The Brexit Six-Pack – The Six Deals Britain Needs To Reach With The EU
In another example of how disingenuous the Leave campaign was in its promises to the British public, Charles Grant, director of the Centre for European Reform, has written a detailed account of the six deals the UK will need to strike to exit the EU.
In all but one, the balance of power lies with the EU, not Britain.
Concerns about the residency status of EU nationals may be playing heavily on the minds of many who are working, studying, self-employed or living self-sufficiently in the UK. But even if these rights are guaranteed, if favourable economic, trade, security and cultural conditions are not negotiated by Theresa May and her government once Article 50 is triggered, EU nationals may not be asking, “can I live in Britain?” but, “do I want to live in Britain?”
The six deals
Once Article 50 is triggered and the official Brexit process begins, there are six major negotiations that Britain must engage in to ensure the economy remains near its current level of growth and prosperity.
The divorce settlement
This is the agreement that it is on everyone’s minds, and the one that the Leave campaigners were happy to let voters believe would signal the end of all hardship and after 24 months we would be free as a bird to negotiate free trade deals (FTD) with the likes of America and China. And of course, by the end of the two years, we would have access to the single market and full control of our borders.
There are no more pigs to be seen in Britain, they are all flying above our heads.
The reality is that these negotiations will merely deal with dividing property, institutions, budget payments and the rights of EU nationals residing in Britain and British citizens residing in the 27 other EU member states. Mr Grant states that the two-year period will not be extended for two reasons:
- the 27 other member states want Brexit to occur before the 2019 European elections, and;
- Article 50 is inherently designed to be hard on the departing country, lest other nations try to follow suit.
Britain will be under pressure to strike a deal quickly, or else leave the EU without a protective legal framework.
Free trade agreements (FTA)
Once Britain leaves the EU officially (two-years after Article 50 is triggered), then it can start negotiating an FTA with the single market. Well, that’s the line the European Commission and Donald Tusk, the president of the European Council has taken. It is in the EU’s advantage to allow talks on an FTA to start as soon as Article 50 is triggered. Depending on the whether you use UK or EU data, the EU exports £290 billion or £360 billion respectively each year. Germany has the biggest trade deficit with the UK; it sold £27 billion more in goods and services to us in 2014 than we sold to it, according to UK data. Not surprising then that Angela Merkel is one of the strongest proponents for allowing the UK to begin FTA talks as soon as Article 50 is triggered.
However, any FTA deal will take far longer than the divorce settlement to negotiate, with most experts stating 10 years is a conservative estimate.
The interim FTA
Exporters and importers, (not to mention consumers) cannot wait 10 plus years for an FTA to be reached; therefore, an interim FTA will have to be negotiated. The idea of Britain becoming a temporary member of the EEA has been floated, but this may be rejected by other EEA countries such as Norway and Iceland, who would have to go to the trouble and expense of reconstructing their own treaties and institutions, and then change them back again once Britain went on its merry way. A paper for Open Europe outlines an idea that would see Brexit occur by 2018 and an interim agreement stay in place until 2024, which “would offer the time and space needed to more coolly and calmly negotiate a long-term agreement”. The paper proposes that free movement be restricted to those who have a job offer. Family members could only join EU nationals in the UK if the sponsor earned a certain level of income. Rather than contribute to the EU budget, Britain would make payments directly to poorer states.
The interim deal would require lengthy negotiations as there are many EU countries who do not want to grant Britain any favours for upsetting the apple cart (yes, I do mean France).
Full WTO membership
At present, the UK is a member of the WTO via the EU. Upon Brexit, it will have to negotiate its own membership. It would need to state its ‘schedules’ of tariffs, quotas, subsidies and other concessions to the WTO and all 163 other members would need to approve them. Again, this process will take far longer than the initial ‘divorce settlement’.
Trade with the rest of the world
The British government needs experienced, skilled trade negotiators and fast. There are 53 countries who currently have trade deals with the EU, and we will need to negotiate FTAs with them all independently at the end of the two-year settlement period. Most of the 53 nations have stated they are not interested in dealing with the UK until it is clear what our trade deal with Europe will be. And they are unlikely to be satisfied with any interim deal; they will want to know for certain what ‘rules of origin’ the EU will apply and how regulations on goods and services will be harmonised between the EU and the UK.
Britain will also need to be a full member of the WTO before most countries will consider an FTA.
Foreign policy and defence
In this area, Britain excels. It has exceptional intelligence, security and defence strategies and infrastructure. However, as Mr Grant points out, countries such as the Baltic states would not look too kindly on Britain if it tried to use its defence capabilities as a bargaining tool to secure a more favourable trade agreement.
Concluding points
To protect its economy, which is already wobbly, even though Article 50 has yet to be triggered, Britain needs to negotiate the above six deals swiftly. And to do this, concessions will have to be made.
Many concessions.
Something the Leave campaign failed to mention before 23rd June 2016.
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