tag:theconversation.com,2011:/ca/topics/eu-customs-union-42601/articlesEU customs union – The Conversation2019-04-10T10:05:40Ztag:theconversation.com,2011:article/1149322019-04-10T10:05:40Z2019-04-10T10:05:40ZFive options for Brexit trade explained<figure><img src="https://images.theconversation.com/files/268550/original/file-20190410-2912-ja387r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The British prime minister’s request for another Brexit delay results from the intensity of diverging positions in the British parliament over Brexit. After a series of <a href="https://theconversation.com/brexit-q-a-what-are-indicative-votes-and-how-do-they-work-114229">indicative votes</a>, where no Brexit plan received majority support, we can sum up the five options as: Theresa May’s withdrawal agreement, a no-deal Brexit, staying in the customs union, staying in the single market, and the so-called Common Market 2.0 idea. </p>
<p>Here’s a break down of what those options mean.</p>
<h2>1. Theresa May’s withdrawal agreement</h2>
<p><strong>Strike your own trade deals? Yes.</strong></p>
<p><strong>Freedom of movement? No.</strong></p>
<p><strong>EU budget contributions? Yes.</strong></p>
<p><strong>Does it solve the Irish border issue? Yes.</strong></p>
<p>May’s withdrawal agreement is unpopular in the UK but has been approved by the EU. As it stands, things would remain the same for the time being, until a trade deal is organised. It avoids the need for an Irish border until then, as the UK and EU would form a customs union. In the meantime, the UK and EU would negotiate their future relationship. The broad shape of this is set out in a non-binding <a href="https://theconversation.com/brexit-political-declaration-what-it-means-for-the-future-uk-eu-relationship-107256">political declaration</a>, which suggests the future relationship will be a comprehensive trade agreement. </p>
<p>In this scenario, the UK would not be bound by EU freedom of movement requirements – a <a href="https://www.ft.com/content/49dc02dc-c637-11e7-a1d2-6786f39ef675">fundamental principle of the EU single market</a> that allows goods, money, services and people to move freely within the bloc. The UK would also be able to sign free trade agreements with others, as Brexiteer MPs demand. The UK would make contributions to the EU budget to participate in selected programmes of interest. </p>
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<img alt="" src="https://images.theconversation.com/files/268552/original/file-20190410-2909-46kdoq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/268552/original/file-20190410-2909-46kdoq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/268552/original/file-20190410-2909-46kdoq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/268552/original/file-20190410-2909-46kdoq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/268552/original/file-20190410-2909-46kdoq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/268552/original/file-20190410-2909-46kdoq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/268552/original/file-20190410-2909-46kdoq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">May’s withdrawal agreement has been rejected three times by parliament.</span>
<span class="attribution"><span class="source">Alexandros Michailidis / Shutterstock.com</span></span>
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<p>However, the withdrawal agreement specifies that if no satisfactory technological and regulatory solution is agreed for the Irish border to avoid a return of a hard border in Northern Ireland and respect the Good Friday Agreement, the UK would retain regulatory alignment with the EU. The <a href="https://theconversation.com/brexit-why-is-the-irish-border-backstop-so-crucial-to-securing-a-brexit-deal-113398">infamous Irish backstop</a> is an insurance mechanism and would cease to exist as soon as adequate alternative mechanisms are viable to operate customs checks without a physical border. </p>
<p>The prime minister’s deal places the UK on a path to a future trade agreement with the EU, the extent of which is, at present, uncertain. But whatever form it takes it will represent less access to the EU’s single market, especially for services, than at present, and some form of increased transaction costs for businesses. Remaining in a customs union or in the single market would avoid some of these, while allowing the UK to exit the formal political institutions of the EU. Yet, both options have pitfalls. </p>
<h2>2. Customs union</h2>
<p><strong>Strike your own trade deals? No.</strong></p>
<p><strong>Freedom of movement? No.</strong></p>
<p><strong>EU budget contributions? Yes, but limited.</strong></p>
<p><strong>Does it solve the Irish border issue? Yes.</strong></p>
<p>Remaining in a customs union would resolve the Irish border matter, and would meet May’s red line regarding ending the free movement of people. But it would commit the UK to applying the same external tariffs and restrictions on goods as the EU, and to adopt the same <a href="https://www.wto.org/english/tratop_e/roi_e/roi_info_e.htm">rules of origin</a> for goods, as well as regulations in areas related to the customs union. </p>
<p>This would curtail the UK’s ability to negotiate independent, preferential trade agreements as it would have no leeway to alter EU tariffs. The flip side is that the UK would have preferential access to any country that has negotiated a trade agreement with the EU. Crucially, this would apply to goods, but not, in the absence of an agreement on services, secure access to the EU market for UK services sectors. Contributions to the EU budget would be limited to participation in specific programmes the UK may be interested in.</p>
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<img alt="" src="https://images.theconversation.com/files/268551/original/file-20190410-2909-mvsd9s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/268551/original/file-20190410-2909-mvsd9s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/268551/original/file-20190410-2909-mvsd9s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/268551/original/file-20190410-2909-mvsd9s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/268551/original/file-20190410-2909-mvsd9s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/268551/original/file-20190410-2909-mvsd9s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/268551/original/file-20190410-2909-mvsd9s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Irish border is a sticking point in Brexit negotiations.</span>
<span class="attribution"><span class="source">Kevin J. Frost / Shutterstock.com</span></span>
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<h2>3. Single market</h2>
<p><strong>Strike your own trade deals? Yes (although there would be some constraints on their content).</strong></p>
<p><strong>Freedom of movement? Yes.</strong></p>
<p><strong>EU budget contributions? Yes.</strong></p>
<p><strong>Does it solve the Irish border issue? No. Some checks may be necessary.</strong></p>
<p>Membership of the single market would improve the prospects for the UK’s services sector. But it implies accepting the four freedoms of movement that form its basis – including movement of people. It will also entail budgetary payments to support participation in the single market’s programmes. European Free Trade Association (EFTA) states are members of the single market through the European Economic Area (EEA) with the EU, but can strike their own preferential trade agreements, so the UK would too. </p>
<p>Single market membership reduces the need for certain checks at the Irish border, but if there are different tariffs in place on each side of the border, some form of checks could be required. It could be that some technological customs is viable that eliminates the need for checks at the border and minimises business disruption, however, there will be more transactional costs than at present.</p>
<h2>4. Common Market 2.0</h2>
<p><strong>Strike your own trade deals? No.</strong></p>
<p><strong>Freedom of movement? Yes.</strong></p>
<p><strong>EU budget contributions? Yes.</strong></p>
<p><strong>Does it solve the Irish border issue? Yes.</strong></p>
<p>A cross-party panel of MPs presented a compromise solution, dubbed <a href="https://theconversation.com/brexit-with-brie-common-market-2-0-proposal-explained-through-the-import-and-export-of-cheese-114330">“Common Market 2.0” proposal</a>, aimed at combining some of the benefits of the customs union and single market options. Common Market 2.0 involves accepting the current withdrawal agreement but renegotiating the political declaration, committing the UK to join the European Free Trade Association (EFTA). </p>
<p>EFTA states, as part of the EEA, respect the four freedoms of movement of the internal market, including people. They also make contributions to the EU budget to the programmes and agencies they participate in, and towards reducing economic inequality amongst EEA states through EEA grants. This is the relationship Norway has with the EU.</p>
<p>Where the Common Market 2.0 proposal differs from Norway’s relationship (which is why it’s also called the Norway+ model) is that it commits the UK to entering a special customs arrangement with the EU. It is unclear if this would be a customs union, which would curtail the UK’s ability to negotiate preferential trade deals, or something else. This presently does not exist between EFTA and the EU, has not been agreed by Europe yet and is not guaranteed to happen.</p>
<h2>5. No-deal Brexit</h2>
<p><strong>Strike your own trade deals? Yes.</strong></p>
<p><strong>Freedom of movement? No.</strong></p>
<p><strong>EU budget contributions? No.</strong></p>
<p><strong>Does it solve the Irish border issue? No.</strong></p>
<p>If no agreement is reached, the default position is a no-deal Brexit. Outside the EU, the UK would no longer need to abide by EU freedom of movement requirements, nor would it have to contribute to the EU’s budget. The UK would be able to negotiate preferential trade agreements, no longer bound by EU tariffs and rules.</p>
<p>Negotiating trade agreements is a lengthy process and the UK will find it hard to negotiate better deals than the EU gets. Plus, the EU is the UK’s biggest trade partner and it would immediately face a number of trade barriers if it defaults to WTO rules.</p>
<p>This would be <a href="https://theconversation.com/no-deal-seven-reasons-why-a-wto-only-brexit-would-be-bad-for-britain-102009">highly disruptive to businesses</a> in the UK and EU, and entail serious economic consequences for both sides. And, in order to ensure that the appropriate tariffs are applied at the borders in a relationship governed by WTO terms some form of border control would be required between Northern Ireland and the Republic of Ireland. This would be necessary to guarantee the integrity of the single market and avoid Ireland becoming a back door for third party goods.</p><img src="https://counter.theconversation.com/content/114932/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Maria Garcia has received funding from the ESRC and EU in the past. She is affiliated with UACES (the academic association for contemporary European studies).</span></em></p>These are the five options for Brexit: Theresa May’s withdrawal agreement, staying in the customs union, staying in the single market, the so-called Common Market 2.0 idea or a no-deal Brexit.Maria Garcia, Senior Lecturer in International Relations, University of BathLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1072972018-11-20T15:17:04Z2018-11-20T15:17:04ZHow a ‘Ukraine-plus’ Brexit deal could solve Theresa May’s problems<figure><img src="https://images.theconversation.com/files/246474/original/file-20181120-161615-vbdnpi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/flags-ukraine-european-union-eu-against-662909407?src=fflhK_7AqU5JpWL5eftTAA-1-8">Shutterstock</a></span></figcaption></figure><p>For all the debate, uproar and resignations over the draft <a href="https://theconversation.com/brexit-draft-withdrawal-agreement-experts-react-107027">Withdrawal Agreement</a> between the UK and EU, it’s worth remembering that the future EU-UK trade deal has not yet been decided. This will only be negotiated in detail after the UK leaves the EU on March 29 2019. What it will look like is very much still up for discussion and Theresa May could yet keep the promises she made in her <a href="https://theconversation.com/experts-read-the-brexit-white-paper-so-you-dont-have-to-72386">Brexit white paper</a> back in February 2017. This includes leaving the single market and customs union, signing a trade deal that ends free movement of people and remove the UK from the European Court of Justice’s jurisdiction.</p>
<p>Ever since Brexit was on the cards, comparisons have been made between the UK and a number of countries that have a close working relationship with the EU. Norway, Switzerland, Canada or a hard, WTO rules-only Brexit have been the options most <a href="https://theconversation.com/four-options-for-uk-trade-after-brexit-62363">commonly put forward for the UK to follow</a>. But there is one option that has largely been absent from discussion: Ukraine. </p>
<p>A country that conjures images of its <a href="https://theconversation.com/ukraine-is-still-on-the-edge-despite-all-efforts-to-stabilise-it-92004">ongoing conflict with Russia</a>, Ukraine might not sound like somewhere that the UK wants to copy. Yet the style of Ukraine’s relationship with the EU is one that aligns with the prime minister’s objectives, as outlined in her white paper. While many of these did not make their way into the Withdrawal Agreement, they could still form part of the future trade agreement that the UK is yet to work out with the EU. </p>
<p>According to <a href="https://link.springer.com/article/10.1057/s41267-018-0189-x">our research</a>, a Ukraine-plus agreement is feasible and could achieve:<br>
* An end to EU law applying in the UK<br>
* No free movement of people<br>
* Access to the EU single market<br>
* The ability to make its own trade agreements with third countries<br>
* Collaboration with the EU on security and defence policy</p>
<h2>Ukraine’s deal</h2>
<p>Ukraine, like Canada, has a deep and comprehensive <a href="http://ec.europa.eu/trade/policy/countries-and-regions/countries/ukraine/index_en.htm">free trade agreement with the EU</a> (DCFTA). This gives it preferential access to the EU’s 500m strong consumer market. The Ukraine-EU agreement eliminates more than 98% of trade duties for both parties. </p>
<p>The DCFTA is complemented by a process of legal adjustments in the number of laws that regulate financial services, telecommunications services, postal and courier services, and international maritime services. If the UK had something similar, this would smooth over the key barrier to trade for Britain’s all-important service sector. </p>
<p>The provision on free movement of capital in the DCFTA also includes standard safeguards to ensure the stability of both side’s financial systems. Moreover, dispute settlement and mediation mechanisms are in place and a panel can make recommendations to the Association Council, a body created to govern EU-Ukraine affairs, in case of dispute or any further proposals for cooperation. Plus, the EU supports Ukraine through a financial and technical assistance programme that helps small and medium-sized enterprises (SMEs) in particular. </p>
<p>There is visa-free travel between Ukraine and most EU member states but no right of free movement of people, which limits migration from Ukrainian citizens. They are allowed to travel for up to 90 days in a 180-day period for tourism, business purposes and to visit friends and relatives. Something similar would help the UK to achieve one of its main objectives of “controlling its borders”.</p>
<p>A Ukraine-plus agreement for the UK could also have security elements, as well as maintaining cross-border crime and terrorist collaboration. The EU-Ukraine agreement provides defence, military and political stability considerations that can provide a good example for a EU-UK agreement. The UK’s strength in <a href="https://www.instituteforgovernment.org.uk/explainers/uk%E2%80%93eu-defence-and-security-cooperation">security and defence</a> are both features the EU will want to keep close links to. Maintaining political stability on the island of Ireland will, of course, need special considerations in the case of a UK-EU agreement.</p>
<p>The DCFTA is much more than a classic free trade agreement. It opens markets through the progressive removal of customs duties and restrictions on services and public procurement. It also ensures fair competition between EU and Ukrainian firms by safeguarding workers’ rights and environmental standards, as well as respecting intellectual property rights and competition law. </p>
<p>When it comes to laws, the DCFTA lays the groundwork for the gradual alignment of Ukrainian norms and standards on food safety and technical regulations with the EU. Seeing as the UK is already aligned on these but wants to reduce EU influence over its laws, this can likely be open for negotiations in a Ukraine-plus deal.</p>
<p>A Ukraine-plus arrangement could therefore be the deal that May is looking for – no European Court of Justice oversight, a trade deal that does not include free movement of people, room for third country agreements and security and defence collaborations. This could achieve most of May’s white paper objectives and appeal to the different factions in her party.</p><img src="https://counter.theconversation.com/content/107297/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ukraine shows how it’s possible to have single market access, while maintaining control of your borders and staying out of the European Court of Justice.Ursula F Ott, Professor of International Business, Nottingham Trent UniversityPervez N Ghauri, Professor of International Business, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1000982018-07-18T14:01:55Z2018-07-18T14:01:55ZWhere the UK’s Brexit plan (and Customs Bill) leave Northern Ireland<p>The status of the Irish border after Brexit is the most complicated and contested part of the UK’s withdrawal from the EU. The UK government insists the issue can only be addressed in the formulation of a new UK-EU relationship. To this end, its most recent <a href="https://www.gov.uk/government/publications/the-future-relationship-between-the-united-kingdom-and-the-european-union">white paper</a>, published on July 12, envisages a future deal in which there are no checks and controls at any UK-EU border.</p>
