The UK is currently a member of the EEA by virtue of being in the EU, together with Norway and two other countries. Being in the EEA but not the EU is often called the 'Norway option'. But even the Norwegian government has said it would not suit the UK, not least because the UK would no longer have any direct influence on the rules of the market under which it would trade.
Lack of influence over trading rules would also be the case if the UK were to walk out of the EU negotiations. The EU is our largest trading partner, and due to its geographical proximity is likely to remain so, whatever deals are struck with other countries. Complex supply chains exist between UK and the other 27 EU countries (EU27), and would be disrupted by leaving the Single Market..
That disruption risks a potentially massive negative effect on the economy. A financial hit for the UK is what is being forecast by key forecasting institutions, such as the Bank of England, as well as being reflected in the substantial devaluation of the Pound since the referendum.
Frankly leaving the Single Market would be rather foolish. Indeed everal prominent VoteLeave campaigners before the referendum last year were saying the UK would not be leaving the Single Market. That influence may have been enough to trip the vote just over the 50% threshold to be 52% to Leave the EU. It is certainly not clear that the referendum can be taken as support for a 'hard Brexit' that involves leaving the Single Market, as Brexiters suggest.
POSITION OF POLITICAL PARTIES
- The Conservatives, in power, state in their 2017 manifesto on page 37 "As we leave the European Union, we will no longer be members of the single market or the customs union. but we shall seek a deep and special partnership, including a comprehensive free trade and customs agreement." and on page 36 "to negotiate the best possible deal" for the UK
- The Labour 2017 manifesto says on page 24 to set up "... negotiating priorities that have a strong emphasis on retaining the benefits of the Single Market and the Customs Union" and on page 14 "...by negotiating a new deal with Europe that puts jobs and the economy first"
- The LibDems 'Europe' webpage says policy is to "Keep the UK in the single market and customs union" as "We passionately believe that Britain is better off in the EU. We will fight against the Conservatives disastrous hard Brexit" but "We acknowledge the result of the 2016 referendum, which gave the government a mandate to start negotiations to leave" There is no mention of being 'pro-EU' and these key statements fall short of that position.
- The Greens webpage says "Ahead of the 2016 referendum, the Green Party campaigned to Remain in the EU... we’ll be pushing back on the Government’s plans for an extreme Brexit.....We will also be calling for a vote on the terms of the deal, as we believe that the EU referendum of 2016 should be seen as the start of a democratic process, not the end of it.".
- The Just Party policies on Europe are:
- Anti-Brexit but not pro-EU, being somewhat EU-sceptic
- The UK should remain in the Single Market and Customs Union
- The UK can otherwise leave the EU, in not having MEPs, provided the UK has equivalent influence in the Single Market to what it does currently
- If not, then the UK should Remain in the EU
- In any case support Freedom of Movement of People (FOM). It benefits the UK, but also means freedom for Brits around the EU. The EU have set this as a 'red line', being adamant that FOM is a must for any free trade deal, given our geographical proximity.
- The referendum was only a 'starting gun' to commence negotiations to Leave, to be followed by keeping progress under review on a democratic basis
RECENT UK/EU NEGOTIATIONS
The EU negotiators have recently let it be known that in seeking the "best possible deal" the UK negotiators have not set out clear objectives on major issues.
In particular progress has also stalled on the three key issues in phase one of the negotiations. There must be significant progress by the time that the heads of the EU27 meet in October on:
- Irish Border
- Rights of EU27 citizens in UK and Brits in EU27 countries
- Settlement of 'divorce bill' on which the Conservative manifesto says on page 37 "...in accordance with the law and in the spirit of the UK's continuing partnership with the EU."
Clear negotiation objectives are required that address the Single Market, Customs Union and these three key issues.
YouGov have carried out regular polls since the Referendum repeating the same question. Still the country is split down the middle, with 45% Leave, 45% Remain and 10% Don't Know.
There have also been two other key polls in recent days:
- YouGov has shown that whilst some people are prepared to be poorer as a result of Brexit, the vast majority do not.
- Crucially a ComRes poll for the BBC has shown that people prefer access to the Single Market for free trade, which we should assume involves FOM of poeple, over restricting FOM by a ratio of over 2:1
- Want the economy to thrive, or at least not drop, by staying in the Single Market
- Are otherwise somewhat sceptical about staying in the EU. Many Leavers and Remainers alike do not want the UK to be sucked into a United States of Europe and have to adopt the Euro in place of the Pound sterling, where the UK's interest rates are not controlled from London
THE PROPOSAL - 'HALF BREXIT'
In order for the UK to comply with current opinion, and for the UK to have clear objectives for the negotiations, then it is:
- For the UK to Remain in the Single Market, provided it is enhanced beyond the current terms of the European Economic Area (EEA) as below, and
- To otherwise Leave the EU so the UK is not sucked into the United States of Europe and have to adopt the Euro. The UK would no longer have MEPs.
This would mean creating a two-tier Europe where:
- There is the core European Union, with most if not all countries using the Euro currency
- An additional group of countries which have their own currencies and for one reason or another do not want to be in the core EU
- The UK (and other participants) need to have as much say in trading rules as the UK has currently in being members of the EU.
