The EEA option for Brexit: a stepping stone in choppy waters
As a committed advocate of our withdrawal from the European Union I was well aware of the uncertainty that would be created and the inherent complications and risks involved. In fact I have been warning about them for a long time. Despite this, I still voted to leave and have not regretted it for a moment; that’s what makes me just as committed as any of the people who now accuse me of being a ‘closet Remainer’.
There is no escaping reality; leaving the EU is a monumental task and we are going to have to be prepared to compromise. We must leave the same way we came in; gradually, in stages. The benefits of our newfound independence, for amusement’s sake let’s call them the “sunlit uplands”, are some way off over the horizon, first an orderly withdrawal is crucial.
The problems we face are numerous. Our civil service is ill prepared and the Department for International Trade and the Department for Exiting the EU are far from being functioning government departments ready to pursue their central purpose. We are preparing to embark on hugely important negotiations with no negotiating team and without a clearly stated idea of what we want to achieve. Looming over this is the economic damage caused by the uncertainty of our future trading relationship.
This is why it is crucial that we adopt an existing model as a political and legal framework to simplify Article 50 negotiations and allow for a carefully managed exit. The EEA option, which entails remaining in the Single Market via the EEA Agreement, is the optimal transitional arrangement which give us a “soft landing” and acts as a stepping stone in choppy waters.
The Leavers who oppose an EEA based solution assert that we’d be better off either leaving without a trade settlement or leaving the Single Market and negotiating a bespoke Free Trade Agreement instead. Unfortunately, their understanding of the Single Market and its current importance to us is lacking, and they oversimplify the process of concluding an FTA. This is when reality bites hard.
I’m quite sure we could negotiate a basic preferential trade agreement with the EU to deal with the issue of tariffs, but the Single Market is not just a tariff-free zone. It facilitates free trade because it is an area of harmonised regulation and mutually recognised standards and qualifications. These common rules allow for the elimination of customs barriers.
If we leave the Single Market without an agreement that deals with the multitude of technical barriers to trade, then we face major disruptions and certain recession. Our exports will become subject to checks and delays. Is the solution therefore to embark upon negotiations for a brand new free trade agreement?
The simple answer is no. It is extremely unlikely that a bespoke bilateral agreement under the aegis of Article 50 could be concluded in the two-year deadline. Unanimity is required to extend the negotiations which, considering the commercial interests at stake, is possible, even likely; but it isn’t certain and our trade relationship remains very uncertain in the meantime. Ten years to negotiate is the figure bandied around, though five years is potentially realistic. Trade agreements are incredibly complex treaties running to thousands of pages long and for the EU prolonged negotiations are the norm.
Work on the EU-Canadian Comprehensive Economic and Trade Agreement (CETA) – the model that David Davis has previously advocated – started in June 2007 and not until October 2013 were the crucial elements agreed upon. Now, nine years after negotiations begun, the agreement still hasn’t been concluded and ratified.
The Colombia-Peru deal was launched in June 2007 and provisionally applied in the first trimester of 2013, taking nearly five years. The current round of EU-Swiss talks started in 1994 and took 16 years to conclude. The process of the EU-South Korea took almost 18 years, with the official negotiations taking 5 years. The Mexico-EU FTA: preliminary talks started in 1995 and finished on 24 November 1999, the agreement coming into force on 1 July 2000, taking nearly five years to complete.
We must dispense with the misguided notion that a free trade agreement is a simple solution. Moreover, as us Brexiteers pointed out throughout the referendum campaign; our EU membership is about far more than trade. Brexit is about untangling ourselves from forty years of political integration and to imagine that it can be done easily and quickly is risible.
It will be frankly impossible to unravel the vast bundle of highly complex budgetary, legal, financial, commercial and political obligations and liabilities all at once. We just don’t have the capacity.
This is why a phased exit is essential and inevitable. There are so many potential points of negotiation that we will need to defer many of the substantive issues for further talks after we’ve left the EU. We must pursue an EEA-based market solution to secure business and trade continuity as part of our exit settlement.
Despite the protestations of uncompromising Leavers, numerous polls show support for a market-based relationship with the EU. This is not “association membership”; moving into the EEA means leaving political and judicial union and ending our EU membership. Full stop.
It represents vast repatriation of policymaking power with everything from trade to fishing, agriculture, energy, environment, transport, telecommunications and even foreign policy requiring us to rebuild independent policies. This is a huge rebuilding project and, frankly, it’s more than enough to be getting on with.
Yes, we still need to follow the rules of the marketplace meaning we have to comply with EEA-relevant EU law, but it is false to assert that we’d have “no say” in the process. Within the structure of EFTA (which hosts the EEA agreement) there is a range of consultative bodies, including the EEA Council, three joint committees and over 30 working groups. Crucially, whereas the UK is currently bound by Treaty to represent the EU common position in the international bodies and conferences from which the substance of so much EU regulation now originates, we will have a seat at the top tables, we will represent ourselves, and we will be free to form ad-hoc alliances to pursue shared goals and protect our interests.
Of the limited options in front of us; this is by far the best. The Brexiteer vision of an independent, self-governing, globally trading nation can be achieved, but the EEA option is a critical stage in our evolution. We can make a success of Brexit and to do so the first goal must be a de-risked, economically secure secession. This will give us a soft landing and a strong platform to build on.
Ben Kelly (@TheScepticIsle) is the Online Director at Conservatives for Liberty.