially covered by CETA meaning that UK financial services would not enjoy the EU market access that they have now. This is something our economy values greatly. It would also mean that UK firms that export to the EU would have to comply with EU product standards and technical requirements without having any say in setting them.
WTO: The default
This model is less like your Tinder date and more like your reliable, but unexciting ex – forever waiting in the wings, always one Snapchat away. The World Trade Organisation sets rules for international trade that apply to all members. There is no free movement of people, no financial contribution necessary and no obligation to apply EU laws.
The verdict: This model is useful because it’s clear and predictable, but it would mean our traded goods would still have to meet EU standards without any influence in setting them. It would also mean many more tariffs would be in place on our trade with the EU, and crucially – trade in services would be restricted. Considering the service industry is one of the fastest growing in the UK, that could be pretty bad.