What are the options for the UK’s trade relations with the EU?

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Cartoon by Danielle Haywood

In three months, on 23 June, the UK is to hold a referendum on whether Britain should remain in the European Union or not. The wording of the referendum question, as accepted by the Government and the Parliament, will be: “Should the United Kingdom remain a member of the European Union or leave the European Union?” (in Welsh: “A ddylai’r Deyrnas Unedig aros yn aelod o’r Undeb Ewropeaidd neu adael yr Undeb Ewropeaidd?”).

When making a choice, it is essential to consider its consequences

The debate is in full swing, leave and stay campaigners are bringing up various political and economical arguments. When making a choice, it is essential to consider its consequences and regardless of which side one takes in all of this, it is important to think about the aftermath of the referendum. In this context, one crucial question is: What options are there for the UK’s trading relations with the EU in the case of a Brexit? If Britain votes to leave the Union, a new trading relationship would have to be negotiated to allow British firms to sell goods and services to EU countries without being hit by excessive tariffs and other restrictions. Leave campaigners say Britain could negotiate an « amicable divorce« , but maintain strong trading links with EU nations.

Here are some possibilities Britain could consider:

  • The Norwegian model: by joining the European Economic Area, Britain would have access to the single market, with the exception of some financial services, but would be free from EU rules on agriculture, fisheries, justice and home affairs.
  • The Turkish model: A customs union could be established between Britain and the EU, allowing access to the free market in manufactured goods but not financial services.
  • The Swiss model: The UK could negotiate trade treaties sector-by-sector. Switzerland, as well as Norway, has to abide by many EU rules without any influence over how they are formed. It also has to pay to access the single market.
  • The Canadian model: the UK could negotiate a comprehensive Free Trade Agreement with the EU, similar to the Swiss model but with better access for financial services and more co-determination over how rules and standards are implemented. It would not have to accept the supremacy of EU law, the jurisdiction of the European Court of Justice, the free movement of people or the requirement to pay significant amounts into the EU budget.

Remain campaigners claim that an « amicable divorce » is a pipe dream. It is highly questionable if the other European nations would allow Britain a « pick and mix » approach to the Union’s rules, a Union “à la carte”. Also, negotiating a comprehensive free trade agreement could take years and with no guaranteed outcome, despite the already existing full regulatory compliance.

But it seems certain that the UK can’t go for a completely clean break with the EU: its exports would be subject to tariffs and since they would still have to meet EU production standards, British business would be less competitive.

Sarah KASCHUBAT

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