One of the big criticisms of Vote Leave during the referendum campaign was that they had no plan for actually leaving the EU, or ‘what Brexit looks like’. Though it gave Vote Leave the campaign flexibility to advocate different positions and simultaneously none at all, it was a legitimate criticism, and one that has become all the more substantial in the wake of the vote.
That said, the same criticism can be levied at the government. It was unspeakably arrogant of Cameron to call the referendum and not lay any groundwork for the possibility of a Leave vote. This lack of preparation has been made all the more apparent by the floundering and half-baked ideas we’re currently seeing.
Top of the list we’ve got the Tory right and UKIP maintaining calls for a ‘hard Brexit’, advocating pulling out of both the EU and the Single Market and damning the consequences. This shows a fundamental lack of understanding of just how entrenched those institutions are in our own operations. There’s a certain cognitive dissonance involved in, rightly, arguing that the EU had too much influence and control over our governance and believing that we can harmlessly eradicate that in one swift movement. Brexit will not be an event but a process, taking five, seven, ten years or more, and we must leave the same way we went in; gradually, and in stages.
The basis of this ‘hard Brexit’ plan is the desire to strike a bespoke Free Trade Agreement with the EU, which itself relies on several misconceptions. Firstly, negotiating a bespoke deal of the required scope simply cannot be done in the two year time frame allowed by Article 50. Advocates of doing so were the same ones who rightly pointed out the EU’s ineptitude of signing trade deals in good time. The deal with Canada for example has taken seven years to negotiate so far, and has still not been implemented, and trade talks with India have been shelved after nine years of back and forth. Yet a bespoke deal with the UK can apparently be agreed within a couple of years. There’s that cognitive dissonance again.
‘So be it’ the hardliners say, suggesting reverting to WTO rules and replying in kind should the EU impose tariffs. The irony of this position is that they clearly have no idea what those WTO rules are. They cite the rule that nations cannot impose discriminatory or punitive tariffs, apparently unaware that the EU is recognised by the WTO as a Regional Trade Agreement and is thus permitted a certain level of discrimination against non-members. Under such a scenario the UK would acquire ‘Most Favoured Nation’ status and, under those WTO rules, the EU would be obliged to impose tariffs. The UK however would not have RTA status and thus would fall foul of those WTO rules preventing discrimination should we seek to impose tariffs on EU exports.
Tariffs though, are much of a red herring. It is regulatory harmonisation that is the key issue, and why we should not be looking to pull out of the single market, at least not during this first Brexit step. Meeting regulations is one thing, but proving you’ve met those regulations is something else entirely, and this is where the Single Market comes in. Without the required paperwork exports into the EU must go through various customs checks to ensure they meet those standards. This would mean our EU trade would grind to a halt with dire economic consequences.
“But China and Australia don’t have free trade deals and they trade with the EU easily enough.” That’s because whilst they don’t have comprehensive FTAs, they, and others, have a multitude of Mutual Recognition Agreements, smaller deals that facilitate trade in various areas by adopting common standards.
This brings us onto the Swiss option, which the chancellor is now reportedly advocating. More realistic than the ‘hard brexit’ option, it is not without it’s challenges. The EU has little appetite for replicating Switzerland’s model of multiple deals and the two year Article 50 timeframe again represents a significant stumbling block. The latter problem could be overcome by going into the negotiations and requesting an immediate extension to the negotiating period before even putting our cards on the table. However, as any extension needs the unanimous agreement of the remaining 27 member states, it’s a risky strategy.
Finally the Norway option is under great misconceptions from both sides of the debate. The Financial Times reported that the City had rejected this scenario in favour of the Swiss option as Norway has to ‘accept all the rules without having a say in them’. Merely reading the EEA agreement itself puts this one to bed. Through the EEA Joint Committee, Norway and the other EFTA states, have significant input into the formation of Single Market regulations and even have a de facto veto over their implementation. This veto has never been used precisely because of the extensive consultation process they are involved in.
Furthermore, it makes the false assumption that the EU is the top table. On the contrary, it is increasingly a middle man between it’s member states and the actual top tables of global trade. It is here where Norway wields significant influence in forming regulations before they get anywhere near the single market. Far from having no say, it arguably has more. Leaving the EU gives us the opportunity to be the architects of a global single market and leave behind the parochialism of the EU’s arrangement.
Nor does the EFTA/EEA option mean accepting freedom of movement. Lichtenstein has set a precedent, through the measures set out in Articles 112 and 113 of the EEA agreement, of having quantitative restrictions on free movement. There is no reason why the UK cannot follow this precedent in order to gain greater control over immigration. Moreover, it’s important to remember that this EEA move is merely the first step. Once this transitional arrangement is in place, there would be added clout to negotiate free movement reforms for the EEA as a whole.
The dearth of informed people involved in this process, Remainers and Leavers alike, has been incredibly depressing. Whilst the think tanks that usually exist to instruct the government on how to do everything have been missing in action, there have been some who have been doing the necessary research. The Flexcit plan from the Leave Alliance – whose sterling work informs much of this article – should be shoved into the hands of every civil servant and government minister remotely associated with getting the UK out of the EU.
The upcoming French and German elections are a good reason to delay triggering Article 50 until we know who it is we shall be negotiating with. In the meantime it offers the opportunity for those involved to do the necessary research so as to go into those negotiations with a clear picture of what we want, what we need, and what is possible.