- Any other arrangements not currently covered by the EEA need to be carried over into it, such as for financial services.
It is anticipated that:
- The UK would make budgetary contributions to be a member of the Single Market, much like Norway does currently, but these could be below current levels
- The Schengen open-borders area will continue unaltered
- Switzerland's trading relationship with the EU would continue as is, but wth the option of joining the EEAplus
- Turkey would remain in its own customs union with the EU
- Members of the EEAplus outside the EU would have the option of joining (or re-joining) the EU on the then current terms
BENEFITS OF THE 'HALF-BREXIT' PROPOSAL
Firstly it should be noted that the proposal conforms with the core EU principle of Freedom of Movement of People.
As a result, together with making ongoing budgetary contributions, all three key negotiation issues would be resolved:
- Irish Border which would continue to be open as at present
- Rights of EU27 citizens in UK and Brits in EU27 countries
- Settlement of 'divorce bill'
- The trading relationship with Europe would remain unaltered, so no risk of a negative economic impact from Brexit
- The proposal broadly fulfils the objectives of each political party, even perhaps the new deal sought by the ruling Conservatives
- The majority of the UK electorate should support the move, probably between 60% and 80%. The only people disappointed would be hard Brexiters, who want to be completely independent of Europe, and those strongly pro-EU.
- An 'EEAplus' provides an exit route for any country wanting to leave the EU but remain in a trading relationship. That might include Greece, which currently is in the euro, and Sweden, which like the UK still has its own currency
- The European Court of Justice (ECJ), which oversees EU matters and is such a hot issue for many, would be replaced for most purposes by the Courts of the EEA. There has to be some way of enforcing the rules of the Single Market.
- The UK would retain the right to rejoin the EU, though that would probably require adopting the Euro (which is another reason not to leave completely now and potentially rejoin later)
WHAT WOULD BE THE EU'S VIEW?
As noted above, the proposal fits the right side of the EU's 'red line' on Freedom of Movement of People, which is the least shakeable of the EU's principles.
The EU has also said categorically:
- The UK cannot 'cherry-pick' what it wants and does not.
- A country that leaves the EU can't have right and benefits equivalent to ongoing members. That would risk the break-up of the EU as other countries left. They are prepared to sacrifice current trade and jobs to protect the EU27
Why might the EU compromise? Two reasons:
- The EU sells a lot to the UK, such as cars from Germany, foods from France and produce from Holland. Up to 3 million jobs in the EU27 are at risk.
- The UK is a major budget contributor
Nonetheless, the possibility of other countries following the UK out of the EU would be of concern to the EU. In reality there's no more than a handful of countries that would wish to Leave, and so there would still be 20-25 countries prepared to move forward to closer political integration. The European political integration project could continue, perhaps even strengthened.
- The EU is likely to be willing to agree a deal for the UK based on 'Half Brexit' and an 'EEAplus', which includes FOM.
- Whereas the EU is highly unlikely to agree to a deal for the UK that retains key benefits of the EU, but without FOM, and whilst being completely outside the European organisations..
THE WAY FORWARD
The 'Half Brexit' proposal is, in summary:
- The UK joins an upgraded EEAplus
- It otherwise leaves the EU, including no need for MEPs
- But retains collaboration in key pan-European initiatives that do not need the UK to be EU members and have MEPs
The LibDems suggest a second referendum at the end of the negotiations in early 2019. That prolongs the uncertainty for businesses, and provides no time for systems and processes to be upgraded should change be required.
Adoption of the Half-Brexit proposal as the agreed negotiation platform of both sides needs to be established ideally by the EU27 meeting in October 2017. Perhaps a second referendum no later than next Spring 2018 is needed to ratify the change in approach.
For that timescale to be achieved, several actions need to take place in parallel immediately:
- The EU needs to be sounded out, outside of the formal negotiations, as to the level of support for the proposal.
- Support is needed from the public, including gathering opinion from suitable polls
- Support needs to be garnered in Parliament, The natural starting point.is the new cross-party APPG which includes in its objectives "to secure the closest possible working relationship with the EU and its 27 member states". An official supporter is Open Britain which wants to remain in the Single Market. Many MPs in the group have stated that same view, which is consistent with the 'Half-Brexit' proposal
Should there not be adequate support for the 'Half-Brexit', then the only acceptable alternative is to Stop or Halt Brexit. Indeed "#Halfbrexit or #HaltBrexit"
MPs who support remaining in the Single Market, and who would back the Half-Brexit proposal or halting Brexit, will need to rebel against their party whips. There are also enormous pressures to split the Labour party between Corbyn supports and moderates, and in the Conservatives between moderates and the right-wing. A new centrist anti-Brexit political party would solve all these issues.
The Half-Brexit concept or halting Brexit may not require the creation of a new political party. However, a new party may well be required, and that takes 6-8 weeks at least to set up and get through the registration process. The Just Party is already registered with the Electoral Commission, ready to particupate in any elections. It is standing by to help MPs who are prepared to defect from their existing parties to create a new centrist anti-Brexit party should they wish to do so.
What are your thoughts on the 'Half-Brexit' proposal? If a good starting point, how would it need to be tweaked?