Britain’s exit from the EU will be far more complicated than most British politicians realiseby Charles Grant / July 28, 2016 / Leave a comment
Negotiations and more negotiations, year after year. That will be the main business of Theresa May’s government for the foreseeable future. Britain’s exit from the EU will require at least six interlocking sets of negotiations, and they will take much longer and be far more complicated than most British politicians realise. One negotiation will cover Britain’s exit from the EU, the second a free trade agreement (FTA) on future economic ties, the third interim cover for the British economy before the FTA enters into force, the fourth accession to the World Trade Organisation (WTO), the fifth a set of deals to replace the 53 FTAs that bind the EU and other countries, and the sixth an agreement on co-operation in foreign, defence and security policies.
The first deal will tackle the UK’s separation from the EU, as prescribed by Article 50. This “divorce settlement” will divide up the properties, institutions and pension rights, deal with budget payments, and decide on the rights of UK citizens in the EU and vice versa. Article 50 sets out a two year period for this negotiation, extendable by unanimity. However, the other 27 want Britain out before the June 2019 European elections and the imminent cycle of EU budget talks so will not extend the deadline.
The second deal will cover future economic ties with the EU. Theresa May will reject the “Norwegian model,” although it would offer access to the single market, since the price—payments into the EU budget and free movement of labour—would be unacceptable. She will go for a free trade agreement, along the lines of the recent EU-Canada deal. The FTA may eliminate tariffs on manufactured goods but is unlikely to scrap many non-tariff barriers. Britain would gain only limited access to the single market for services. UK-based financial firms would lose the “passporting” that enables them to do business across the EU, while other service industries—such as shipping, airlines and the law— would also suffer.