<p>Meanwhile, in Brussels, the text of primary concern remains the draft <a href="https://ec.europa.eu/commission/sites/beta-political/files/draft_agreement_coloured.pdf">Withdrawal Agreement</a>. It contains a separate protocol on Northern Ireland and Ireland which includes the EU’s own proposal for avoiding checks at the Irish border. Under this so-called “<a href="http://qpol.qub.ac.uk/uk-withdrawal-backstop-ni-key-slides/">backstop</a>”, Northern Ireland would effectively remain part of the EU’s customs union and single market for goods – implying potential checks and controls at sea and air ports on the movement of goods between Northern Ireland and the rest of the UK.</p>
<p>This backstop is the EU’s (and, with it, Ireland’s) “insurance policy” – only to kick-in if the future trade deal is insufficient to avoid border checks and controls between the UK and EU.</p>
<h2>The Customs Bill amendments</h2>
<p>The amendments made to the <a href="https://services.parliament.uk/bills/2017-19/taxationcrossbordertrade.html">Taxation (Cross-Border Trade) Bill</a> (more commonly known as the Customs Bill) in the House of Commons on July 16 have direct bearing on this backstop. One, in particular, came by way of a pro-Brexit alliance between rebel MPs from across the house, including the Democratic Unionist Party from Northern Ireland. </p>
<p><a href="https://hansard.parliament.uk/Commons/2018-07-16/debates/B3ED8272-3DF1-464E-8ABA-701A376E6A2C/Taxation(Cross-BorderTrade)Bill">Clause 37</a> makes it unlawful for Northern Ireland to be part of any customs territory outside that of the UK. It is obviously intended to cut dead any prospect of a customs border “in the Irish Sea”, and thus to slay the EU’s backstop proposal. </p>
<p>The nodding-through of this clause in Westminster belies the colossal political and economic repercussions of Brexit for the place it most affects. News of the amendment was met with <a href="https://www.bbc.co.uk/news/uk-northern-ireland-44857742">vocal expressions</a> of despair and frustration from several quarters in Northern Ireland. The Brexit rollercoaster has been made even more nerve-racking in Northern Ireland by a sense of democratic deficit, given the absence of a functioning Assembly and Executive and the <a href="https://theconversation.com/fighting-an-election-only-to-refuse-a-seat-sinn-fein-and-westminster-abstention-76963">policy of abstention</a> observed by Sinn Féin MPs.</p>
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<p>Nervousness centres on <a href="https://www.irishtimes.com/news/ireland/irish-news/cast-iron-backstop-guarantee-needed-following-brexit-bill-amendments-sf-1.3567930">concerns</a> that the amended Customs Bill could scupper any prospect of a backstop in the protocol, and with it, the likelihood of finalising the Withdrawal Agreement itself. </p>
<p>And where does this leave the UK’s <a href="https://theconversation.com/britains-brexit-plan-revealed-experts-react-99862#comment_1667526">Brexit plan</a>? Well, the white paper was always intended to make the EU’s backstop unnecessary. As it states: “The operational legal text the UK will agree with the EU on the ‘backstop’ solution as part of the Withdrawal Agreement will not have to be used.” How does it propose to achieve this?</p>
<h2>The Irish dimension</h2>
<p>First, the white paper proffers a UK-wide version of the EU’s backstop for Northern Ireland, effective membership of the single market for goods. To the <a href="https://www.thetimes.co.uk/article/theresa-may-warns-of-harsh-penalties-if-future-pms-break-brexit-deal-bsmcf6jwx">irritation of Brexiteers</a>, it would see the UK subscribe to a “common rulebook” with the EU. The idea is that common rules would mean no UK-EU regulatory divergence, and so no checks or restrictions between the UK and EU on their agricultural and manufactured products.</p>
<p>For goods coming from outside the EU and UK it advocates the creation of a “facilitated customs arrangement”. This is unique and untested. It would require tremendous flexibility, not to mention trust, on the part of the EU – the prospects for which are ever-diminishing. </p>
<p>And on the detail, the EU may straightforwardly query the viability and realism of this proposal – as it did in <a href="https://ec.europa.eu/commission/sites/beta-political/files/slides_on_uk_technical_note_on_temporary_customs_arrangements.pdf">response</a> to the UK’s proposal for a <a href="https://www.gov.uk/government/publications/technical-note-on-temporary-customs-arrangement?utm_source=2ee1e4f1-35e9-4abd-911e-a64bb2616a3e&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate">temporary customs arrangement</a>, commonly known as the UK’s “alternative backstop”. </p>
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Read more:
<a href="https://theconversation.com/backstop-option-for-irish-border-after-brexit-the-difference-between-eu-and-uk-proposals-explained-97963">'Backstop' option for Irish border after Brexit – the difference between EU and UK proposals explained</a>
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<p>But the Irish border is about much more than trade. The fact that the <a href="https://www.qub.ac.uk/brexit/Brexitfilestore/Filetoupload,824444,en.pdf">border region</a> is so integrated now is due not only to EU membership but to the layers of contact and cooperation that exist across it. Much of these have been established since the 1998 <a href="https://www.gov.uk/government/publications/the-belfast-agreement">Belfast (Good Friday) Agreement</a>, which remains a cornerstone of peace in Northern Ireland.</p>
<p>This complexity and sensitivity was acknowledged in the <a href="http://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_IDA(2017)607267">priority</a> given to the Irish dimension from the start of the withdrawal negotiations. This resulted in a set of commitments from the EU and UK to Northern Ireland/Ireland in the <a href="https://ec.europa.eu/commission/sites/beta-political/files/joint_report.pdf">Joint Report</a> of December 2017. </p>
<p>Elements of the Joint Report are acknowledged at several points in the white paper but there are also <a href="http://qpol.qub.ac.uk/uk-white-paper-irish-dimension-1998-agreement/">serious omissions</a>. Recognising the importance of a holistic approach to the Irish border issue, negotiators in Brussels will want to assess the significance of such omissions. Are they simply due to a lack of space or is there an attempt by London to row back on previous <a href="https://www.gov.uk/government/publications/prime-ministers-letter-to-donald-tusk-19-march-2018">promises</a>? Whether their assessment is characterised by trust or suspicion will have implications for the wider withdrawal process.</p>
<h2>Back to the backstop</h2>
<p>One thing remains unalterable: the Withdrawal Agreement <a href="http://www.thenational.scot/news/16354133.eu-chief-warns-tories-of-no-deal-if-uk-reject-irish-backstop/">cannot be finalised</a> without an insurance policy to avoid a “hard” Irish border. Whether this backstop is specific to Northern Ireland – as the European Commission has insisted – or UK-wide will only be decided by ongoing UK-EU negotiations. </p>
<p>While the language of the protocol on Northern Ireland can be <a href="https://www.bbc.co.uk/news/uk-northern-ireland-44741402">de-dramatised</a>, the consequences of failing to agree a backstop cannot. Without a backstop for the Irish border, there will be no Withdrawal Agreement. Without this, the UK will simply leave the EU on March 29, 2019 with no transition period, no insurance policy, and no agreed framework for the future relationship.</p>
<p>There is no doubt that such an outcome would cut sharpest at the most vulnerable point in the separation of the UK from the EU: the Irish border.</p><img src="https://counter.theconversation.com/content/100098/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Katy Hayward has received funding from the Economic and Social Research Council and the Social Sciences and Humanities Research Council (Canada). The views expressed here do not represent those of any of these funders.</span></em></p><p class="fine-print"><em><span>David Phinnemore has previously received funding from the British Academy, the Economic and Social Research Council and the European Union. The views expressed here do not represent those of any of these funders.</span></em></p>Is the UK’s Brexit plan enough to avoid a hard Irish border?Katy Hayward, Reader in Sociology, Queen's University BelfastDavid Phinnemore, Professor of European Politics, Queen's University BelfastLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/998622018-07-12T15:14:22Z2018-07-12T15:14:22ZBritain’s Brexit plan revealed: experts react<figure><img src="https://images.theconversation.com/files/227424/original/file-20180712-27042-1bwq91l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/home">from www.shutterstock.com</a></span></figcaption></figure><p>After a summit with her cabinet that sparked several ministerial resignations, British prime minister Theresa May has published a controversial white paper setting out her government’s vision for Brexit. This will now be sent to the European Union for further negotiations. Experts assess the proposals in key areas. </p>
<h2>An appeal to party unity</h2>
<p><strong>Nicholas Allen, Reader in Politics, Royal Holloway, University of London</strong></p>
<p>The publication of the <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/724982/The_future_relationship_between_the_United_Kingdom_and_the_European_Union_WEB_VERSION.pdf">Brexit white paper</a> is the latest step in Theresa May’s effort to broker a common position for negotiating future UK-EU relations. It is also the latest step in what might be called the Cabinet “peace process”.</p>
<p>Senior ministers have been sniping at each other for months and two cabinet ministers – David Davis and Boris Johnson – have resigned. Tory MPs have been engaging in open civil war. With the clock ticking on the Article 50 negotiations, the prime minister had to reimpose some semblance of <a href="https://theconversation.com/theresa-may-was-right-to-reimpose-collective-ministerial-responsibility-its-the-only-way-to-govern-99608">collective responsibility</a>.</p>
<p>In many ways, the details in the white paper are less significant than the softer-Brexit direction of travel established at the <a href="https://theconversation.com/the-brexit-plan-that-could-bring-down-the-british-government-explained-99607">crunch summit</a> at Chequers that preceded it. Britain is leaving the EU. A sizeable minority of zealot Tory MPs will object to any watering down of their vision of being wholly outside the ambit of EU regulations. Yet, some element of compromise is almost certainly necessary.</p>
<p>It is simply too soon to know whether or not the white paper will bolster or diminish <a href="https://theconversation.com/theresa-may-has-survived-chequers-but-what-comes-next-could-be-worse-99771">May’s position</a>. Negotiating Brexit and keeping the Tories united was always going to be extraordinarily challenging. In that sense, at least, nothing has changed.</p>
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<img alt="" src="https://images.theconversation.com/files/227426/original/file-20180712-27024-16zofum.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/227426/original/file-20180712-27024-16zofum.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=331&fit=crop&dpr=1 600w, https://images.theconversation.com/files/227426/original/file-20180712-27024-16zofum.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=331&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/227426/original/file-20180712-27024-16zofum.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=331&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/227426/original/file-20180712-27024-16zofum.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=416&fit=crop&dpr=1 754w, https://images.theconversation.com/files/227426/original/file-20180712-27024-16zofum.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=416&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/227426/original/file-20180712-27024-16zofum.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=416&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Dominic Raab: under pressure for not giving MPs advance sight of the Brexit white paper.</span>
<span class="attribution"><a class="source" href="https://goo.gl/9djCRA">Parliamentlive.tv</a></span>
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</figure>
<h2>Free movement</h2>
<p><strong>Erica Consterdine, Research Fellow in the Sussex Centre for Migration Research, University of Sussex</strong></p>
<p>Now to the big bad wolf of Brexit – free movement of people. The key issues of the Brexit debate on immigration have been the rights of EU citizens residing in the UK and vice versa, and the looming <a href="https://theconversation.com/how-reliant-is-britain-on-eu-migrant-workers-62796">labour market crisis</a> following the end of free movement. The white paper reinforces earlier agreements for the rights of EU citizens up until 2020, but makes no attempt to address the impending labour issue.</p>
<p>May has been consistent in the last 18 months that free movement is ending. The government proposes a “mobility framework” but this seems to be little more than a buzzword of which the substance is lacking. The government is rightly waiting for a report from the <a href="https://www.gov.uk/government/organisations/migration-advisory-committee">Migration Advisory Committee</a> due in September to fill in the details.</p>
<p>The framework is effectively just an extension of current policies for nationals of countries outside the European Economic Area. It suggests extending intra-corporate transfer to EU citizens, policies to attract international students and allowing visa free travel for tourists.</p>
<p>The most novel proposal is to establish a UK-EU Youth Mobility Scheme, presumably on a quota basis. Surprisingly, there was no proposal to reestablish a seasonal agricultural workers scheme – a move that seemed likely in light of <a href="https://www.parliament.uk/business/committees/committees-a-z/commons-select/environment-food-and-rural-affairs-committee/inquiries/parliament-2015/feeding-the-nation-labour-constraints-inquiry-16-17/">recent conclusions</a> from the Environment, Food and Rural Affairs Committee. Key in the paper for wider policy is that reducing net migration remains an ambition, but the explicit target of reducing it to less than <a href="https://www.telegraph.co.uk/news/2017/04/20/theresa-may-commits-tories-cutting-net-migration-uk-tens-thousands/">100,000 a year</a> is curiously absent, suggesting the target itself may well finally be abandoned.</p>
<h2>Northern Ireland</h2>
<p><strong>Feargal Cochrane, Professor of International Conflict Analysis, University of Kent</strong></p>
<p>July 12 was an ironically poignant day to bring this document out. “The Twelfth” is a key date in Northern Ireland, with one section of the community celebrating their Britishness through the commemoration of the Battle of the Boyne in 1690, when Protestant King William defeated Catholic King James, and the other section (and not just Irish nationalists) going on holiday to escape it. It’s a time of heightened tensions between <a href="https://www.bbc.co.uk/news/uk-northern-ireland-44804286">unionists and nationalists</a>.</p>
<p>The white paper is essentially an attempt to supersede the <a href="https://theconversation.com/backstop-option-for-irish-border-after-brexit-the-difference-between-eu-and-uk-proposals-explained-97963">backstop option</a> on the Irish border, agreed by the British government in December 2017, then disavowed shortly after, and now essentially reframed. There is barely a mention of a UK government alternative to the EU backstop option, or contingency planning if agreements cannot be reached, with most of the focus being on an innovative bespoke approach to future agreements. The Irish government and the EU are likely to push this much more forcefully in their responses to the document. </p>
<p>The main proposal is for a “free trade area” for goods that would establish “continued frictionless access” across the EU and UK for goods. There is much in the white paper that is aspirational (like previous iterations of the UK position). That includes the hope for a deal where “close arrangements on goods should sit alongside new ones for services and digital”. </p>
<p>If the EU wears this (it’s far from certain that it will and certainly not in this form) it would avoid the need for a hard border in Ireland over some – but not all – issues. It’s not clear, for example, how this would relate to the free movement of people. But so much here will depend on how hard the EU returns the serve on the text. Its immediate holding response is that it will consult its EU partners and negotiate.</p>
<p>One problem beyond the substance of the text for the EU, the Irish government and everyone in Northern Ireland, is that who knows what the future will bring. Signing a treaty today does not mean that it will be adhered to tomorrow. So one of the key issues for the Irish government will be the extent to which these commitments on a continued and agreed rule book with a frictionless border in Ireland can be made as watertight as possible. </p>
<p>This will not be regarded by Ireland or the EU as a take-it-or-leave-it option. It is the start of the negotiation, not the end, and the best the UK government can now hope for is an outcome that is Brexit in name only with alignment (albeit bespoke) in key areas of customs and trade. If the UK government can’t deliver this (and the odds on failure would be high at the moment) Northern Ireland faces a No Deal abyss that will represent the biggest political and economic crisis since Ireland was partitioned by Britain in 1921.</p>
<h2>Services</h2>
<p><strong>John-Paul Salter, Visiting Lecturer in Public Policy, King’s College London</strong></p>
<p>Overall the white paper succeeds in clarifying the government’s position on services. Unlike goods, services will not be included in the government’s proposed free trade agreement. Instead it is proposed that a special arrangement is put in place allowing British banks to operate in EU markets. </p>
