There are many hugely complex issues still to be decided:
What should our future trading relationship with the EU look like?
Should we try to stay a member of the single market and customs union?
There are huge issues at stake in the EU-Brexit negotiations: Should we seek to restrict freedom of movement? If these are not compatible which is the priority and is it worth the hit to our economy?
I want to ask you what you think our priorities should be in the Brexit negotiations. Please let me know your views!
For more information about some of the options for a future trading relationship between the UK and EU I’ve included some details below:
At the moment, as a member of the EU, the UK is part of the Single Market. This means no tariffs, customs duties (taxes or charges to import or export), or quotas on trade between Member States.
There are also other benefits of membership of a single market, such as shared rules on the minimum standards of goods to be bought and sold, or the rules on how a product is labelled. Whilst these might seem trivial, they can actually add significant costs for businesses, and also mean that consumers benefit from knowing that goods imported from the EU meet the standards we demand.
Currently 44% of the goods and services the UK exports goes to the EU, whilst 53% of the goods and services we import come from the UK. Any change to our trading arrangements with the EU will clearly have a hugely significant impact on our economy, jobs and wages.
There have been broadly three alternative options for the UK’s future trading arrangements with the EU:
- Membership of the European Economic Area (like Norway)
- A free trade agreement (like Canada)
- No agreement falling back onto World Trade Organisation rules
All are likely to involve some balancing of a range of factors including terms of access to the Single Market, control of immigration and financial contributions to the EU. There are positives and negatives for each approach.
Membership of the EEA
The EEA option involves considerable (but not complete) access to the Single Market. It also involves contributions to EU spending and accepting the free movement of people.
Free trade agreement
A free trade agreement between the UK and the EU would be an intermediate option between EEA membership and trading under WTO rules. The EU has a number of free trade agreements with countries around the world, such as the negotiations with Canada which are nearing a conclusion.
While they vary, as a general rule, free trade agreements tend to offer less access to the Single Market but impose fewer obligations.
Free trade agreements tend to take a long time to negotiate, and it is extremely unlikely that such a complex negotiation could be completed in the two year period after Article 50 is triggered in which the UK would have to leave the EU. The Canada negotiations have taken seven years.
If the UK leaves the EU and does not take up membership of the EEA or sign a free trade agreement, we would have to fall back on WTO rules. This would mean that the UK has access to the Single Market, but only on the least advantageous terms.