14 February 2018

LSE: Britain’s best Brexit bet is the Jersey option

[...]Would a deal that excluded both services and labour be acceptable?

It just might. Indeed, as John Springford and Sam Lowe of the Centre for European Reform point out, the crown dependency of Jersey already enjoys such a relationship with the EU.

Were the EU to accept such a deal with the UK, it would certainly impose additional conditions. It would insist on a mechanism to monitor potential violations of the agreement and an arbitration system that took account of relevant European Court of Justice (ECJ) decisions. This might be modelled on the Efta court and supervisory authority that performs such a role for Norway and other European Free Trade Area (Efta) members that are part of the European Economic Area (EEA). It would doubtless also require the UK to continue paying into the EU budget, albeit much less than now; Switzerland’s payments per person are around half of Britain’s even though it is much richer. Controls on EU migrants would also need to be light.

The UK would need to continue to respect state-aid rules; that shouldn’t be a stumbling block for a Conservative government that believes in competitive markets. It would also need to continue abiding by EU social and employment laws; while that might seem more problematic, such rules have scarcely prevented the UK from having flexible labour markets. Indeed, UK requirements on, for instance, maternity leave are well above the EU-mandated minimum.

Under the Jersey model, the UK would hardly be an EU vassal state. It would regain regulatory autonomy in services, which account for four-fifths of the economy, and in other policy areas currently covered by EU law.

If the Jersey model still seems unacceptable, consider that the measures needed to avoid a customs border in Ireland are the same, obviously, as those needed to avoid one at Dover. While some still dream of untested and unlikely technological solutions that would avoid a hard border with Ireland, suggestions such as drones and blimps to prevent smuggling aren’t going to fly. And unless Britain satisfies the EU that it will avoid a hard border in Ireland, it won’t obtain an orderly exit deal or a transition period, let alone a post-Brexit trade deal.

In short, then, the Jersey model is the furthest that the UK as a whole can diverge from the EU if it wants to avoid a chaotic no-deal Brexit, whose catastrophic economic and political consequences I previously explained. The only alternative would be for the Jersey model to apply only to Northern Ireland, which would entail a customs border between Northern Ireland and Great Britain. Good luck persuading the Democratic Unionist Party MPs at Westminster who are propping up Theresa May’s minority government to agree to that.

Full article on LSE's EUROPP blog

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