<p>This will be based on a beefed-up version of mechanisms which are already in place, and which enable the EU to grant access to the banks of non-member states (as the UK will be, after Brexit) if their regulatory frameworks are judged to be “equivalent”. The white paper also makes important suggestions for how these mechanisms can be improved: there are proposals for how cooperation between EU and British regulators can be formalised, for example. </p>
<p>The Bank of England is presumably happy, since it would avoid becoming a passive rule-taker. The City will be happy since clarity is better than uncertainty for firms planning their futures. And since, in time, the equivalence provisions might be extended to cover more areas of activity.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/227486/original/file-20180712-27042-19gna8y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/227486/original/file-20180712-27042-19gna8y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/227486/original/file-20180712-27042-19gna8y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/227486/original/file-20180712-27042-19gna8y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/227486/original/file-20180712-27042-19gna8y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/227486/original/file-20180712-27042-19gna8y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/227486/original/file-20180712-27042-19gna8y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Clarity for the City.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com">Shutterstock</a></span>
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<p>What the EU’s response will be is difficult to judge. At a basic level, the proposal rests on legislative provisions which are already there, so the starting points are clear. More importantly, though, the white paper places great emphasis not on market access (and thus on the continued profitability of British firms), but on systemic stability.</p>
<p>A messy, poorly-executed financial services Brexit would risk disrupting regulatory cooperation, which in turn could threaten the stability of the UK’s and the EU’s financial system. Given the extent of their interconnection, contagion would quickly spread.</p>
<p>Seen in this light, the proposals for enhanced regulatory equivalence, with a view to bolstering institutional cooperation, are eminently sensible. They are also feasible.</p>
<p>On the other hand, since the referendum, several member states – France, Germany, Luxembourg, Ireland – have gone to great lengths to try to attract British firms. They may each covet the prestige and tax revenues that come from hosting a large financial sector. Plus, there is an EU-level move happening, as the European Central Bank and the European Commission are both keen to see the centre of gravity of European financial markets return to the mainland. This consideration may well feature in the thinking behind the EU’s response.</p>
<h2>Goods</h2>
<p><strong>Maria Garcia, Senior Lecturer in International Relations, University of Bath</strong></p>
<p>The initial economic partnership chapter of the white paper recognises that cross-border transactions post-Brexit will be different from the existing arrangements. However, the degree of difference and additional transaction costs are not highlighted. The UK will seek a free trade area for goods, including agri-food, which will be underpinned by a “facilitated customs arrangement” aimed at frictionless trade of goods and a “common rule book”. There are still outstanding questions as to how exactly the customs arrangement will work in practice.</p>
<p>The idea is to avoid border checks on goods travelling between the UK and EU and vice versa. The UK would apply any EU tariffs that differ from UK tariffs on goods coming into the UK that are destined for the EU, and then refund them for goods that stay in the UK. This would be a unique situation and it is not evident that the EU will accept this, especially when the white paper’s section on future UK trade policy claims that checks will not be conducted at the border but throughout the country, without explaining how this will work in practice.</p>
<p>The second part of the free trade area proposal, a common rule book on goods, recognises the importance of rules on safety, and non-tariff measures that affect trade. It includes a commitment that the institutions which set British standards will not propose standards that conflict with EU ones. This recognition should facilitate further negotiations, despite being deeply unpopular among Brexiters.</p>
<p>The white paper insists on common rule books only on rules necessary for frictionless trade at the border, but there is no specification of which rules fall under this category, and which rules will be subject to change. It’s likely that the EU will demand clarification of this, and that the parties’ interpretation of which rules are essential for frictionless trade may vary.</p>
<p>Clarity and agreement on this will be especially important with a view to future trade agreements, as the EU will want to ensure that, for instance, the infamous <a href="https://www.bloomberg.com/news/articles/2017-11-01/chlorinated-chicken-back-on-menu-in-britain-s-brexit-conundrum">US chlorinated chickens</a> do not enter its market, not even in the shape of a British-baked pie.</p><img src="https://counter.theconversation.com/content/99862/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Erica Consterdine receives funding from the Economic and Social Research Council. </span></em></p><p class="fine-print"><em><span>Maria Garcia has received funding from the Economic and Social Research Council and European research funding. She is the Secretary of UACES, the academic association for Contemporary European Studies. </span></em></p><p class="fine-print"><em><span>Feargal Cochrane, John-Paul Salter, and Nicholas Allen do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It sparked a series of government resignations, but what’s actually in Theresa May’s Brexit plan?Nicholas Allen, Reader in Politics, Royal Holloway University of LondonErica Consterdine, Postdoctoral Research Fellow in Immigration Politics & Policy, University of SussexFeargal Cochrane, Professor of International Conflict Analysis, School of Politics and International Relations, University of KentJohn-Paul Salter, Visiting Lecturer in Public Policy, King's College LondonMaria Garcia, Senior Lecturer in International Relations, University of BathLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/996072018-07-09T14:54:39Z2018-07-09T14:54:39ZThe Brexit plan that could bring down the British government – explained<p>Two years after the referendum, the UK government briefly appeared to agree on its vision for the future UK-EU relationship. A <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/723460/CHEQUERS_STATEMENT_-_FINAL.PDF">three page document</a>, outlining the UK position, was published following a long meeting of cabinet ministers at the prime minister’s country retreat of Chequers on July 6.</p>
<p>The new position aims to address the Irish border issue and potentially offers a softer version of Brexit than was <a href="https://www.gov.uk/government/speeches/pm-speech-on-our-future-economic-partnership-with-the-european-union">previously talked about</a>. It has prompted the <a href="https://www.bbc.co.uk/news/uk-politics-44770847">resignation</a> of three ministers. The Brexit secretary, David Davis, and his number two at the Department for Exiting the EU, Steve Baker, stepped down just 50 hours after the publication of the three-page document. This was followed by foreign secretary, Boris Johnson. Such dramatic developments raise serious questions for the UK’s Brexit strategy and the future of the government itself. </p>
<p>So what was agreed to at Chequers and why has it led to these resignations? Davis stepped down <a href="https://ig.ft.com/david-davis-brexit-letter/">because</a> he felt the new plan cedes too much control to the EU. Notwithstanding, the new plan should be understood as only the starting point of negotiations over the future UK-EU relationship. In that sense, we should expect the UK position to further evolve in the months to come.</p>
<h2>Previous proposals</h2>
<p>The government’s new position has substantially evolved from its previous proposals for the UK’s future economic relationship with the EU. It has been dubbed a “third way” between the <a href="https://www.gov.uk/government/news/new-customs-proposals-laid-out-by-government-in-new-paper-on-future-relationship-with-the-eu">two proposals</a> that the government published in August 2017.</p>
<p>The first was a highly streamlined customs arrangement that came to be known as <a href="https://theconversation.com/can-technology-and-max-fac-solve-the-irish-border-question-expert-explains-96735">“max-fac”</a> (short for maximum facilitation). It aimed to simplify the UK’s customs arrangement with the EU by using a variety of IT solutions to avoid a customs border between Northern Ireland and the Republic. Jon Thompson, head of HM Revenue and Customs <a href="https://www.ft.com/content/2f0d89f2-6011-11e8-ad91-e01af256df68">estimated</a> that the cost of building the necessary infrastructure for this option would be about £20 billion.</p>
<p>According to the second model, a new customs partnership, the UK would mirror “the EU’s requirements for imports from the rest of the world” as if the UK was still a member of the EU’s customs union. The UK, under this model, would still be free to pursue its independent trade policy. </p>
<p>This could potentially lead to differences in its tariffs with the EU ones. To deal with this problem, an unprecedented and untested repayment mechanism was proposed. According to it, imports to the UK would pay whichever was the higher of the UK’s or the EU’s tariff rates and traders would claim “a refund for the difference between the two when the goods were sold to an end user in the country charging lower tariffs”.</p>
<p>Apart from the cost and the feasibility, the biggest problem of the previous two proposals was that neither of them addressed effectively <a href="https://theconversation.com/backstop-option-for-irish-border-after-brexit-the-difference-between-eu-and-uk-proposals-explained-97963">the Irish border conundrum</a>. Neither could secure a frictionless, invisible border, given that the UK’s intention is to leave the single market and the customs union after Brexit.</p>
<h2>The new proposal</h2>
<p>As the UK government had <a href="https://www.gov.uk/government/publications/technical-note-on-temporary-customs-arrangement">previously conceded</a>, upholding its Irish border commitments required regulatory alignment. Without the same regulatory standards on the two sides of the border, checks would be required on the various products that would be crossing it to ensure the integrity of the single market. </p>
<p>This is why the new plan proposes to establish a free trade area for goods between the UK and the EU where “a common rulebook for all goods including agri-food” will exist. The UK will commit, by international agreement, “to ongoing harmonisation with EU rules on goods”. This echoes the <a href="http://www.skoutaris.eu/blog/2016/8/2/the-day-after-the-referendum-before-possible-alternatives-to-eu-membership-1">mechanism</a> of the European Economic Area whose members have to adopt the new or reformed regulations that the EU institutions produce. </p>
<p>At the same time, the government contends that parliament can guard the UK legal order from future EU legislation in an arrangement that somehow resembles the EU’s relationship with Switzerland. Given the <a href="https://www.politico.eu/article/eu-switzerland-stuck-on-immigration-free-movement-single-market-europe-migration/">ongoing crisis</a> in EU-Switzerland relations over the issue of free movement of people, the UK government is right to recognise that such action might lead to unforeseen consequences. At the same time, it effectively <a href="https://www.theguardian.com/politics/live/2018/jul/09/david-davis-resigns-as-brexit-secretary-live-updates?page=with:block-5b4321c9e4b0cb7e6f6c375d">puts into question</a> whether the UK parliament would have real power to diverge from EU regulations on goods. </p>
<h2>The starting point of negotiations</h2>
<p>The proposal that came out of Chequers is not the <a href="https://www.telegraph.co.uk/politics/2018/07/08/britain-has-put-forward-sensible-brexit-proposal-eu-would-risk/">definitive end state</a> of the future UK-EU relationship, as some have suggested. </p>
<p>But even if the resignations of Britain’s main negotiator and the foreign secretary do not lead to a political crisis, the Chequers deal should be understood as the UK starting position in its negotiations with the EU.</p>
<p>The Chequers proposal does not sit comfortably with the models for the EU-UK relationship that the EU has already suggested. It is not a Canada-style free trade agreement with the Northern Ireland <a href="https://ec.europa.eu/commission/sites/beta-political/files/draft_withdrawal_agreement.pdf">backstop option</a>. Nor is it an economic relationship that allows the application of all four fundamental freedoms of movement, as <a href="https://theconversation.com/is-brexit-a-good-idea-lessons-from-norway-on-the-advantages-of-eu-membership-40652">the “Norway” option</a> does. </p>
<p>Still, it is the first comprehensive position that the UK has put forward. So the UK will be hoping that the EU will consider it. </p>
<p>Even if the EU does not reject the UK position outright, the government should expect that issues such as its contribution to the new EU budget and the role of the European Court of Justice are raised and seriously considered in the months to come. This is still only the beginning of the process that will hopefully lead to an orderly Brexit and mutually beneficial future with the EU.</p><img src="https://counter.theconversation.com/content/99607/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nikos Skoutaris consults GUE/NGL parliamentary group of the European Parliament for Brexit-related issues. He has received funding from UACES and UEA's HEIF Impact Fund for the organisation of a conference on the 'De-Europeanisation of Border Conflicts: The Brexit Effect on Territorial Borders</span></em></p>Two years after the Brexit referendum, Cabinet members apparently agreed on the country’s vision for its future relationship with the EU. But it has already led to a flurry of resignations.Nikos Skoutaris, Lecturer in European Union Law, School of Law, University of East AngliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/987932018-06-22T16:22:10Z2018-06-22T16:22:10ZAirbus departure? Five things you need to know to understand its relationship with Britain<figure><img src="https://images.theconversation.com/files/224470/original/file-20180622-26555-qpjobf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Ryan Fletcher / Shutterstock.com</span></span></figcaption></figure><p>Airbus <a href="https://www.reuters.com/article/uk-britain-eu-airbus/airbus-says-no-deal-brexit-would-force-it-to-reconsider-uk-presence-idUSKBN1JH3EV">has warned</a> that a no-deal Brexit could force the aircraft manufacturer to close its UK operations, which, among other things, produce all-important wings. Here’s why other countries are circling to pick up the slack from a UK departure from the single market and customs union – and why the Airbus story has always been shaped by national politics as well as international commerce.</p>
<h2>1. Minority stake</h2>
<p>This story harks back to the <a href="https://www.flightglobal.com/news/articles/eads-10-airbus-history-344479/">history of Airbus</a>. In 1970, the British, French and German governments came together to create a consortium to challenge US dominance in the market. UK airline BOAC (now part of British Airways) did not support it, and the consortium largely developed around Franco-German leadership. But the British manufacturing group Hawker Siddeley still retained design and supply of the wings to Airbus. </p>
<p>Then, when the UK aerospace industry came together in the late 1970s under the umbrella of British Aerospace, it bought a 20% stake in Airbus. But this was sold in 2006 <a href="https://www.theguardian.com/business/2006/sep/07/theairlineindustry.travelnews1">for about £2 billion</a> when British Aerospace thought that Airbus was in turmoil. So the UK has always been – at best – a minority player in Airbus.</p>
<h2>2. Wings are complex</h2>
<p>An airline’s wings are among the most complex part of the airframe. They comprise tens of thousands of parts that need to fit together with amazing precision. They are a blend of metals and composites that require deep expertise to both design and manufacture. </p>
<p>Wings therefore require high-tech, highly advanced factories and skilled people to make them. These skills do not come cheap – and such a factory requires major investment. They really are the jewel in the crown for any airframe company and the French and German parts of Airbus have been interested in creating this capability locally. </p>
<p>Not only this, but many of the parts in the state-of-the-art A350 wings are produced in Spain where labour is cheaper, but then assembled in the UK where the expertise is greater. So it’s not just France and Germany who are interested in wing production.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/224471/original/file-20180622-26579-x8ozyg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/224471/original/file-20180622-26579-x8ozyg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=407&fit=crop&dpr=1 600w, https://images.theconversation.com/files/224471/original/file-20180622-26579-x8ozyg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=407&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/224471/original/file-20180622-26579-x8ozyg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=407&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/224471/original/file-20180622-26579-x8ozyg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=512&fit=crop&dpr=1 754w, https://images.theconversation.com/files/224471/original/file-20180622-26579-x8ozyg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=512&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/224471/original/file-20180622-26579-x8ozyg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=512&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Wings require highly-skilled manufacturing.</span>
