08 March 2016

POLITICO: 5 options for post-Brexit trade with Europe

POLITICO looked at existing EU settlements with countries outside the bloc and narrowed down on five options for the U.K.:

1. Join the minnows

The first option available would be for the U.K. to sign up for the European Free Trade Association (EFTA) and then enter the European Economic Area (EEA), like Norway, Iceland and Lichtenstein.

While the EFTA is a loose intergovernmental organization aimed at promoting free trade and economic integration, countries in the EEA are part of the EU Single Market with free movements of people, goods, services and capital in all member countries.

This would allow the U.K. to maintain access to the Single Market and continue trading with EU member countries with very few export-import restrictions. But there’s a major caveat: it would also require the U.K. to accept a high proportion of EU laws without any way of representing its interests in the EU institutions that make them. [...]

Jonathan Hill, the EU commissioner for financial services, told the U.K. Treasury Committee that Norway was “in the position of a supplicant” when dealing with EU authorities, adding: “For us to be in that position would be, to put it mildly, a trifle odd.” [...]

2. Be more like the Swiss

If the U.K. decides to copy the Swiss, signing the EFTA will not be enough; the U.K. will also need to sign a bilateral trade agreement with the EU that is tailor-made for British needs.

However, “striking an agreement like the one Switzerland has with the EU would take years to negotiate,” Alemanno said.

Moreover, if it wanted to follow the Swiss model, the U.K. would also be likely to have to contribute to the EU budget, abide by some internal market laws — and accept the free movement of people. [...]

3. Do like the Turks

If the U.K. wanted to move in the direction of even less integration, it could imitate Turkey and enter into a customs union with the EU.

A customs union is a kind of free trade area with a common external tariff. But this would only secure limited access to the Single Market: In Turkey’s case, the arrangements cover industrial and processed agricultural goods, but not raw agricultural products or services. And the U.K. would still need to apply EU laws to areas covered by its own customs union, again without having a say on those rules.

One of the Euroskeptics’ main arguments in favor of a customs union is that the U.K. would be able to strike its own trade agreements with third countries.

Not so.

“The U.K. would be obliged to have common external tariffs and common trade arrangements with third countries,” said Roderick Abbott, a senior trade adviser at Kreab and former deputy director-general at the WTO and the European Commission. “For instance, when the EU did a free trade agreement with Korea, Turkey, because it is in a customs union with the EU, had to give a similar arrangement to Korea” — even though it was not involved in the negotiations.

4. Common cause with Canada

One example of an even less integrationist trade deal with a third country is the EU’s Comprehensive Economic and Trade Agreement (CETA) with Canada. Negotiations started in 2009 and were officially concluded in September 2014.

But CETA has not been signed yet due to disagreements over the so-called investor-state dispute settlement mechanism — although major progress on this front has been made in recent days.

“CETA has without question been a long process,” said Canada’s ambassador to the EU, Daniel J. Costello. He said official negotiations were preceded by several years of preparatory work, while months of toil still lie ahead to complete translations and obtain formal approval on each side before the agreement can be signed, ratified, and enter into force. [...]

5. Live and let live

An option that no one seems to consider seriously, not even the Euroskeptics, is simply to trade with the EU within the framework of the WTO.

However, if the U.K. decided to do so, it would need to strike its own trade agreements with third countries. Currently, the EU ambassador to the WTO speaks on behalf of all 28 member countries and, by being part of a greater bloc, the EU member countries have more leverage over other WTO members. [...]

Full article on POLITICO

© POLITICO