Five models will help UK's Relationship with EU after BREXIT
As a member of the EU, the UK has been
included in trade deals the EU has negotiated. There are 22 trade agreements
between the EU and individual countries, and five multi-lateral agreements
covering multiple countries.
- This means that if the UK wants to retain preferential access to the markets of the 52 countries covered by these agreements, it would have to renegotiate trade deals with all of them.
But which of the other models discussed as potential post-Brexit options
for the UK are realistic?
1.The Norway model:
The
European Economic Area (EEA) allows Norway to access the EU market by paying an
annual sum that has gone up from 280 million pounds in 2010 to nearly 400
million pounds now.
- Member of European Economic Area, full access to single market, obliged to make a financial contribution and accept majority of EU laws, free movement applies as it does in the EU
- Under this agreement, they are not only assured free movement of their citizens across Europe, but also keep their core industries of fishing and oil away from EU interference.
- Some economists have already suggested that one of the options Britain could follow in the wake of a Brexit vote is the Norway model.
2. The Switzerland model:
Member of the European Free
Trade Association but not the EEA, access to EU market governed by series of
bilateral agreements, covers some but not all areas of trade, also makes a
financial contribution but smaller than Norway's, doesn't have a general duty
to apply EU laws but does have to implement some EU regulations to enable
trade, free movement applies.
- Switzerland has a free trade agreement with the EU and a number of agreements which give it access to the single market for most of its industries.
- But it does not have full access to the single market for its banking sector and other parts of the services sector, which together make up almost 80% of the UK economy.
- Its agreement also requires the free movement of people.
- The Swiss voted against joining the EEA in December 1992.
3. The Turkey model:
Customs union with the EU,
meaning no tariffs or quotas on industrial goods exported to EU countries, has
to apply EU's external tariff on goods imported from outside the EU.
- Turkey is not part of the EEA or the European Free Trade Association but does - like tiny Andorra and San Marino - have a customs union with the EU.
- This means it faces no tariffs (taxes or duties on imports and exports) or quotas on industrial goods it sends to EU countries.
- The customs union does not apply to agricultural goods, or services.
- Turkey also has no say on the tariffs it has to impose on goods it imports from non-EU countries, as it has to apply the EU's common external tariff to those goods (and is not involved in setting it).
4. The Canada option:
The
Comprehensive Economic and Trade Agreement (Ceta) between the EU and Canada is
not yet in force, although it has been in the making for seven years.
- It gives Canada preferential access to the EU single market without all the obligations that Norway and Switzerland face, eliminating most trade tariffs. However, some "sensitive" food items, including eggs and chicken, are not covered by it.
- The services sector is only partially covered by Ceta.
City states do not impose
import or export tariffs at all - a unilateral free trade approach.
Some advocates of Brexit have said the UK
should adopt a unilateral free trade policy - dropping all tariffs and relying
on the World Trade Organisation's framework
Conclusion :
If Britain chooses
to leave the EU but join the ant one of these models, it will be a
half-in-and-half-out arrangement, and the long-term impact on either side will
be minimal. Only if both sides fail to reach an agreement and extend the talks
at the end of the second year, the real Brexit will happen.
The U.K. will
then move towards the WTO rules under which it will have to pay tariffs for the
goods it sells to the EU countries.