<span class="attribution"><span class="source">Stoyan Yotov / Shutterstock.com</span></span>
</figcaption>
</figure>
<h2>3. Not just about tariffs</h2>
<p>The recent announcement that tariffs were the reason for the potential movement of wings is not the whole story of why wing production could move. In fact the EU charges tariffs of 0% on aircraft parts from Brazil and China. If it was just a tariffs issue, the UK government could always create a special economic zone, such as the <a href="http://manufacturinginmexico.org/maquiladora-in-mexico/">maquiladora system</a> in Mexico. </p>
<p>Special maquiladora plants are used to assemble goods from other countries for export back to the country of origin while avoiding export and import tariffs. These are typically used in low-skilled industries such as clothing and are designed to take advantage of lower labour costs rather than advanced technology. Wings are strategic – and France and Germany would want them as the move would bring jobs in high-value manufacturing.</p>
<p>Airbus in Europe is often viewed as a “job factory” (as one former Airbus first-tier supplier CEO told me in an interview) – with the focus being on the creation of jobs. The long-running <a href="https://www.bbc.com/news/business-41152544">Boeing-Airbus lawsuit</a> at the World Trade Organisation is focused on the alleged use of illegal EU state aid to support these well-paid jobs in the development of new airframes. With the UK out of the EU, there would be no such aid, leaving it worse off competitively.</p>
<h2>4. Logistical sense</h2>
<p>From an efficiency point of view, having wings made in a different country to the rest of the airframe is a poor choice. Wings need to be transported by boat to France from the UK. So potential delays in their transport – such as when the Ciudad de Cadiz (one of three ships used to transport wings) <a href="http://shipfinder.co/about/news/cargo-ship-ciudad-de-cadiz-runs-aground/">ran aground in 2013</a> – would be avoided. </p>
<p>It would make logistical sense for them to be made on-site, making the operation more efficient and able to run on a truly <a href="https://www.investopedia.com/terms/j/jit.asp">just-in-time basis</a>. However, efficiency has never been at the centre of Airbus’s decision-making, with components and major sections being made across Europe. The delay in the <a href="https://www.nytimes.com/2006/12/11/business/worldbusiness/11iht-airbus.3860198.html">launch of the A380</a> “superjumbo” is one example of where the different location choices (in this case different computer design systems) was driven by political needs rather than operational expediency.</p>
<h2>5. No guarantees</h2>
<p>Despite the logic for Airbus moving operations, its departure from the UK is not a given. Due to the high cost of developing an aircraft, Airbus may be more interested in launch aid or tax breaks than efficiency. Plus, for the existing planes, it is very difficult to simply pack a factory up and move it somewhere else. Factories need labour and this will need to be recruited and trained. </p>
<p>Many companies that I have studied think that manufacturing capability can be developed in 18 months. From my experience this is highly optimistic and is more typically five to seven years. So there’s likely to be a stay of execution for at least that amount of time, as manufacturing capability and the supply chains and skills that support them cannot be turned on and off like a tap.</p><img src="https://counter.theconversation.com/content/98793/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Johnson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Why Airbus has warned that a no-deal Brexit could force the plane maker to close its UK operations.Mark Johnson, Associate Professor of Operations Management, Warwick Business School, University of WarwickLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/987292018-06-21T14:20:44Z2018-06-21T14:20:44ZA hard Brexit is looking increasingly likely – according to behavioural economics<p>Gloomy forecasts for the post-Brexit economy, and a psychological tendency to gamble rather than accept certain losses, may boost public support for a giant leap away from the EU – despite the fact that most experts are advising a cautious small step.</p>
<p>Parliamentary rebels have tempered their demands for a vote <a href="https://theconversation.com/tory-rebels-back-down-on-brexit-vote-but-what-does-that-actually-mean-98671">on the final Brexit deal</a> and abandoned an earlier <a href="https://theconversation.com/lords-brexit-defeats-are-forcing-mps-to-face-crucial-choices-96482">House of Lords attempt</a> to keep the UK in the European Economic Area. Attempts to maintain <a href="https://www.independent.co.uk/news/uk/politics/brexit-latest-customs-union-uk-eu-theresa-may-tory-deal-rebels-a8394371.html">membership of the customs union</a> and <a href="https://www.theguardian.com/politics/2018/jun/21/may-risks-row-with-brexiters-over-plan-for-single-market-for-goods">single market</a> by Brexit’s opponents have seemingly failed. </p>
<p>But in keeping up pressure to stay as close as possible to the EU, they risk driving Britain further away from it. Anti-Brexiteers now risk colliding with one of the harshest lessons of behavioural economics – once people are determined to leave, any scare about the next step may just prompt them to run further away.</p>
<p><a href="https://theconversation.com/the-cost-of-brexit-and-how-much-you-should-trust-the-forecasts-explained-by-an-economist-91172">Most independent studies</a> point to bigger economic losses the more the UK distances itself from present EU trade arrangements. So does <a href="https://www.gov.uk/government/publications/hm-treasury-analysis-the-long-term-economic-impact-of-eu-membership-and-the-alternatives">the Treasury’s own</a> analysis, unless the UK gains a remarkably generous bespoke deal. </p>
<p>But the same studies also suggest there will be losses even from the smallest step away. And the error around these calculations gets bigger as they move further from present arrangements, so that the gloomier forecasts are also hazier. This allows Leave campaigners to agree with “Remoaners” that an ultra-soft Brexit is worse than remaining – and to draw the opposite conclusion: that only the most radical departure will do. </p>
<h2>Double or nothing</h2>
<p>People are generally risk-averse when it comes to potential gains. They tend to opt for guaranteed receipt of a certain amount (say, £50), rather than the chance to gamble for a larger amount (say, a 50% chance of getting £100) while getting nothing at all if they lose the bet. The expected outcome (to someone who’s risk-neutral) is £50 in both cases. But, as the proverb goes, a bird in the hand is worth two in the bush.</p>
<p>By contrast, most people are risk-preferring when it comes to potential losses. Instead of definitely losing £50 they would prefer to gamble on a 50% chance of losing £100 and a 50% chance of not losing anything. Although the mathematically expected loss is £50 in each case, most of us will run the risk of worsening that loss if that brings a comparable chance of escaping it altogether. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/224251/original/file-20180621-137725-x4hcr0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/224251/original/file-20180621-137725-x4hcr0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/224251/original/file-20180621-137725-x4hcr0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/224251/original/file-20180621-137725-x4hcr0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/224251/original/file-20180621-137725-x4hcr0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/224251/original/file-20180621-137725-x4hcr0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/224251/original/file-20180621-137725-x4hcr0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">£100 on red.</span>
<span class="attribution"><span class="source">shutterstock.com</span></span>
</figcaption>
</figure>
<p>The evidence that people routinely gamble to avoid guaranteed losses, while playing safe with guaranteed gains, was assembled by cognitive psychologists and turned into an elegant “<a href="http://www.open.edu/openlearn/money-management/management/leadership-and-management/making-decisions/content-section-6.4">Prospect Theory</a>” by Amos Tversky and Daniel Kahneman – who won the <a href="https://www.nobelprize.org/mediaplayer/index.php?id=531">economics Nobel for it in 2002</a>.</p>
<p>An important consequence of this asymmetry is that people may react differently to a choice that is functionally the same, if it is re-framed in terms of losses <a href="https://thedecisionlab.com/bias/framing-effect/">rather than gains</a>. You might, for example, prefer the surefire gain of £50 if you perceive the alternative (gaining £100 or £0, with equal probabilities) as a lottery. </p>
<p>But if you are loss-averse, you might also part with £50 – calling it an insurance premium – to avoid risking an equally probable loss of £100 or £0. So, stating post-Brexit outcomes in terms of GDP loss, compared to the status quo, may have worked out to the Brexiteers’ advantage. </p>
<h2>The Remainers’ dilemma</h2>
<p>Faced with a certain loss from the “soft” option, those (the majority) who voted for Brexit will inevitably be drawn towards the “hard” alternative. It might be a huge gamble, but it seems worth taking if it brings some chance of ultimate gain, against the certain loss from a soft Brexit.</p>
<p>While the hard Brexit risk may be very high – with potentially even bigger economic losses, according <a href="https://www.theguardian.com/politics/2018/feb/07/brexit-north-east-west-midlands-hardest-secret-analysis">to leaked government analysis</a> – a bigger break creates room for radically different and rosier scenarios. It’s always possible that, after a transitory tussles with Brussels, a clean break from EU rules sparks a British social and economic renaissance. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/224252/original/file-20180621-137734-1gybcz6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/224252/original/file-20180621-137734-1gybcz6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/224252/original/file-20180621-137734-1gybcz6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/224252/original/file-20180621-137734-1gybcz6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/224252/original/file-20180621-137734-1gybcz6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/224252/original/file-20180621-137734-1gybcz6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/224252/original/file-20180621-137734-1gybcz6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Losing hope?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/97214336@N05/28057544395">Garon S/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>This could come from fully embracing <a href="https://www.economistsforfreetrade.com/">globalisation and free markets</a> (the preference of those on the Right), or from a return to social, industrial and economic policies <a href="https://briefingsforbrexit.com/">lost to past liberalisation</a> (preferred by those on the Left). These are opposing and incompatible approaches, but they coalesced to swing the referendum in 2016. </p>
<p>For those with no wish to stay, a giant leap with the distant possibility of landing on higher ground will tend to seem much more appealing than a small step that’s bound to lead downhill. And developments since the referendum may be reinforcing a <a href="http://www.open.edu/openlearn/society-politics-law/politics/straight-talking-collides-cyclical-preferences">pattern of preferences</a> by which voters who never wanted to Leave now embrace the “hardest” way of doing so, once they’ve definitely lost the option to Remain. </p>
<h2>Behavioural trouble</h2>
<p>This isn’t the first time that Prospect Theory has loomed behind Brexit-related decisions. The original Leave vote in 2016 can be explained as <a href="http://www.cognitionandculture.net/blog/christophe-heintzs-blog/does-prospect-theory-explain-trump-and-brexit-votes">a battle of gain/loss framing</a>, which the Brexiteers won by exploiting discontent with people’s present situations. </p>
<p>Remainers unsuccessfully tried in 2016 to persuade voters that EU membership brought a net gain – through trade, unrestricted travel and work opportunities. They wanted the UK to stick with these sure gains, rather than gamble on a step into the unknown outside the EU which might result in great loss. </p>
<p>The Leave campaign successfully re-framed EU membership as a sure loss – of money (since the UK is a net contributor), sovereignty (since the EU sets rules) and external links (since the common external tariff blocks the UK from doing its own trade deals). Convinced that they were losing under the current arrangement, many voters saw leaving as a way to avoid this sure loss, even if not entirely believing Brexiteer predictions of instant gains once outside. </p>
<p>So having persuaded a majority of referendum voters that they could only avoid a certain loss by leaving, hard Brexiteers will now exploit the same behavioural trait to propel the UK as far away from the EU as it can go. The risk for Remainers is that by framing the soft Brexit option as damage limitation, they may simply propel people towards the hard alternative – as the only way their decision to Brexit can possibly do them any good.</p><img src="https://counter.theconversation.com/content/98729/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Shipman receives funding from the British Academy/Leverhulme Foundation. </span></em></p>A psychological tendency to gamble rather than accept certain losses, may lead to a surge in support for a harder Brexit.Alan Shipman, Lecturer in Economics, The Open UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/956012018-04-26T12:43:21Z2018-04-26T12:43:21ZA customs union would free the UK to strike trade deals – but it doesn’t solve every Brexit problem<p>The debate around the UK’s level of involvement in the EU single market after Brexit may lead to a significant u-turn in government policy. Having initially said it would not seek a customs union with the EU after Brexit (after leaving the full, existing customs union), it looks as though the UK government’s position is softening. Given the <a href="https://theconversation.com/the-five-alternatives-to-eu-single-market-and-customs-union-would-all-make-uk-poorer-92228">alternatives </a> to the single market that are available to the UK, a potential u-turn is welcome.</p>
<p>Leaving the single market but agreeing to a customs union doesn’t rule out the UK making its own trade deals. However, it should be careful what it wishes for. Freedom comes at a price. A customs union only covers trade in goods, so the UK would need an umbrella agreement to cover its other arrangements with the EU.</p>
<p>The World Trade Organisation (WTO) sets out the basics in Article XXIV of the <a href="https://www.wto.org/english/res_e/publications_e/ai17_e/ai17_e.htm">General Agreement of Tariffs and Trade</a> (GATT). In essence, a customs union is where tariffs are removed between members of the union, and the tariffs charged on imports coming from outside the union are harmonised across members of the union. This definition seems straightforward but when you dig deeper into Article XXIV, you find that while these rules apply to trade in goods, they say nothing about services – which are of course very important for the UK. </p>
<p>The text is also quite vague about the products that should be covered by the customs union, stating only that “substantially all trade” should be included. Of course, as soon as you start excluding products from your customs union, then borders with frictions, such as border checks, start to emerge. Therefore, the issue of whether any agreed customs union would be complete needs careful consideration. However, it’s clear that the WTO rules are too vague for anyone to claim that the UK cannot create an incomplete customs union if the EU agrees.</p>
<p>What we know is that an incomplete customs union, where product coverage is less than 100% or trade policies are not fully harmonised, could give the UK more freedom to sign its own trade deals. Turkey, an example of a country in an incomplete customs union with the EU, has a number of <a href="https://www.wto.org/english/tratop_e/region_e/region_e.htm">Free Trade Agreements</a> with non-EU countries. However, if the UK steps outside the EU Customs Union and creates an incomplete UK-EU Customs Union, then embarks on signing new trade deals, there would need to be rules agreed regarding the coexistence of trade agreements. In simple terms, when the clauses in different trade deals start to conflict with each other, there will need to be a way to resolve these disputes.</p>
<h2>Freedom at a price</h2>
<p>Is all this freedom a good thing? It would take the UK further away from the complete customs union, which is the desire of Brexit supporters. However, signing even very simple trade deals will require considerable capacity and time, with the potential for <a href="https://piie.com/research/piie-charts/piie-chart-political-timetables-us-free-trade-agreements">significant delays even between signing and implementation</a>. The EU also already has a <a href="http://ec.europa.eu/trade/policy/countries-and-regions/negotiations-and-agreements/">long list of arrangements</a> in place. Those with Japan and Mexico are the most recent examples. The UK is likely to find it harder to make deals when outside a large trade block. Furthermore, signing free trade agreements with non-EU countries would not compensate for losses due to new <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2993069">trade barriers against the EU countries</a>. </p>
<p>Staying close to the EU may also protect the UK from the US government’s <a href="http://uk.businessinsider.com/trump-tpp-shift-trade-war-tariff-policy-confusion-2018-4?r=US&IR=T">trade wars</a> in crucial markets such as metals, fuels and chemicals. As the EU demonstrated in the case of the steel dispute, it can successfully <a href="http://www.bbc.co.uk/news/business-43505804">negotiate exemptions</a> from the new protectionist US tariffs. The UK, acting alone, may not have enough economic and political weight to do the same.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"969525362580484098"}"></div></p>
