23 March 2017

Open Europe: The Netherlands just issued two friendly reports on Brexit

First of all, there was the report commissioned by the Dutch parliament, stressing that “any restriction on free trade with Britain would inevitably be at the cost of Dutch exports, prosperity and employment,” while adding that “There’s no reason at all to allow Britain to cherry pick…but there’s also no reason to prevent Britain from receiving trade advantages.”

This looks at odds with the statement of the Maltese presidency, as well as the EU Council’s proposed guidelines for 27 EU member states that the UK should be enjoying less trade benefits as compared to now.

Another report, by the Dutch Advisory Council on International Affairs, is also quite friendly to the British. The report carries some weight, not only because the Council is chaired by former NATO Secretary General Jaap de Hoop Scheffer, but also because the Dutch government is legally obliged to issue a response to it.

The report, of which only an executive summary has been published, mainly focuses on the new trade relation between the EU and the UK after Brexit and calls for taking CETA, the recently concluded free trade agreement between the EU and Canada, as a model and upgrading it into a so-called “CETA-plus model”, an option we’ve looked at more closely before.

The report states:

“It’s politically possible to bring future cooperation in the framework of this model to a higher level, while adding elements from the association agreements the EU has concluded with neighbouring countries. A so-called CETA-plus model not only opens the possibility for free trade in goods but only enables agreements on opening up services sectors.”

The report also notes that “it’s expected that, despite the UK’s desires, it won’t be possible to agree an extensive trade deal within two years,” so it’s “likely and desirable to agree a short transition period in order to enable an orderly transition” after the UK’s exit, supposedly on 30 March 2019, and “before such a trade deal is agreed.”

As to what such a transition arrangement should look like, the Council “considers a temporary extension of [Britain’s membership of the EU’s] customs union with for example three years as the most obvious solution.”

It’s not clear whether the UK government would be willing to stay in the customs union for that long, given that it therefore would also need to wait longer to conclude trade deals with non-EU partners.

In terms of enabling an orderly transition in terms of market access for goods and services, in case there wouldn’t be a ‘CETA-plus’ agreement by 30 April 2019, the Council stresses that the UK should, like Norway, take over the EU’s rules, as it writes:

“For UK participation to the single market in goods during a transition period, it’s required that the internal market acquis is taken over and applied in an equivalent way.” It adds that also “some adequate dispute settlement system will need to be created then,” something which will be discussed in more detail hereunder.

On services, it notes that “equivalence is the most likely and realistic alternative to the loss of passport rights. The Netherlands should argue in favour of a good arrangement during the transition period, so there would be as little damage for companies as possible.”

It goes into more in detail about this issue:

“With regards to financial services, [we think] the priority should be to avoid disruption of the EU’s financial system as much as possible and to mitigate negative effect on the financial services system as much as possible. Decisions to grant equivalence in the framework of third country regimes could thereby be a fall-back position, although it’s not possible to apply this to all financial services while the Commission can also withdraw this again. The advantage however is that the arrangement can be applied to all third countries in principle and is therefore no violation of the ‘most favoured nation’ – principle. It’s also possible to extend the scope of equivalence, which would make this option even more attractive.” [...]

Full article on Open Europe

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