Insight
’Canada’, ‘Norway’ or something in between? by Charles Grant 26 January 2018
The UK and the EU will soon start talks on the outlines of their future economic partnership. Three questions matter. What will Britain ask for? How will the EU respond? And what will be the outcome? Michel Barnier, the European Commission’s chief negotiator, says that Britain must choose between ‘Canada’ (something like the EU-Canada free trade agreement, which provides for free trade in goods but covers only a few services), or ‘Norway’ (in the single market – but accepting EU rules, European Court of Justice jurisprudence, free movement and payments to the EU). He has also spoken of ‘Canada Plus’ as a possibility, without defining what that might mean. The UK has already said that it wants neither Canada nor Norway. It is preparing to propose a relationship based on a unique, bespoke model of regulatory alignment with the EU. British officials suggest that one of the approaches explored in a recent report from the Institute for Government is a fair guide to their government’s thinking. This approach divides economic activity into three baskets: • • •
Complete regulatory alignment. The UK would follow EU rules and accept that if it deviated it would face retaliation, in the form of restricted market access. In the areas covered by this basket, the UK would be almost in the single market. Rough regulatory alignment or ‘managed mutual recognition’. The EU and the UK would agree on common objectives and outcomes but choose their own rules for achieving them. If the UK deviated substantially, the EU would retaliate. In areas that are irrelevant to the single market, the UK would adopt its own rules.
Officials in Brussels and national capitals are starting to react to these not-yet-proposed ideas. The Germans, the French and the Commission are hostile. Their objections include: 1. The UK is asking to ‘cherry-pick’. It would be in the single market in areas that suited it (such as chemicals, financial services or aviation) and outside in the areas that did not. This would lead to an unbalanced deal that benefited the UK more than the EU. Cherry-picking grates against the EU CER INSIGHT: ‘CANADA’, ‘NORWAY’ OR SOMETHING IN BETWEEN? 26 January 2018
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