<p>An incomplete customs union with the EU will be a step towards minimising the losses of Brexit, while giving opportunities to negotiate new free trade agreements related to particular goods. UK manufacturers selling final goods (transport, electrical equipment, computers, for example) to the EU, depend on the supply of intermediate goods (components for that electrical equipment and computers) from the EU in the first place. If even moderate tariffs are imposed, the flow of intermediate goods from the EU may come to a halt. If agricultural goods are excluded from the new UK-EU customs union, it opens up further possibilities for negotiating new free trade agreements with non-EU countries.</p>
<p>And since the customs union option doesn’t cover services, one option would be to have a broader umbrella agreement, perhaps an economic integration agreement, to also cover services. </p>
<p>A customs union in itself, and certainly one that gives the UK the flexibility to sign its own trade deals with non-EU countries, would not automatically solve the Irish border issue – a complete customs union (going further than even the WTO definition) would be a prerequisite for that. The political compromises, which are being discussed within the Conservative party, suggest a complete customs union is most unlikely. Therefore, even if a u-turn is forthcoming, many other challenges remain.</p><img src="https://counter.theconversation.com/content/95601/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A deal with Europe would offer freedom, but some key sectors wouldn’t be included.Karen Jackson, Senior Lecturer in Economics, University of WestminsterOleksandr Shepotylo, Lecturer in Econoimcs, University of BradfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/928692018-03-06T10:20:10Z2018-03-06T10:20:10ZWhy the EU’s Brexit ‘backstop option’ for Northern Ireland doesn’t threaten the UK’s constitutional integrity<p>In her Mansion House speech on March 2, British prime minister Theresa May <a href="https://www.gov.uk/government/speeches/pm-speech-on-our-future-economic-partnership-with-the-european-union">insisted that</a> the Brexit referendum result “was a vote to take control of our borders”. At the same time, her government has repeated ad nauseam that there will be “<a href="http://www.bbc.co.uk/news/uk-politics-43215286">no hard border</a>” between Northern Ireland and the Republic of Ireland. But the question that continues to haunt the Brexit negotiations is whether the UK can leave the EU’s single market and the customs union without erecting a land border on the island of Ireland.</p>
<p>The text of the deal reached between the UK and EU in December 2017 included a <a href="https://ec.europa.eu/commission/sites/beta-political/files/joint_report.pdf">formula</a> to “square the circle”. It stated that the aim of future negotiations would be to address the challenge of the Irish border through the overall EU-UK relationship. If the final withdrawal agreement finds it impossible to provide for a frictionless invisible border, then “specific solutions” will apply to Northern Ireland. But if the UK and the EU cannot agree on those specific solutions, then Northern Ireland will remain aligned to the single market and the customs union. </p>
<p>That third “backstop option” was legally codified in a protocol contained in the <a href="https://ec.europa.eu/commission/sites/beta-political/files/draft_withdrawal_agreement.pdf">Draft Withdrawal Treaty</a> published by the EU on February 28. It said that if no specific solutions were found, a common regulatory area comprising the EU and Northern Ireland would be established and the region would remain in the EU customs territory. May quickly <a href="http://www.bbc.co.uk/news/uk-politics-43224785">rejected the plan</a>, <a href="https://www.ft.com/content/51397a80-1c6a-11e8-956a-43db76e69936">saying</a> it “threatens the UK constitutional integrity”.</p>
<p>But that’s not strictly the case.</p>
<h2>Flexible rules</h2>
<p>Under EU law, there are a number of cases where different parts of a member state might have different relationships with the EU. These include <a href="https://www.theguardian.com/uk-news/2017/jul/20/half-in-half-out-eu-territories-show-way-northern-ireland">special territories</a>, such as a set of Swedish-language islands in Finland and <a href="https://theconversation.com/ceuta-and-melilla-the-spanish-enclaves-at-the-centre-of-the-fight-against-terrorism-83196">Spanish cities</a> in Africa. For either historical, geographical or political reasons, these territories have a different relationship with their national governments – and therefore with the EU – than the rest of the member state’s territory. </p>
<p>The sovereignty of a member state over these areas has never been challenged. For example, the fact that EU law does not apply in the same way to the French Overseas Territories as it does to the French mainland, doesn’t question France’s sovereignty over those territories.</p>
<p>The UK itself has made extensive use of this flexibility. Gibraltar, the Channel islands and a number of other overseas territories have a different relationship with the EU than the UK. Such “differentiated” membership to the EU has not undermined the constitutional relationship of those territories with the UK – and so a similar solution for Northern Ireland after Brexit would not threaten the UK’s constitutional integrity. </p>
<h2>The backstop option</h2>
<p>Because of the Good Friday Agreement, Northern Ireland already enjoys a <a href="https://sluggerotoole.com/2017/12/11/specific-solutions-distinct-arrangements-more-of-the-same-for-post-brexit-ni/">unique constitutional status</a>. It is the only UK region that enjoys <a href="https://www.legislation.gov.uk/ukpga/1998/47/section/1">a right of secession</a> and its governance entails the close cooperation of its communities, the UK and the Republic of Ireland. </p>
<p>The EU’s “backstop option” is a specific arrangement that respects and protects this existing sophisticated constitutional architecture. It’s a pragmatic solution to the specific circumstances of Northern Ireland rather than a staging post towards a united Ireland or an <a href="https://www.thesun.co.uk/news/5698320/mps-blast-eu-northern-ireland-annex-claims/">annexation of the region to the EU</a>, as some have claimed.</p>
<p>Contrary to conventional wisdom, such status would not even be unique. The UK government seems at least amenable to the idea that another region with a constitutional relationship with the UK will remain within the EU customs territory: the two <a href="https://www.sbaadministration.org/">UK Sovereign Base Areas in Cyprus</a>. Similar to the situation in Ireland, if those two base areas follow the UK out of the single market and customs union, there will be a hard border on the island of Cyprus. This is why the UK and the Cypriot governments are currently negotiating how they can preserve the <a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A12003T%2FPRO%2F03">special EU status</a> that those regions have enjoyed since Cyprus joined the EU in 2004. While they are part of the EU customs territory, the EU treaties do not apply to them.</p>
<p>In the past, there have been some rare cases where a region of a third country was part of the EU customs territory. For instance, because of their geographical position, the Austrian territories of Jungholz and Mittelberg became <a href="http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31992R2913:en:HTML">part of the EU customs territory</a> when it was <a href="http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:31968R1496&from=EN">established</a>, long before Austria joined the EU.</p>
<h2>A Gordian knot</h2>
<p>All this does not mean that the “backstop solution” will be completely unproblematic. Apart from a number of practical issues that <a href="https://www.cambridge.org/core/journals/cambridge-yearbook-of-european-legal-studies/article/territorial-differentiation-in-eu-law-can-scotland-and-northern-ireland-remain-in-the-eu-andor-the-single-market/C935B6423D5D5CDE84D833AC8026F564">would need to be solved</a>, a Brexit in which Northern Ireland remained in the customs union and the rest of the UK was outside it, could create tensions for economic integration. </p>
<p>The easiest and most effective way to solve this Gordian knot involves the UK remaining in the single market and the customs union. The prime minister, however, in her speeches at Lancaster House, Florence and at Mansion House ruled this option out. No current technological solution for the border issue has so far been presented as a convincing alternative that could ensure frictionless trade. Against that background, perhaps May’s vehement rejection of a solution that respects Northern Ireland’s unique status is actually threatening, rather than protecting, the constitutional integrity of the UK.</p><img src="https://counter.theconversation.com/content/92869/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nikos Skoutaris consults the GUE/NGL parliamentary group of the European Parliament for Brexit-related issues. He has received funding from UACES and UEA's HEIF Impact Fund for the organisation of a conference on the 'De-Europeanisation of Border Conflicts: The Brexit Effect on Territorial Borders'</span></em></p>Other EU countries have flexible legal arrangements for their own special territories – something similar for Northern Ireland is not impossible.Nikos Skoutaris, Lecturer in European Union Law, School of Law, University of East AngliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/927782018-03-05T12:33:43Z2018-03-05T12:33:43ZTheresa May’s push ‘to get on with it’ means nothing while rent-a-bile Brexiteers rampage<p>After several weeks of high-profile speeches by government ministers, the UK is now apparently ready to “get on with it”, nearly a year after triggering Article 50 to begin Brexit negotiations. </p>
<p>In a bizarre mix of failing to address key issues head on and yet still making concessions on just how close the future relationship of the UK to EU will be, Prime Minister Theresa May has proved something most of us in the sorry Brexit saga have known for a long time – that Brexit in fact does not mean Brexit at all. It means something really rather different.</p>
<p>The European Court of Justice, that previously terrible snatcher of sovereignty in the Brexiteers’ eyes, will continue to have some kind of jurisdiction in the UK. Cooperation with and access to the single market – while being “different in the future” – will remain a central part of the UK-EU relationship. “Tough decisions” will have to be made not just about just how the UK leaves, but also, by about how much the UK remains entangled with the European project.</p>
<p>All of this was framed of course as the PM’s attempt to “bring the country back together”. A noble aim indeed. But we should pause before we give May too much praise.</p>
<p>After all, as former prime minister John Major <a href="https://www.telegraph.co.uk/politics/2018/02/28/sir-john-majors-explosive-brexit-intervention-read-speech/">noted</a>, the simple binary choice of in/out in response to an incredibly complex series of questions produced a vote in 2016 to leave based on just 37% of the electorate.</p>
<p>That this result is an expression of the democratic will of the people is incontestable. But the other great democratic fact of the 2016 referendum is this: that those who voted remain, and those who didn’t vote at all actually make up around 60% of the electorate. They therefore represent a majority that did not vote for Brexit.</p>
<p>No, this does not mean we have to immediately overturn the result, nor that we necessarily need a second referendum. But it does mean that May and the rest of Brexit camp cannot afford to ignore this fact for much longer. As movements to resist Brexit both inside and out of parliament gather strength, the continued sidelining of this many people will not hold sway forever.</p>
<h2>Don’t forget about the negotiation</h2>
<p>In the interim between the joint report that May signed in December on withdrawal, the EU has continued to be, well, the EU, by producing the first stab at a treaty on withdrawal. </p>
<p>The draft withdrawal agreement is a classic EU document – the condensing of complex political organisation and change into something approaching a legal document. And yet May has offered no real response to this. That’s because she knows there can be no real response to this that would not upset the hard Brexiteers in her party. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/208685/original/file-20180302-65547-17kwl1s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/208685/original/file-20180302-65547-17kwl1s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/208685/original/file-20180302-65547-17kwl1s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/208685/original/file-20180302-65547-17kwl1s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/208685/original/file-20180302-65547-17kwl1s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/208685/original/file-20180302-65547-17kwl1s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/208685/original/file-20180302-65547-17kwl1s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Enter a cabinet divided.</span>
<span class="attribution"><span class="source">EPA</span></span>
</figcaption>
</figure>
<p>But that is precisely what she will eventually have to do – respond to that document, formally and in legally realistic terms, and address the key issue of some kind of customs union that keeps Northern Ireland in line with the EU.</p>
<p>May is also perhaps beginning to realise that every simplistic Brexit promise and slogan that she has put out since becoming PM has been both entirely unrealistic and counter-productive. Her red lines, her talk of sabatours frustrating the will of the people – all of it solely aimed at appeasing the hard Brexiteers and cementing her grip on power – have served no interest other than her own in the UK or in the EU. Her apparently tough stance has failed to secure anything at the negotiating table. </p>
<h2>Who’s getting on with it?</h2>
<p>These are the realities May now faces, and understanding them helps explain the emollient tone of her latest speech. Despite not angering the hard Brexiteers, it did also manage to at least sound a note of compromise or conciliation.</p>
<p>One final word of caution though, as we reflect on this: it is all very well offering the hand of friendship, but for it to mean anything at all, it has to be the hand not just of May, but of the government and her cabinet. </p>
<p>Any message of cooperation is easily lost, we might say, if Boris Johnson is, during the same week as May’s speech, <a href="http://www.bbc.co.uk/news/uk-politics-43221934">denigrating the seriousness</a> of the Irish border situation, or if Michael Gove is <a href="http://www.bbc.co.uk/news/uk-43169004">wrongly suggesting</a> the EU is holding the UK back from banning plastic straws. </p>
<p>May’s message is even less likely to get across if the rent-a-bile crowd of Brexiteers within her own party – Jacob Rees-Mogg, Iain Duncan-Smith, Peter Bone – are continued to be allowed to spread their hard Brexit message with abandon.</p>
<p>So yes, a softer tone was spotted, as the realities of Brexit really begin to bite. But there’s a long way yet to go in bringing back together a nation that May herself has contributed so much to dividing – doubly so if she continues to allow members of her government and party up carry on doing the same.</p><img src="https://counter.theconversation.com/content/92778/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andy Price does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A conciliatory tone from the prime minister but Boris Johnson and Michael Gove continue to cause problems.Andy Price, Head of Politics, Sheffield Hallam UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/924852018-03-01T14:48:39Z2018-03-01T14:48:39ZWould staying in a customs union after Brexit avoid a hard border with Ireland?<p>Apart from being a week in which Siberian snowstorms blanketed Europe, the last days of February 2018 will be remembered as the moment the Irish border question marched firmly back onto centre stage in the Brexit debate in three rapid steps.</p>
<p>The first step came on February 26, when Labour leader Jeremy Corbyn – in a shrewd political move – called for the UK to <a href="http://www.bbc.co.uk/news/uk-politics-43189878">enter a permanent customs union</a> with the EU after Brexit. Corbyn thus returned to the political agenda an issue the British prime minister, Theresa May, had <a href="https://www.theguardian.com/politics/2018/feb/04/cabinet-united-brexit-trade-strategy-amber-rudd-theresa-may-customs-union">tried to erase</a> unequivocally only weeks before. Corbyn’s reasons were “to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland”. Parliamentary numbers give him every chance of prevailing.</p>
<p>Then a <a href="https://news.sky.com/story/boris-johnson-promises-to-release-very-positive-northern-ireland-border-letter-11270575">letter emerged</a> from the foreign secretary, Boris Johnson, to May. In it, Johnson – who had repeatedly denied in public any threat of a hard Northern Ireland border – turned out to be contemplating precisely this eventuality in private. This discovery – <a href="https://news.sky.com/video/heseltine-responds-to-boris-letter-leak-11270175">deemed</a> “the most remarkable revelation of duplicity” by Conservative peer Michael Heseltine – also indicated the price that Tory Brexiters now seem increasingly prepared to see paid for Brexit: a hard Northern Irish border, whatever consequences this may involve for peace or the future of Ireland.</p>
<p>Step three followed the day after, when the European Commission unveiled its <a href="https://ec.europa.eu/commission/publications/draft-withdrawal-agreement-withdrawal-united-kingdom-great-britain-and-northern-ireland-european-union-and-european-atomic-energy-community_en">Draft Withdrawal Agreement</a> for the UK’s departure from the EU. Among its provisions were stipulations that – if other agreements were not reached to avoid a hard border – Northern Ireland would form part of the EU customs territory. This would be accompanied by the establishment of “common regulatory area on the island of Ireland”, in a wide variety of subject areas. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/eu-brexit-withdrawal-proposal-a-lawyer-explains-the-detail-92620">EU Brexit withdrawal proposal: a lawyer explains the detail</a>
