Forget Norway: Canada-plus is the best Brexit deal Britain can achieve
“To every thing there is a season, and a time to every purpose under heaven.” – Book of Ecclesiastes, Chapter 3, Verse 1
Theresa May’s policy of slowing down the post-Brexit train through the determined tactic of vagueness has been skilful, but it has now served its purpose. By resolutely refusing to invoke Article 50 – starting the two-year clock for when negotiations must be concluded on a new economic arrangement with Brussels – the Prime Minister won grudging, if broad, political acceptance.
This has come from both staunch Brexit outers in the Conservative Party, as well as tepidly sympathetic Europeans, like pivotal Angela Merkel of Germany. May won valuable space and time for her new Cabinet to begin to master their fiendishly complex briefs, as well as for political passions to begin to dissipate on both sides of the Channel, so a best-case negotiation is now possible.
But, to paraphrase the quote from Ecclesiastes, the season has changed. Any further vagaries will now quickly begin to look like confusion, of Britain simply not knowing what it wants from the coming pivotal talks with the EU. And as we both know well from personal experience, it is almost impossible to succeed at negotiation if your side doesn’t know what it wants in the first place. So now is the season for clarity.
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At the moment the most discussed Brexit scenarios are the Norway option (membership of the European Economic Area, the EEA) and the CETA-plus option (a variant on Canada’s free trade deal with the EU). On its policy surface, there are several key advantages to the Norway plan. It is an off-the-shelf model which could most easily be negotiated within the two-year time frame allotted. It would allow the UK continued access to the Single Market for goods and services and EU passporting to UK-based banks, a vital “ask” of the City of London.
But it is highly unlikely that it will be adopted by the May government. This option is politically seen as eroding British sovereignty, a rallying cry for the Tories’ Brexit base. As a member of the EEA, the UK would be required to make contributions to the EU Budget and comply with most provisions of EU law, crucially including the free movement of people.
As concerns over immigration were a major factor in the victory for the Brexit cause, it is hard to see how the new Tory leadership could politically support this option, as for most of the Conservative Party base, adoption of this plan hardly makes Brexit worth it at all. Mindful of the political fates that befell the last three Tory Prime Ministers when they ignored Eurosceptics, May is unlikely to repeat history, at least at this early stage of her premiership.
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So the CETA-plus scenario is the option the UK government will most likely adopt, largely for reasons of domestic politics. Under this option, the UK would enter into a free trade agreement in goods with the EU along the lines of the agreement just concluded between the EU and Canada.
In addition, free trade in services and possibly in agriculture would ideally be agreed to as an add-on. At the same time, pursuing its broader Drakean strategy, the UK would negotiate free trade agreements with other, more economically vibrant, partners such as China, the US and India.
However, there is a major drawback to CETA-plus; to misparaphrase Mick Jagger, time is not on its side. Realistically, CETA-plus cannot be concluded by the time the UK would be officially outside the EU two years on from Article 50 being triggered. So in the period between leaving the EU and concluding a CETA-plus agreement with Brussels, the UK and EU will need to agree to both continue negotiating to conclude CETA-plus, while in the interim the UK simply becomes a garden-variety member of the World Trade Organisation (WTO).
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While this amounts to a sound negotiating strategy, the key risk of pursing this option remains the fact that, to date, the EU has steadfastly linked its readiness to agree to free trade in services to the freedom of movement of people. CETA-plus undermines this European red line.
However, as is true in life, all strategies present perils, but we are still called upon to act. CETA-plus (with WTO in the interim) is the best possible negotiating option the UK can hope to achieve in the upcoming talks. The time for vagueness is over; it is now time for the season of policy creativity.