In principle I agree with the Brexit hard liners. It would be a pretty poor show if the UK ended up as a vassal state on a tight EU leash. This explains the phobia of any kind of agreement with the EU. The point they miss, however, is that regulatory harmonisation is the WD40 of modern trade and there is no scenario where the EU, our nearest regulatory superpower, will not wield influence on the rules we employ for the production and export of goods.
Being that we are just a few miles off the shores of mainland Europe we will need formal arrangements for continued participation in the economic and social life of the continent. This is why no deal is something to be avoided.
As far as that goes, we have had the full spectrum of warnings, some more drastic than others. But nearly every analysis shows that we will be scrabbling around for waivers, temporary measures an interim fixes to avoid emergencies and critical shortages. Even those who advocate no deal end up admitting that we will need peripheral bilateral deals on aviation and nuclear safeguards.
These such deals are likely to mirror those held by other third countries so we have a fair idea of what that looks like but the point that seems to escape hardliners is that no deal cannot stay no deal. We will need to evolve from wherever our landing point is.
There are those who say the damage of no deal will be greater to the EU, but what they miss is that the effects are distributed and the EU is better able to absorb them, not least because the Commission is on the ball. The UK, however, will be in the midst of a regulatory minefield as we restore functionality to active regulatory systems. Our need will be more acute.
By that point we will be looking to enter talks in respect of a more comprehensive trade arrangement only this time the EU will not be waiting on the UK to devise a workable solution. The EU will have a take it or leave it deal waiting and whichever administration is left to clear up the mess left by the Tories will probably be compelled by domestic political pressure to sign it.
It is a certainty that any such deal will come with a number of up front demands, not least something very similar to the Northern Ireland backstop and where trade in goods is concerned, full adoption of EU rules with direct ECJ oversight. At this point the EU has it where it wants us. It will be calling the shots and we really will be a rule taker with no say in the rules.
Being that the UK will have a separate agreement to that of Norway and the Efta states the EU can very easily gang up on the UK and we are then little more than a background admin chore for the Commission rather than a partner. At that point we are certainly no better off in the sovereignty stakes in that every future concession we ask from the EU will come with a price, be it financial contributions or concessions on freedom of movement.
Over the years we could end up in a BRINO situation comparable with the so-called vassal state transition - but on a more permanent basis. The irony here is that no deal ultimately ends up with the UK being in exactly the position ultra Brexiters sought to avoid - having criticised the EEA option as BRINO when it is in fact nothing of the sort.
As this blog, among others, has detailed, the Norway relationship is far from a vassal state set up. It is not a passive recipient of rules and there structure of the EEA agreement allows for modifications and adaptations. The point, though, it that it's a mulitlateral set up rather than bilateral - and if the UK chooses to pick its battles well, combining its political capital with that of EEA members, it stands a better chance of evolving the EEA agreement into something more to our liking.
Here we cannot discount the role of Geneva in regulatory affairs. All you have to do is crack open an EU regulation or a trade deal to see how global standards originating from Geneva play a pivotal role in trade and from the backbone of much of the EEA acquis. It is a second nucleus within the single market. Efta+UK then becomes one of the major soft power and intellectual influencers of regulation and able to shape the rules in ways we could not as a "BRINO" vassal state.
Hard-liners imagine that Brexit is a total departure from the EU regulatory environment but this is on the assumption that we'll be setting sail into the wide yonder striking deals all over the world, obvious to the fact that other countries have their own regulatory and standards obligations with the EU, and will not seek to prioritise the UK.
The so-called WTO option would be a whole lot more convincing if the Brexiteers had a well defined trade strategy but as it stands we see no evidence they have even mastered the Janet and John basics. It looks less promising when they are relying on the disgraced Institute for Economic Affairs as their ideas engine. This is very much a suck it and see strategy.
Right now the UK is the position to design its future relationship in tandem with the EU, where the EU will be as accommodating as it can be so long as the UK is realistic. By crashing out, thus shafting our allies, losing all of our third country and inter-agency agreements in the process, the UK loses its bargaining power and much of the goodwill it presently enjoys. (which is rapidly running out).