</strong>
</em>
</p>
<hr>
<p>The idea of treating Northern Ireland differently was <a href="http://www.independent.co.uk/news/uk/politics/brexit-latest-updates-theresa-may-northern-ireland-border-eu-irish-republic-customs-union-a8232631.html">speedily denounced</a> by May. But her insistence that a hard border between Northern Ireland and the Republic of Ireland can somehow be avoided remains unsupported by any concrete plan as to how this might be done without following the route suggested in the draft withdrawal agreement – which <a href="https://www.theguardian.com/politics/2018/feb/28/irish-pm-shows-frustration-with-uk-over-brexit-border-deal">is supported</a> by the Irish government.</p>
<h2>What a customs union would mean</h2>
<p>In both a no-deal scenario or May’s preferred scenario of a new comprehensive free trade deal between the EU and UK (like <a href="https://theconversation.com/what-is-the-canada-trade-model-and-could-it-work-for-a-post-brexit-uk-58098">Canada’s</a>), a hard border – complete with customs checks on both sides, queues and tariffs and political fury in border counties – is guaranteed. If the UK were to leave the EU without a deal, World Trade Organisation tariffs would apply on trade on all goods between the UK and the Republic of Ireland. For that, customs controls would be needed. But a Canada-style deal would <a href="https://www.irishtimes.com/opinion/kevin-o-rourke-britain-wakes-up-to-the-reality-of-free-trade-1.3316849">clearly also require checks on the border</a> – however much May denies this. Free trade areas always require border controls – because even though goods in a free trade area would be traded tariff-free, goods coming from outside the free trade area would not be. </p>
<p>What about Corbyn’s plan to place the UK in <a href="https://theconversation.com/jeremy-corbyns-brexit-plan-proves-he-likes-having-his-cake-and-eating-it-even-more-than-boris-johnson-92622">a permanent customs union</a> with the EU? This would certainly eliminate the need for customs controls to collect tariffs – as a customs union would eliminate tariffs on all goods crossing internal frontiers. But it would not eliminate customs controls entirely. This can be seen from the fact that between 1973 and 1992, the UK and Ireland were in a Corbyn-style customs union with each other (called the European Economic Community) and <a href="https://tradebetablog.wordpress.com/2017/01/">yet customs controls were maintained</a>. </p>
<p>Member states of a customs union can maintain all sorts of regulations – such as health standards, agricultural controls and minimum product standards – and goods entering the market need to be checked for compliance with these. This is exactly what customs officers along the Northern Irish border were doing until the single market emerged in 1993.</p>
<p>Only in a single market are such standards harmonised or mutually recognised on a comprehensive basis – without the need for customs checks. This is why it was possible to abolish systematic customs checks along the border in 1993. </p>
<h2>How to avoid a hard border</h2>
<p>Corbyn’s proposal, if the EU agreed to it, would reduce customs checks along the frontier and be a hugely welcome boost to cross-border trade and to the prosperity of both the UK and Ireland. It is also infinitely preferable to the May-Johnson free trade area plan. What it will not do, however, is end the prospect of a hard border. </p>
<p>For this, both Northern Ireland and the Republic of Ireland need to be in a single market with one another. One way of doing this is for the UK as a whole, in leaving the EU, to stay in a single market and customs union relationship with the EU 27 states – what could be called a “Norway plus” deal. Another is the fall-back option within the EU’s draft withdrawal agreement – that Northern Ireland remains part of the current EU customs territory after Brexit. </p>
<p>May currently rejects both options. The economic consequences of that for the UK as a whole seem <a href="https://www.ft.com/content/b3d35136-0543-11e8-9650-9c0ad2d7c5b5">dubious.</a> But, at any rate, as long as both courses are ruled out, May’s “no hard border” mantra should be recognised for the self-deluding fantasy that Johnson’s letter implies it is.</p><img src="https://counter.theconversation.com/content/92485/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gavin Barrett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Options to avoid a hard border are on the table, but they remain unpalatable to Theresa May’s government.Gavin Barrett, Professor at the Sutherland School of Law, University College DublinLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/926222018-02-28T15:29:16Z2018-02-28T15:29:16ZJeremy Corbyn’s Brexit plan proves he likes having his cake and eating it even more than Boris Johnson<p>Foreign Secretary Boris Johnson’s policy on cake is, famously, “pro-having it, and pro-eating it”. This certainly appears to be the predominant ambition among the Cabinet’s leading Brexiteers. Quite understandably, this has led to accusations by the EU that the UK is trying to “cherry pick” which parts of EU membership it wants to retain <a href="https://theconversation.com/uk/eu-referendum-2016">post-Brexit</a>, allegedly with little regard for the fact that the EU is a package deal – take it, or leave it. The reality, however, is that the EU is not a package deal. Member states have been cherry-picking which parts they wish to participate in since the union’s inception.</p>
<p>Prime Minister Theresa May, lacking a majority in the House of Commons, may well find herself in need of a compromise that she can sell at home. The hard Brexiteers within her own party insist that the UK must be free to strike its own trade deals with third-party states. A small minority within her own party, meanwhile, favour as little deviation from the status quo as possible. This minority was manageable so long as the Labour party backed the government’s position on Brexit. Now, however, Labour leader Jeremy Corbyn, in an ironically New Labour display of third-wayism, has set out its own <a href="https://blogs.spectator.co.uk/2018/02/full-text-jeremy-corbyns-brexit-speech-2/">vision for Brexit</a>: the maintenance of a customs union with the EU post-Brexit. Both the Labour party and the government Brexiteers maintain that free movement of people must come to an end.</p>
<p>To summarise, what May needs in order to sell a Brexit deal domestically is as follows:</p>
<ul>
<li><p>Freedom to strike trade deals with third-party states post-Brexit</p></li>
<li><p>The end of free movement of people (at least, as we know it)</p></li>
<li><p>A (note the indefinite article) customs union with the EU</p></li>
</ul>
<p>At the same time, the prime minister also appears to need an arrangement which meets the EU’s principal criteria:</p>
<ul>
<li>No special treatment for the UK just because it voted to leave</li>
</ul>
<p>The government needs an arrangement that satisfies all of the former criteria, but that the deal cannot amount to special treatment. Such an arrangement might seem like political alchemy except for the fact that such an arrangement already exists. It is enjoyed by members of the <a href="https://theconversation.com/could-the-uk-rejoin-the-european-free-trade-association-efta-after-brexit-81208">European Free Trade Association</a> (EFTA) – an organisation of which the UK was a founding member.</p>
<p>EFTA is an international organisation established by a free trade agreement – the EFTA Convention. The EFTA Convention seeks to eliminate tariff barriers and reduce non-tariff barriers between its signatories. Crucially, though the EFTA states have negotiated a number of trade agreements jointly, its members are free to negotiate their own trade agreements with third countries.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/208278/original/file-20180228-36671-1nmyrhd.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/208278/original/file-20180228-36671-1nmyrhd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/208278/original/file-20180228-36671-1nmyrhd.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/208278/original/file-20180228-36671-1nmyrhd.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/208278/original/file-20180228-36671-1nmyrhd.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/208278/original/file-20180228-36671-1nmyrhd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=425&fit=crop&dpr=1 754w, https://images.theconversation.com/files/208278/original/file-20180228-36671-1nmyrhd.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=425&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/208278/original/file-20180228-36671-1nmyrhd.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=425&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">What the UK can get and how.</span>
<span class="attribution"><span class="source">Stuart MacLennan</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
</figcaption>
</figure>
<p>EFTA was established as an alternative to the EU’s predecessor, the European Economic Community (EEC). While the EEC sought to liberalise free trade through integration, EFTA’s model was based upon cooperation between sovereign states. The UK and Denmark were both founding members of EFTA, however. When both states joined the EEC in 1973, their substantial trading relationships with EFTA members created an onus to bridge the gap between the two blocs. The result was that the remaining individual EFTA members concluded free trade agreements with the EEC in 1972 and 1973.</p>
<p>The crucial difference between a free trade agreement and a customs union is that the trade agreement is only concerned with how the parties to the agreement trade with each other. Under a customs union, the parties to the treaty not only agree to trade freely with each other, but they also agree to negotiate all future trade agreements with other states collectively. Consequently, the parties to a customs union are not at liberty to negotiate agreements with third-party states by themselves.</p>
<h2>More cake, Jeremy?</h2>
<p>Labour’s position on cake seems to be: pro-having it, pro-eating it, and pro-vetoing everyone who wants a cake of their own.</p>
<p>Corbyn’s new position on Brexit appears to be even more selfishly selective than anything articulated by Johnson. Announcing the policy, he said:</p>
<blockquote>
<p>Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland … But we are also clear that the option of a new UK customs union with the EU would need to ensure the UK has a say in future trade deals.</p>
</blockquote>
<p>In essence, Corbyn’s post-Brexit vision is for the UK to form a new customs union with the EU (as opposed to participating in the existing EU customs union). The EU and UK would jointly conclude agreements with third-party states, and the UK would enjoy a veto over such agreements. This not only amounts to a cherry-picking of the EU’s existing trade framework, but an insistence that the UK should exercise an even greater control over the EU’s arrangements with third-party states than exists at present. While indications are that Brussels is looking favourably upon Corbyn’s speech, it is inconceivable that the EU would agree to the form of arrangement Corbyn is presently proposing.</p>
<p>The solution, therefore, becomes increasingly obvious. Membership of EFTA would allow the UK access to the association’s network of existing free trade agreements, as well as retaining the UK’s liberty to conclude trade agreements of its own, thereby satisfying a key demand of Brexiteers. Furthermore, such an arrangement would put the UK far beyond the ambit of the free movement of people that is so anathema to the Conservative right. And while EFTA membership falls short of a separate customs union with the EU, it appears to be as close to Corbyn’s new position as is conceivably possible.</p>
<p>Crucially, such an arrangement conforms with existing arrangements between the EU and EFTA states – in particular, Switzerland – thereby allowing the EU to maintain that the UK is not a recipient of any special treatment. It may well be the case that EFTA’s next member is also its first.</p><img src="https://counter.theconversation.com/content/92622/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dr Stuart MacLennan is a member of the Labour Party.</span></em></p>The Labour leader’s vision for a customs union after Brexit is even more optimistic than the one being proposed by Theresa May.Stuart MacLennan, Senior Lecturer in Law, Coventry UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/922282018-02-26T10:33:03Z2018-02-26T10:33:03ZThe five alternatives to EU single market and customs union would all make UK poorer<figure><img src="https://images.theconversation.com/files/207821/original/file-20180226-140184-mlntva.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/container-ship-berthing-port-127403000?src=KpbMEHT1SPYi-uIj89nipQ-1-21">shutterstock.com</a></span></figcaption></figure><p>Concerns are intensifying over the UK’s economic future, thanks to the lack of clarity over what kind of relationship it will have with the EU after Brexit. If the UK were to leave the <a href="https://theconversation.com/should-the-uk-remain-in-the-eu-customs-union-after-brexit-63179">single market and customs union</a>, there are five obvious alternatives. </p>
<p>We looked at each of these <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2993069">in a recent study</a> and found the UK’s real GDP will drop by 2.63% if there is a shallow free trade agreement in place with the EU (akin to Canada’s). If the UK manages to also conclude a free trade agreement with the US, the effect of leaving the EU will be -2%. And an agreement with the largest Commonwealth countries will make it -1.93% worse off than staying in the EU. </p>
<p>In the case of a hard Brexit, reverting to World Trade Organisation (WTO) free trade rules, the predicted losses will grow to -4.78%. A free trade agreement with the US will reduce predicted losses to -4.13% and, alternatively, a deal with the Commonwealth countries would lessen the blow to -3.96%. </p>
<p>This will not take place abruptly. The losses will occur over a long period, but it’s clear that signing new trade agreements with other countries cannot entirely compensate for leaving the EU. We also found that the trade creation effect of the EU (where trade deals spur more trade between countries after they sign a trade agreement) gets stronger over time and has currently reached its peak. This suggests that our estimates of Brexit are quite optimistic. </p>
<h2>Global shifts in world trade</h2>
<p>Over the last century, the UK has gone from being a global trade power to an “awkward partner” in the EU, before rejecting its EU membership outright. This nationalist tendency is in contrast to the moves of many countries towards forming mega-regional trade blocs like the the <a href="https://theconversation.com/uk/topics/tpp-7972">Trans-Pacific Partnership</a> (TPP) between the US and 11 countries around the Pacific, and the 16-nation Regional Comprehensive Economic Partnership (RCEP) – and, of course, the EU.</p>
<p>Negotiating these blocks requires large-scale trade diplomacy and prolonged discussions. They take years to negotiate.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/207320/original/file-20180221-132663-bvg731.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/207320/original/file-20180221-132663-bvg731.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=353&fit=crop&dpr=1 600w, https://images.theconversation.com/files/207320/original/file-20180221-132663-bvg731.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=353&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/207320/original/file-20180221-132663-bvg731.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=353&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/207320/original/file-20180221-132663-bvg731.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=443&fit=crop&dpr=1 754w, https://images.theconversation.com/files/207320/original/file-20180221-132663-bvg731.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=443&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/207320/original/file-20180221-132663-bvg731.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=443&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Global trade deal groups.</span>
<span class="attribution"><span class="source">Oleksandr Shepotylo and Karen Jackson</span></span>
</figcaption>
</figure>
<p>While UK policy makers have been keen to highlight the opportunities of signing new trade deals, it is becoming increasing apparent that negotiating an <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/680366/Technical_Note_-_International_Agreements_in_the_Implementation_Period_-_CLEAN.pdf">implementation period</a> to do so is an important next step. Hence, the UK Brexit secretary, David Davis, <a href="https://www.gov.uk/government/news/david-davis-teesport-speech-implementation-period-a-bridge-to-the-future-partnership-between-the-uk-eu">has called for</a> a time limited period after Brexit where the EU’s trade agreements with third countries continue to apply to the UK. </p>
<p>In other words, it is starting to become clear that <a href="https://vimeo.com/252854131">grandfathering agreements</a>, where agreements that apply to the EU would be rolled over and apply to the UK, is not quite as simple as it may have first appeared. </p>
<p>In the face of such difficulties it is somewhat predictable that the US and Commonwealth get mentioned as the light at the end of the tunnel. Certainly the Commonwealth remains as a group of member states. But re-establishing it as a trading club headed by the UK, or the UK signing a collection of bilateral trade agreements through it, may prove difficult. </p>
<p>After World War I, the UK defence of imperial preferences was seen by some as a desperate attempt to maintain a powerful position in the world-trading environment. More recently, African countries <a href="http://www.thecitizen.co.tz/News/Signing-EPA-with-Europe-is-bad--declares-Magufuli/1840340-3828048-jqq8bi/index.html">have been reticent</a> to sign up to EU trade deals amid accusations that they are a type of colonialism. Meanwhile, India is backing their “Buy in India” programme <a href="https://theconversation.com/why-britain-cannot-bank-on-india-for-post-brexit-business-66246">rather than looking to trade with the UK</a>.</p>
