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It is possible to see Britain’s exit from the EU from both ends of the telescope. At the moment, too many people are choosing to see only what they want to see — either an inflexible European Commission that wants Britain out as quickly as possible or hardliners in the British cabinet winning the argument for a clean break.
Both sides are in danger of damaging the negotiations before they start. Few are focused on creating a framework in which the closest and most co-operative relationship can be achieved.
Establishing such a relationship — which should cover trade in goods and services, security co-operation, and many other aspects of Britain’s 40-year integration in Europe — will be the most complex policy process ever mounted in peacetime. It can only be achieved by Britain and the EU working together, though that currently seems a long way off. [...]
In reality, there is a lot of space between a hard Brexit, which would entail the UK enjoying no free trade with Europe, and becoming like Norway, enjoying trade in the European Economic Area with all the costs and obligations, but no say in the rulemaking.
The UK could stay in the European customs union, for example. This would mean that industrial goods exported to and from Britain would not face European customs duties and checks that would increase their cost and jeopardise the value chains that link UK manufacturing to the continent.
Those who say the UK has to be outside the customs union because it prevents us having an autonomous trade policy are wrong. In fact, being in the customs union requires such a policy because you have to try to sign flanking deals to the EU’s own free trade agreements in order to get your own goods into third country markets.
What membership of the customs union removes is the ability to negotiate on industrial tariffs that are bound by the EU’s common external tariff. This would be hard to swallow for Leave campaigners who made so much of Britain’s ability to negotiate its own agreements outside the EU. But we have to weigh the hypothetical benefits of future tariff cuts for UK exports globally with the actual costs imposed on our EU trade of being outside the union.
While remaining inside the customs union for goods, Britain could negotiate a bilateral treaty to try to recreate elements of “passporting” for its supply of financial and other services to the EU single market. What the EU demands in return for this would depend on what the agreement covered.
If the UK requested rights that were great enough to require a reciprocal freedom of movement of people, the extent of this would be tested in the negotiation. It is too early to assume that any participation in the single market would demand total freedom of movement. We should also bear in mind that many of those who voted Leave did so to control migration, not end it. [...]
It is not disrespectful of the political choice made in the referendum to examine the closest possible relationship between Britain and the EU. But this requires changing the rhetoric and some of the assumptions on both sides, and curbing the zeal of those who want a complete break with Europe, whatever the price.
Full article on Financial Times (subscription required)