One of the most frustrating aspects of the Brexit process has been the lack of clarity as to what exactly the UK government wants the relationship with the EU post-Brexit to look like. It has fallen to others to extrapolate a position from what the UK has indicated it doesn't want.
The table below (which owes a great deal to Michel Barnier's "red lines" graphic from December last year) lists what the UK's objectives are thought to be, and the extent that these objectives can be achieved within the existing structures (membership of the EU, the European Economic Area (EEA) or European Free Trade Association (EFTA), an association agreement or a separate customs union).
MEMBERSHIP OF THE EU
Of the UK's objectives, only one, customs free trade, is presently enjoyed by the UK as a member of the EU. All the others: freedom from the financial burden of contributing to the EU, control of immigration, submission to the European Court of Justice and EU regulation, and the ability to make independent trade deals with third party nations, are incompatible with membership.
Within the EU, goods can be moved freely across national borders without any customs duty being payable or any physical barriers (creating the "Single Market"), but goods from outside the EU have to clear customs and are subject to the Common External Tariff (CET). The CET applies to the import of goods across the external border of the EU, and applies to all EU members, but the rates of duty differ from one kind of import to another depending on what they are and where they come from. The UK Government insists that it wants the "most frictionless trade possible" with the remaining members of the EU, and cites advances in technology (as yet unidentified) as the means to achieve this. The EU has consistently contended that access to the Single Market is conditional upon acceptance of the four freedoms, and remains sceptical as to how frictionless trade can be achieved without membership of the Single Market.
MEMBERSHIP OF THE EEA
Often described as the "Norway option", the EEA actually comprises all the existing members of the EU plus Iceland and Lichtenstein as well as Norway. Its principal attraction is that membership confers equal rights and obligations within the Single Market on non-members, which would give the UK the "frictionless trade" it wishes. The quid pro quo, however, is that EEA countries must adopt EU legislation relating to the four freedoms - the free movement of goods, services, persons and capital, and the jurisdiction of the ECJ. As the former UK Foreign Secretary, Sir Malcolm Rifkind wrote recently "the requirement [to incorporate into UK law all future EU regulations without playing any role in the formulation of such laws] would be both humiliating and indefensible…and creates an impenetrable barrier to remaining in the Single Market."
MEMBERSHIP OF EFTA
EFTA is the intergovernmental organisation of Iceland, Liechtenstein, Norway and Switzerland. Switzerland is the only member of EFTA which is not in the EEA, so this option is known as the "Swiss Model". Switzerland's relations with the EU are governed by a patchwork of bilateral agreements which add up to access to (most of) the Single Market, but this was achieved only on condition of Switzerland's accepting free movement of people, which ironically was one of the reasons Switzerland rejected membership of the EEA. Switzerland also makes contributions into the EU budget, another UK "line in the sand". As a member of EFTA Switzerland is, however, free to negotiate free trade deals with other third party countries, one of the UK objectives.
AN EU/UK ASSOCIATION AGREEMENT
Association Agreements are entered into between the EU and a non-EU country to create a framework for cooperation between them. They typically provide for tariff-free access to some or all EU markets in exchange for political, economic, trade or human rights reform. The most recent Association Agreement was entered into with Ukraine, so this is often described as the "Ukraine model". Leaving aside the irony that Association Agreements are often entered into as a precursor to entry into the EU, rather than a means of exit from it, the main attraction for the UK of an Association Agreement with the EU is that it permits "deep and comprehensive" access to the Single Market without requiring freedom of movement. This is generally because
the EU is not ready to grant freedom of movement to the citizens of the counterparty nation, rather than vice versa, but it does at least provide a model for frictionless trade with control of immigration. What it would not do, however, is remove the UK from the jurisdiction of the ECJ or the need to accept EU regulation.
A CUSTOMS UNION
There has been much semantic debate in the UK about whether the country could cease to be a member of "the Customs Union" and instead have "a" customs union with the Customs Union. The model here is Turkey, which has a customs agreement with the EU (the Ankara Agreement). Turkey doesn't have to make contributions the EU budget and is not to subject to free movement of people. It does enjoy customs free trade. It is not subject to the jurisdiction of the ECJ or EU laws and regulations. However in practice for Turkish goods to enter the Single Market they must comply with the relevant EU regulations, and the Ankara Agreement contemplates the eventual alignment of Turkish law with the acquis communautaire. More importantly, Turkey has little or no freedom to develop trade policy with other countries; it is bound to open its markets to any country the EU enters into a free trade agreement with, but takes no role in the negotiation of that agreement and does not have the same immediate duty-free access to that country's market that EU members do. For that reason the Turkey model is not an acceptable one for the UK.
The Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada came into force in September last year. It removes duties on 98% of products traded between the EU and Canada, and permits both parties to enter into trade deals with other countries. Under CETA Canada is not subject to the jurisdiction of the ECJ and EU law is not directly enforceable but it does have to meet EU regulatory standards in relation to the goods it exports to the EU. It covers access to each side's public procurement processes, mutual recognition of professional qualifications and to a limited extent mobility of company employees. In these respects, CETA is a useful precedent for the UK's new relationship with the EU. But there are major issues on which CETA has no bearing, issues that have so far proved intractable in the negotiations, such as the border between Northern Ireland and the Republic, and the status of EU citizens in the UK and of UK citizens in the EU. Moreover it took seven years to negotiate and was twenty two years in the making. One can only wonder how long a so-called "Canada Plus Plus Plus" deal will take to conclude. The current twenty two month schedule seems ambitious.