<h2>Five alternatives</h2>
<p>Our research highlights the losses stemming from the lower bargaining power of the UK as a standalone country, rather than as a member of a powerful trading bloc like the EU. </p>
<p>Signing free trade agreements with countries that are farther away, such as the US or Commonwealth countries (Australia, Canada, New Zealand, India, Pakistan, South Africa) cannot compensate for these losses, as some commentators suggest. But it reduces the blow by about 0.65 to 1.1%, depending on the scenario. A hard Brexit would generate losses from 4.1% to 5.3% of real GDP – that’s roughly £77 billion to £99 billion.</p>
<p><iframe id="OKLoc" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/OKLoc/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Again, it’s important to recognise that these losses will not be immediate, nor will a hard Brexit cause a catastrophic decline in trade flows between the EU and UK. These are long-run forecasts and these changes would occur gradually after Brexit has taken place.</p>
<h2>The multiplier effect</h2>
<p>To understand how the effect of trade deals influence trade creation over time, we studied all free trade agreements around the world over the period 1960-2014. Several important trends emerge. First, the positive effect of a free trade agreement (or negative effect of exiting it) accumulates over several decades. Second, preferential trade agreements, in particular, the EU common market are currently having the strongest impact on trade in the European region.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/207365/original/file-20180221-132654-1asqley.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/207365/original/file-20180221-132654-1asqley.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=439&fit=crop&dpr=1 600w, https://images.theconversation.com/files/207365/original/file-20180221-132654-1asqley.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=439&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/207365/original/file-20180221-132654-1asqley.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=439&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/207365/original/file-20180221-132654-1asqley.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=551&fit=crop&dpr=1 754w, https://images.theconversation.com/files/207365/original/file-20180221-132654-1asqley.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=551&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/207365/original/file-20180221-132654-1asqley.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=551&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Dynamics of regional trade agreements (RTA) and the EU, 1960-2014.</span>
<span class="attribution"><span class="source">Karen Jackson and Oleksandr Shepotylo</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>Countries benefit from integrating into large regional trade and economic blocs. Those that do not, experience significant economic losses. Even if a country outside the bloc is a more efficient exporter, they lose out to less efficient exporters that are in the trade group. Similarly, countries in trade blocs give each other preferential treatment, causing those outside the group to decline in importance. </p>
<p>So a resurgence of the Commonwealth group as a mega-regional would be beneficial, but not to the extent that it would compensate for the losses associated with Brexit. That’s assuming it would be possible to sign a free trade agreement with the largest Commonwealth countries. A US-UK free trade agreement would also face significant political difficulties and, if realised, the benefits would not outweigh the negative effect of Brexit.</p>
<p>The UK decision to step outside the EU framework and embark on independently negotiating trade deals is a risky endeavour and likely to bring significant losses. Signing TTIP would further weaken the UK’s position. Instead, the UK would be wise to negotiate a way it can play the new mega-regional game as part of the EU bloc.</p><img src="https://counter.theconversation.com/content/92228/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Leaving the EU single market and customs union cannot be compensated for by free trade agreements with other countries.Karen Jackson, Senior Lecturer in Economics, University of WestminsterOleksandr Shepotylo, Lecturer in Econoimcs, University of BradfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/911722018-02-05T14:11:35Z2018-02-05T14:11:35ZThe cost of Brexit and how much you should trust the forecasts – explained by an economist<figure><img src="https://images.theconversation.com/files/204809/original/file-20180205-19921-1ox9hsg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/717456961?src=tfuApU69IwYneVQ63hC7sg-1-0&size=huge_jpg">shutterstock.com</a></span></figcaption></figure><p>Brexit is like a box of chocolates: you never know what you’re gonna get. The latest surprise is that Downing Street has <a href="http://www.bbc.co.uk/news/uk-politics-42938672">ruled out</a> staying in the <a href="https://theconversation.com/should-the-uk-remain-in-the-eu-customs-union-after-brexit-63179">customs union</a>, which allows uninhibited trade in goods within the EU. It follows the leak of the government’s pessimistic assessment of the economic impact of Brexit. The leaked document reinforces the <a href="https://theconversation.com/why-is-the-academic-consensus-on-the-cost-of-brexit-being-ignored-59540">academic consensus</a> on the costs of Brexit and shows that staying in the customs union would be better for the UK economy.</p>
<p>The full report is not yet available to the public. Instead, it was leaked in two instalments. The <a href="https://www.buzzfeed.com/albertonardelli/the-governments-own-brexit-analysis-says-the-uk-will-be?utm_term=.gqwmoO3XB#.qxVzRy8YE">first</a> shows that Brexit will be economically damaging in every scenario – including the scenario the government says it prefers, which seems to be somewhere between membership of the single market like <a href="https://theconversation.com/is-britain-the-new-norway-stance-on-ecj-suggests-london-seeks-a-softer-brexit-82862">Norway</a> or a trade deal <a href="https://theconversation.com/what-is-the-canada-trade-model-and-could-it-work-for-a-post-brexit-uk-58098">like Canada</a>. The bottom line is that after Brexit, the UK will be inexorably poorer.</p>
<p>The <a href="https://www.buzzfeed.com/albertonardelli/the-leaked-brexit-analysis-shows-how-cutting-eu-immigration">second</a> instalment showed not only that migration has been beneficial to the UK economy, but also that its Brexit-driven reduction will be costly. To add insult to injury, it also showed that these losses will not be compensated by gains from a free trade agreement with the US. The net benefits from migration may be small but as the leaked report shows they are significantly larger than the gains from free trade agreements with countries on the other side of the globe. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/204811/original/file-20180205-19921-wh6t60.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/204811/original/file-20180205-19921-wh6t60.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/204811/original/file-20180205-19921-wh6t60.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/204811/original/file-20180205-19921-wh6t60.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/204811/original/file-20180205-19921-wh6t60.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/204811/original/file-20180205-19921-wh6t60.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/204811/original/file-20180205-19921-wh6t60.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Immigration is good for the UK economy.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/prague-czech-republic-december-2017-passport-789007057?src=m2McGItshCn4qEfg9yMQVQ-1-10">shutterstock.com</a></span>
</figcaption>
</figure>
<p>It will not be at all shocking if there is a third instalment. It may show that EU regulations have been beneficial to the UK (the benefits <a href="https://theconversation.com/is-eu-regulation-really-so-bad-for-the-uk-83193">have long been overlooked</a>). Or maybe that Europe does not need the City of London to sustain high rates of economic growth. Or that there is not a single region in the UK that would clearly benefit and that the ones that will be hurt the most <a href="https://qz.com/1162733/how-will-brexit-affect-me-uk-regions-that-voted-leave-could-be-worst-affected/">are the ones that voted Leave</a>.</p>
<h2>Don’t shoot the messenger?</h2>
<p>The choice the government has is how to leave. Leaving like Norway, the report estimates, will make the UK roughly 2% poorer (Nobel-prize winning and economics expert Paul Krugman <a href="http://krugman.blogs.nytimes.com/2016/04/23/boris-is">has written</a> that, in this context, “2% is a lot”). Leaving like Switzerland will make the UK 5% poorer and leaving like Russia, 8% poorer. Unsurprisingly, this last figure is in line with the estimated benefits the UK <a href="http://voxeu.org/article/how-rich-nations-benefit-eu-membership">historically enjoyed from its membership in the EU</a>.</p>
<p>In fact, the leaked scenarios have not moved us an iota away from <a href="https://voxeu.org/article/looking-back-ex-ante-estimates-costs-brexit">what we knew pre-referendum</a>. There is mention that a new method was used, but that is highly unlikely. There is no time, energy nor capacity in the civil service to develop a new model amid this chaos. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-is-the-academic-consensus-on-the-cost-of-brexit-being-ignored-59540">Why is the academic consensus on the cost of Brexit being ignored?</a>
</strong>
</em>
</p>
<hr>
<p>Otherwise, there is no meaningful difference between the figures in the leaked report and analysis carried out before the referendum by the Treasury or economists at the LSE, NIESR, or the <a href="http://www.independent.co.uk/news/uk/politics/brexit-economic-impact-uk-autumn-statement-debt-loss-household-1250-institute-for-fiscal-studies-a7437131.html">IFS</a>. </p>
<p>The only thing that is different is that this time the message is coming from the Department for Exiting the European Union, DExEU. And it’s very much in DExEU’s interest to make Brexit work. </p>
<h2>Forecasting cliffs</h2>
<p>Nonetheless, you may ask: how can we trust these forecasts? One of the key Brexit ministers, the MP Steve Baker, claims that Whitehall economic forecasts are <a href="https://www.theguardian.com/politics/2018/jan/30/brexit-minister-says-whitehall-economic-forecasts-are-always-wrong">always wrong</a>. Many point to how the UK economy has <a href="https://www.theguardian.com/business/2017/jan/05/chief-economist-of-bank-of-england-admits-errors">weathered the Brexit vote</a> and not fallen off the cliff edge that was supposedly forecast.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/204810/original/file-20180205-19944-1yrvhti.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/204810/original/file-20180205-19944-1yrvhti.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/204810/original/file-20180205-19944-1yrvhti.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/204810/original/file-20180205-19944-1yrvhti.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/204810/original/file-20180205-19944-1yrvhti.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/204810/original/file-20180205-19944-1yrvhti.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/204810/original/file-20180205-19944-1yrvhti.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A false portrayal of Brexit?</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/blindfolded-businessman-walk-cliff-business-concept-560053792?src=9T8UGZdUhBqXxBTs9Hlruw-1-26">shutterstock.com</a></span>
</figcaption>
</figure>
<p>But the forecasts published in the run up to the Brexit vote have not been disproved. First and foremost this is because the UK has not yet left the EU. When it does, what these forecasts predict is not that the economy will collapse, shrink or self-destroy. <a href="https://theconversation.com/brexit-100-days-on-and-wheres-the-economic-armageddon-66300">They predict</a> that because the UK will grow more slowly and the gap compared to an average EU member (treated as an approximation to a “UK that remained in the EU”) will increase. </p>
<p>This prediction was based on three important assumptions. The first was immediate withdrawal from the EU – this hasn’t happened yet. The second was that the UK government remains <a href="https://voxeu.org/article/how-european-integration-builds-state-capacity">stable</a>. The snap election and hung parliament meant this did not happen either. </p>
<p>And the third assumption the forecasts are based on is that the economic performance of the rest of the EU would remain similar to what it was before the referendum. In fact, Britain’s economy has been helped <a href="http://www.huffingtonpost.co.uk/entry/jim-oneill-brexit-eu_uk_5a65ca6ee4b002283004747b">by a buoyant EU and global economy</a>. </p>
<p>So what happens next? <a href="http://www.politics.co.uk/comment-analysis/2018/02/02/brexit-cost-analysis-loss-to-economy-would-pay-for-2-5-milli">Reactions</a> to the leaked report seem to be that those sceptical of the EU – and “experts” – will remain that way. Hard Brexit supporters are keen to undermine the report.</p>
<p>What’s different now compared to before the referendum, though, is that the political and economic elites are no longer on the same side as the media, which was <a href="https://voxeu.org/article/looking-back-ex-ante-estimates-costs-brexit">skewed toward Brexit</a>. Although media coverage can still only be described as lukewarm at best, there is now more consensus among political elites against a hard or no-deal Brexit. Moreover, <a href="http://www.cbi.org.uk/news/cbi-calls-for-greater-clarity-and-urgency-on-brexit-trade-and-on-transition/">business has said loud and clear</a> that it fully concurs with the conclusions from the leaked report – that the UK needs to stay in the customs union.</p><img src="https://counter.theconversation.com/content/91172/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nauro F. Campos does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The leaked government Brexit report reinforces the academic consensus that the harder the Brexit, the worse it will be for the UK economy.Nauro F. Campos, Professor of Economics and Finance, Brunel University LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/884982017-12-04T14:43:25Z2017-12-04T14:43:25ZIreland: a century of trade relations shows why a soft border is so important<p>You only have to look at the levels of trade and economic development in Ireland over the past century to realise the significance of a smooth border between Northern Ireland and the Republic. The Republic is best described as a small, open economy whose fortunes have been inextricably linked with those of its larger neighbour, the UK. If this holds true for the Republic then it is even more so the case with Northern Ireland.</p>
<p>What is perhaps not appreciated is the comparatively wealthy character of the Irish economy as a whole in the years before independence. In 1913 Ireland <a href="https://books.google.co.uk/books/about/The_Economic_Development_of_Ireland_in_t.html?id=A5DbUoU_lCAC&redir_esc=y">ranked tenth</a> in a European league of 23 countries for Gross National Product per capita. The perception of Irish underdevelopment was only relative to industrial pioneers like Britain. While agriculture did dominate, the hallmarks of a modern economy – a strong secondary sector and a growing tertiary sector – were developing fast, driven in part by labour mobility and emigration, but also by technological change, capital investment, access to major markets and a stable currency. </p>
<p>The pattern of its development was uneven, however, with the bulk of heavy industry such as engineering, shipbuilding and textiles located in the North. While, in the South, industry was specialised in food processing located near key ports in Dublin, Cork, Limerick and Waterford.</p>
<h2>Division and decline</h2>
<p>The island was officially divided in two on May 3 1921 following the Government of Ireland Act of 1920. A <a href="http://ukandeu.ac.uk/explainers/the-origins-of-the-irish-border/">land border was created</a>, stretching 310 miles through a patchwork of forests and farms. With the emergence of two separate countries, came two distinct economies.</p>
<p>While the creation of the common travel area in 1923 allowed movement of peoples, over time the border would become a customs and security control that took on social, cultural and political significance. The decision by the then Irish Free State in the early 1930s to industrialise behind a tariff wall <a href="https://www.economics.ox.ac.uk/oxford-economic-and-social-history-working-papers/independent-ireland-in-comparative-perspective">served to deepen the economic divide</a>. </p>
<p>Then, the Free State’s neutrality during World War II followed by the declaration of a republic in 1948 further emphasised social and cultural differences between North and South. During <a href="https://www.britac.ac.uk/pubs/proc/files/98p035.pdf">this period</a> dwindling southern Irish exports were oriented toward UK markets – more than 90% went to the UK from 1924-1950. Trade in the opposite direction was higher, but during the same years the Northern Irish economy stagnated as traditional industries declined, the fillip of material demand from WWII aside. </p>
<p><a href="https://www.researchgate.net/publication/24140468_You_Take_the_High_Road_and_I'll_Take_the_Low_Road_-_Economic_Success_and_Wellbeing_in_the_Longer_Run">By the end of the 1950s</a>, inward-looking economic policies, including tariff protection and restrictions on capital imports, were deemed responsible for the under-performing southern economy. In 1958, the Irish government decided to open up its economy and encourage investment through tax and investment incentives. </p>
<p>This policy shift was matched by a reorientation away from UK markets. Trade with the UK as a whole declined thereafter – export and import shares fell from 74% of the Republic’s trade in 1960 to a little over 30% by 1992. Entry into the European common market (EEC) in 1972 helped accelerate this change. </p>