Any intelligent trade strategy has to take into account that we do £270bn worth of trade a year with the EU. It is presently the backbone of our exports and safeguarding that trade really ought to be our number one priority. Only then do we asses how we approach our independent trade policy. We cannot engineer new agreements until the dust has settled anyway. We need to know what our own customs and regulatory regime is going to look like and how much room for manoeuvre we have.
We could easily jettison the European market in favour of absolute regulatory sovereignty but it's highly unlikely that any alternative combination of third country deals is going to rival our current single market trade, not least since single market participation is what presently makes the UK an attractive investment destination.
More to the point, total divergence from the European regulatory ecosystem makes no sense. There will be some sectors which are euro-centric where there is nothing to be gain from divergence. By the same token, there will be other sectors, most likely services, where our fortunes lie elsewhere. We need a relationship that enables both.
Being that the EEA is an adaptive framework and the UK is not entirely lacking clout, there is every possibility of persuading the EU to accede to opt-outs not least because it would be in the broader European neighbourhood interest. There is no reason why Efta diversification could not complement EU activities instead of going into direct competition. Our trade can be coordinated rather than dictated.
The Brexiter mentality is one of hostility to the EU where it seeks to burn bridges and seeks underhanded competitive advantages and expect that the EU will not respond. That doesn't end well for the UK. The EU can and will frustrate effort by the UK if we give it cause to. We have seen during the negotiations how the EU will stand by its underlying principles and uphold the sovereignty of its systems. Where the UK is concerned that much is not going to change at any time in the future.
Time and again the EU has re-stated that it will not allow cherry-picking of the single market, and it has seen through every deceptive attempt to do so. The only way to truly cherrypick the single market is by being in it and shaping it. Efta-EEA is our best vehicle for doing so. Should we do this, the EU will can and will be more accommodating and will likely not force us down the avenue of a customs union. It will use the structure of the EEA and we'll find alternative solutions.
When evaluating the EEA option most analysis make the mistake of examining Norway as a model - but the UK is not Norway. We are a bigger more complex, more diverse economy where there will necessarily be more input across more sectors and more of a need to participate in shaping the rules. So long as the UK government is a robust and active participant there is no reason why it should meekly accept diktats as Norway often does. Efta+UK is a power in its own right.
In designing our future relationship the government needs to consider our geo-strategic position in Europe and the longer term developments. Being that any buccaneering "fwee twade" adventure is already showing signs of falling flat on its face, the more prudent move is to ensure we remain a power in Europe. Burning all of our bridges ensures we end up on an EU leash and unable to exert any influence.
The facts of life seem to escape the ultra Brexiteers. Leaving the EU does not make the EU vanish and despite the UK's departure the EU is still a superpower able to wield extraordinary regulatory influence far beyond the confines of Europe. The UK is no competition and attempts at a "Singapore on Thames" runs against the grain of building a level playing field through the multilateral system We'll get a frosty reception from our allies and the EU will use its power to isolate us.
A no deal situation really helps nobody. Dubbed the "WTO option" it should really be called "The Failure Outcome". If you're planning for such an eventuality involves stockpiling and civil contingency measures along with emergency waivers from international rules, that really ought to be a clue that it isn't a good idea.
Moreover, much of the trade and regulatory integration has physical infrastructure because it is optimised for European trade and it works. I'm all for ending political union to stop the EU telling us how to run our own affairs, but as far as trade in goods goes, if it ain't broke, why fix it? The ultras in their determination to leave as quickly as possible will end up wrecking supply chains, throwing regulatory systems into chaos and hitting us so badly in the wallet that we lose a lot of the economic clout we'd enjoy were we simply to join Efta.
The Ultras demand a "clean Brexit" but it's no more clean than if I carved my arm off with a chainsaw. A clean Brexit would be an amputation with careful surgery. A careless and hostile departure now creates a cascade of immediate problems but stores up far more serious geopolitical questions for the future where the UK finds itself weaker and less able to withstand the demands of the EU. That would certainly be what our shortsighted Ultras deserve, not least as payment for their weapons grade lying, but that would be a very sorry end to the Brexit saga and nobody wins from it.
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