<p>More importantly its EEC membership, determined largely by the decision of the UK to join, also served to legitimise Irish economic and political concerns as a peripheral economy. The benefits of membership for the Republic were slow to materialise and any gains were negated by the second oil crisis in 1979. To counter the price shock, the government spent vast amounts, leading to enormous public debt <a href="https://www.britac.ac.uk/pubs/proc/files/98p035.pdf">and threatened national bankruptcy</a>. This in turn was followed by financial austerity <a href="https://academic.oup.com/cje/article-abstract/36/1/223/1714644?redirectedFrom=PDF">and high unemployment in the 1980s</a>. </p>
<p>Across the border, the North’s economy followed a similar pathway. At its creation the then wealthy Ulster province was envisaged as a self-sufficient net contributor to the British revenue. But decades of industrial decline saw these contributions dwindle. </p>
<p>Instead, Northern Ireland required significant government support in the 1960s. Investment grants, tax concessions and other inducements were used to attract foreign investment. However, as the UK entered prolonged recession in the 1970s, these funds dried up and industry suffered. The background music to this was the <a href="https://academic.oup.com/cje/article-pdf/5/1/1/4817582/5-1-1.pdf">turmoil of the Troubles</a>, during which cross-order relations and economic activity reached their lowest ebb.</p>
<h2>An exceptional recovery</h2>
<p>Recovery, when it came, was exceptional. In the South the economy grew at an average of 7% each year from 1987 to 2000. However it is more accurate to see this as compensation for years of under-performance, as one of the poorest countries in the common market began to converge with richer trading partners. </p>
<p>The North’s economy was not unaffected by this development. It also coincided with a detente between the two during this period. Starting with the Anglo-Irish Agreement in 1985 and then the Good Friday Agreement in 1998, political relations improved and translated into economic gains. Since the early 1990s there has been a steady growth in cross-border activities only partly slowed by the credit crisis of 2007-08.</p>
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<p>There have also been increases in tourism, investment and travel. Around 30,000 people cross the border daily for work purposes and approximately 177,000 lorries <a href="http://www.intertradeireland.com/researchandpublications/trade-statistics/total_cross_border_trade/">and 250,000 vans cross</a> each month. Trade is now valued at <a href="http://www.cso.ie/en/releasesandpublications/ep/p-biun/biun/trade/">around £3 billion</a> a year.</p>
<p>The latest estimates for the Northern Irish balance of trade are more compelling. They identify the Republic as the North’s largest external trading partner.</p>
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<p>For the 1.81m people in the North and the 4.78m people in the Republic, this cross-border trade is huge. Of particular importance is the agricultural processing industry with supply chains crossing the border several times before final production. </p>
<p>One-third of the total trade between the two economic areas is in <a href="http://www.cso.ie/en/releasesandpublications/ep/p-biun/biun/trade/">animals and food</a>. Under World Trade Organisation rules, tariffs on dairy produce are approximately 30%. Disrupting the sector by forcing businesses to completely rethink their supply chains could prove costly.</p>
<p>After decades of diplomacy and development the two economies of Ireland are more integrated than they have been in a century. The EU was central to this, proving an honest broker in these discussions. Brexit threatens to undo these advances and once again partition the Irish economy. Further, it threatens to undermine the positive relations that so many have worked so hard for, for so long. </p>
<p>Irish politicians, on both sides of the border, must fear a return to a dark period in the history of the island. And Brexit negotiators should be mindful of this as they bash out their divorce settlement.</p><img src="https://counter.theconversation.com/content/88498/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jason Begley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>After decades of diplomacy and development the two economies of Ireland are more integrated than they have been in a century.Jason Begley, Research Fellow, Centre for Business in Society, Coventry UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/873882017-11-13T13:51:42Z2017-11-13T13:51:42ZNorthern Ireland’s economy has a lot more to lose from a hard Brexit than the Republic’s<p>As the Brexit end game approaches, the intractability of the <a href="https://www.ft.com/content/2548fe28-c648-11e7-a1d2-6786f39ef675">problems around the Irish border</a> are thrown into sharp relief. On the one hand there is a stated desire by all parties in Northern Ireland to avoid a “hard” border (generally seen as involving customs posts and assorted paraphernalia long vanished from Europe). On the other, there is a <a href="https://theconversation.com/theresa-may-confirms-itll-be-a-hard-brexit-heres-what-that-means-for-trade-71417">stated intent</a> from the British government to take the UK as a whole out of the single market, customs union and free trade areas that combine to form the structure of the EU. These are logically incompatible.</p>
<p>A harder border of any kind will have an effect on the economies of both north and south. It is inescapable that Brexit will bring some economic pain to Ireland. But the <a href="https://www.esri.ie/pubs/RS48.pdf">general consensus</a> is that this will be concentrated in a few sectors. And a closer look at the nature of trade across the Irish border indicates that the economic losses will be significantly greater on the northern than on the southern side. </p>
<p>Although nobody expects a complete cession, there will be greater friction to trade than is the case at present, if barriers are put in place. A rich literature in international integration supports the notion that lowering barriers to trade <a href="https://blogs.imf.org/2016/06/20/how-lowering-trade-barriers-can-revive-global-productivity-and-growth/">results in increased trade</a>. </p>
<p>So, any Brexit that takes Northern Ireland out of the customs union will have a significant impact. There will be no increased trade, in the short to medium term, with the rest of the UK, where economic growth forecasts have been <a href="https://www.ft.com/content/499115b6-ad90-11e7-beba-5521c713abf4">constantly downgraded</a> since the Brexit vote. Meanwhile increased barriers will be created with the EU.</p>
<h2>Global connections</h2>
<p>Northern Ireland is not a globally linked economy. Of all sales, a mere 15% of goods are exported and 8.5% of services. In 2015 <a href="https://www.nisra.gov.uk/sites/nisra.gov.uk/files/publications/BESES-Goods-Services-Publication-2015-Headline-results.pdf">total exports</a> amounted to £9 billion or €13 billion, of which €10.8 billion was goods. On a per capita basis this is a quarter of the export footprint of Ireland and on a services basis 20 times less. </p>
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<p>Cross border trade flows, more specifically, are also <a href="https://www.oireachtas.ie/parliament/media/housesoftheoireachtas/libraryresearch/others/NSIPA-Brexit-Research-Paper-Final--Version051216.pdf">heavily weighted</a> against Northern Ireland. The Republic of Ireland accounts for 33% of all Northern Ireland goods exports as of 2015 and 40% of all its services exports, some 36% of total exports. In contrast Northern Ireland is a destination for just 1.7% of all Irish exports.</p>
<p>So any slowing of trade between the two will be of far greater importance to the Northern Irish economy.</p>
<h2>Diversity matters</h2>
<p>When you examine the distribution of this trade across sectors it becomes clear that it is highly concentrated on a few. North to south trade in goods is concentrated 52% in food and drink, and in services 63% in wholesale and retail services. South to north trade in goods is 66% in food, drink and chemicals. </p>
<p>At first blush, then, trade between the two parts of the island revolves around integrated supply chains in Irish agribusiness, with a seasoning of warehousing services. The trade surplus which Northern Ireland enjoys with the Republic of Ireland is nearly entirely made up of food and drink exports.</p>
<p>This would be severely affected by a hard Brexit, which would see the UK crash into a trading regime of <a href="https://theconversation.com/explainer-whats-the-difference-between-hard-and-soft-brexit-66524">World Trade Organisation rules</a>. Under WTO rules, food and related exports would face tariffs in the 30-40% range. Even with sterling declining in value this would almost certainly render Northern Ireland’s surplus moot overnight. </p>
<p>Even a <a href="https://theconversation.com/four-options-for-uk-trade-after-brexit-62363">Norway-style Brexit</a> (where Norway pays for membership of the European Economic Area) would leave agriculture outside the free trade rules, again making this vulnerable. Add to this the fact that Northern Ireland’s agribusiness sector <a href="https://www.nerinstitute.net/download/pdf/industrial_policy_wp_2016_061216.pdf">lags in productivity</a> compared to other EU regions and that a hard Brexit may also see UK agriculture facing significant price pressure from cheaper world production.</p>
<p>Although agriculture directly does not make up a large part of either economy (<a href="http://www.niassembly.gov.uk/globalassets/documents/raise/publications/2016-2021/2016/aera/6616.pdf">less than 3% of gross value added</a>), significant processing and manufacturing of agriculture and related products also takes place. The agri-food sector accounts for roughly 8% of total employment in both states. So the impact of any hard Brexit will be magnified. But, at least the Republic’s economy can fall back on the fact that far more of its exports go to the EU and it is much more diverse than Northern Ireland’s, making it less vulnerable to the shock of a hard Brexit.</p><img src="https://counter.theconversation.com/content/87388/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Brian Lucey does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Any Brexit that takes Northern Ireland out of the customs union will have a significant impact.Brian Lucey, Professor of International Finance and Commodities, Trinity College DublinLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/831922017-08-31T11:45:17Z2017-08-31T11:45:17ZLabour plants a firmer foothold in the shifting sands of Brexit Britain<p>The impact of the Brexit vote may finally be losing its chokehold on the two-party duoply of British politics. The Labour Party has now <a href="https://amp.theguardian.com/commentisfree/2017/aug/26/keir-starmer-no-constructive-ambiguity-brexit-cliff-edge-labour-will-avoid-transitional-deal">called for a transitional period</a> after Britain leaves the EU in March 2019, during which it argues single market and customs union membership should continue unchanged. This is the first evidence that Labour is ready to start challenging the dominant Brexit narrative.</p>
<p>Remember, that narrative has been all pervasive: <a href="https://theconversation.com/so-what-does-brexit-mean-64980">Brexit means Brexit</a>, and anyone who argues for anything other than the total breaking of ties with our European <a href="https://theconversation.com/brexit-and-the-sin-of-originalism-the-past-should-not-define-the-future-81860">partners is trampling over the will</a> of the British people. So why has Labour broken the pattern now, after so many months of seeming prevarication?</p>
<p>There are two principal reasons for this. The first is the most obvious and yet one that seems curiously overlooked: despite all major politicians still playing lip service to “the will of the people” from the referendum vote, that will has actually been expressed again since. The <a href="https://theconversation.com/uk-election-hung-parliament-casts-doubt-over-theresa-mays-future-79169">June 2017 election result</a> showed that Theresa May and the Tory version of Brexit was losing support, and fast. If there is one overriding lesson of the 2017 election, it is that hard Brexit was not a convincing vote winner. </p>
<p>The Labour Party also experienced an unexpected surge in support at the election. This was based largely on a manifesto that argued in all but name for continued membership of the single market in the party’s <a href="http://www.politico.eu/article/jeremy-corbyn-calls-for-jobs-first-brexit/">version of a “jobs first”</a> Brexit. <a href="https://www.theguardian.com/politics/2017/aug/01/soft-brexit-policy-won-labour-votes-in-general-election-says-study">Recent research</a> showed how significant a vote winner this was for Labour.</p>
<p>This shift in public mood away from a hard Brexit has only intensified over the summer, as evidence of the economic impacts of Brexit continue to <a href="https://www.theguardian.com/business/2017/jul/24/how-has-brexit-vote-affected-uk-economy-july-verdict">mount</a>, and as the government continues to misjudge the sensitivities involved. Its approach to the negotiations and the drip feed of <a href="https://theconversation.com/is-britain-the-new-norway-stance-on-ecj-suggests-london-seeks-a-softer-brexit-82862">complicated</a> “position papers” on Brexit have hardly inspired confidence.</p>
<p>But more than this, Brexit will continue to dominate every aspect of British politics for the foreseeable future as we hurtle towards the March 2019 deadline. It will be nigh on impossible to fight any other cause in the coming months that will not be overshadowed by Brexit. Much better to take ownership of the whole issue, and reach out with a distinct position – even if the Labour party leadership under Jeremy Corbyn is <a href="http://www.bbc.co.uk/news/av/uk-politics-eu-referendum-36506163/corbyn-i-m-seven-out-of-10-on-eu">lukewarm</a> on the European project as a whole.</p>
<h2>All about the manifesto</h2>
<p>The second reason for the Labour shift stems from the other great lesson of the election: the <a href="http://www.labour.org.uk/index.php/manifesto2017">Labour manifesto</a>. The proposals it contained – an end to austerity, national investment, abolition of tuition fees – <a href="https://theconversation.com/be-it-bold-or-foolish-the-labour-manifesto-at-least-offers-voters-a-real-choice-77829">struck a chord</a> with voters in the UK, particularly the young. </p>
<p>If Labour wants to build on this momentum, and move closer to actually making these proposals into policy by forming a government, it has to fight the Conservatives on Brexit. It must now sense the opportunity to do exactly that as the <a href="http://services.parliament.uk/bills/2017-19/europeanunionwithdrawal.html">EU Withdrawal Bill</a> returns to parliament on September 7. With a distinct position from Labour on Brexit in place, May’s shrunken majority looks shakier than ever. </p>
<p>Fighting the Tories on Brexit is now more important than ever if Labour wants to ensure its surge in popularity continues. The only chance any of its manifesto proposals ever have of becoming policy depends not only on Labour winning an election, but also on a healthy and growing economy. A hard, cliff-edge Brexit, is a mortal danger to any hope of making the Labour manifesto into policy.</p>
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<img alt="" src="https://images.theconversation.com/files/184173/original/file-20170831-30312-48hqt5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/184173/original/file-20170831-30312-48hqt5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/184173/original/file-20170831-30312-48hqt5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/184173/original/file-20170831-30312-48hqt5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/184173/original/file-20170831-30312-48hqt5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/184173/original/file-20170831-30312-48hqt5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/184173/original/file-20170831-30312-48hqt5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Choices ahead.</span>
<span class="attribution"><span class="source">via shutterstock.com</span></span>
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<h2>Making the first move</h2>
<p>Beyond these two driving forces behind Labour’s shift in favour of remaining in the single market during a transitional period, there is perhaps one other concern. As the Brexit negotiations rumble on, and surely even Leavers eventually begin to tire of the whole affair, someone, from somewhere within the British political class, will eventually stand up and tap into the growing social discontent. If this concern is not already gnawing away at Labour strategists, it probably should be.</p>
<p>This will be beyond the Liberal Democrat position on a second referendum, and will come from the heart of the two-party consensus on Brexit. Though the UK’s voting system precludes such a meteoric rise, this could be a Macron-type figure, who could very quickly transform the face of British politics, if not in votes then in framing the debate. </p>
<p>But perhaps more concerning still to Labour, it could be a senior Tory who breaks ranks, who stands loud and clear and says: “Sorry, we got it wrong: the evidence is in, time for a rethink on Brexit.” It would be a high-risk strategy indeed for any Tory who dared to do it, but it is not beyond the realm of the possible, and the damage it could do to Labour as an opposition may be catastrophic. Any chance to craft out a clear, distinct voice on the issue of our time would be quickly lost.</p>
<p>The Labour shift in favour of remaining in the single market and customs union during a transition period can be seen then for what it is: not necessarily a change of heart at the top of the party, but a strategic imperative to stay in touch with the shifting political sands of Brexit Britain. This new flexibility may well prove to be its strongest suit.</p><img src="https://counter.theconversation.com/content/83192/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andy Price does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Unpicking why Labour has shifted its Brexit strategy to push for single market membership during a transitional period.Andy Price, Head of Politics, Sheffield Hallam UniversityLicensed as Creative Commons – attribution, no derivatives.