Four main negotiating scenarios appear on the horizon at the beginning of 2018.
First, European Economic Association (EEA) membership, involving continuing Single Market (SM) access, along with its four freedoms, as well as continuing financial contributions, but with European Free Trade Association (EFTA) Court rather than European Court of Justice (ECJ) jurisdiction.
The UK could seek some possible tweaking to Freedom of Movement (FOM),and its exit from the Common Agricultural and Fisheries Policies, in order to make such membership more bespoke to UK needs, with associational tie-ins across areas, such as defence, medicines, and security.
Indeed some in the Labour Party project that an EEA arrangement, with some tweaking to FOM, to the Fisheries policy, and across other limited areas, is where the UK will, and should end up; and that end-point could then be sold as the least economically damaging option, both still honouring the brexit vote and responding to connected primary immigration concerns in leave voting Labour voting constituencies.
A de facto UK CU membership could possibly be then yanked onto UK EEA membership, as part of a permanent or indefinite post-brexit UK-EU deal, in place of a long-term 2019 transitional or ‘implementation’ arrangement, which remains current UK policy.
But EEA membership is not designed as a transitional phase in a journey towards an alternative trading relationship – at least, as it is currently constituted./
The prospect of the UK being able to tweak FOM provisions is doubtful and uncertain, although the Cameron temporary brake proposal could possibly be resurrected.
And, of course, the negotiations are being conducted by the May government, not the Labour opposition. The prime minister is pushed to placate the hard brexit demands of a significant segment of Conservative MP’s, who will not hesitate to push for a disorderly brexit if the alternative that is offered appears to be, in effect, continuing practical adherence to EU requirements and processes, albeit outside full membership.
Second, an extension to Article 50 UK exit date in order to allow sufficient time to negotiate a Comprehensive Free Trade Agreement (CFTA), which, post any 2019 legal exit, is likely to take more than five years to conclude. Again, that would be anathema to the Tory hard brexiteers, but even more so. They would no doubt agitate that the democratic will of the UK population was being betrayed, supported by most of the populist media. It seems unlikely that the EU would be willing to agree such an extension, while the legal case for the UK to unilaterally declare an extension is contested.
Third, a disorderly (read: most economically damaging) exit.
Fourthly, and currently the May government’s preferred expressed option, is a Deep and Comprehensive (or Special) Free Trade Agreement (CFTA).
Such a CFTA could be modelled on the EU-Ukraine Association Agreement (UK-Ukraine AA) rather than a EU-Canada CFTA-plus services model.
The EU-Ukraine AA was finally ratified in 2017 by the EU27. It,in essence, offers most of the the benefits of the SM and Customs Union (CU), including tariff-free access for goods and passports for services and with associated customs cooperation. provides a detailed but clear and short summary of that agreement.
Regulatory alignment, including to EU competition, to state aid, to anti-dumping and to public procurement regulations, is also enshrined in the agreement. The FOM SM full membership obligation, however, is excluded, dealt with instead by a visa liberalisation and work permit system.
It also offers Ukraine the option of ‘buying in’ to a number of EU common programmes, for example, to the Horizon 2020 research programme, to EU agencies such as Europol. Prospects of participation in a wider set of EU common policies, such as transport, environment, employment and consumer protection policies, with political cooperation across justice and home affairs, foreign, security and defence fields is included.
But the EU-Ukraine AA was offered by the EU as an inducement for a country formerly in the erstwhile USSR political and economic orbit to move politically closer to it (and by extension NATO) and away from Russia.Ukraine confirmed its self perception and wish to be perceived as a european state looking westwards a stance not universally accepted across its geographical area, exposing the political fault lines involved. As such the agreement could indeed be viewed as particularly exceptional and special.
The replicability of the treaty to the UK-EU Phase 2 negotiations is open to severe doubt, insofar that these will be driven by a quite different set of political and economic imperatives.The Ukraine and the UK vastly differ in in economic characteristic and importance to the EU. The exponents of the treaty, however, point out that it could offer a precedent framework in which the UK could progress its own bespoke agreement with the EU, helped by its relative economic and political importance to the EU.
A bespoke CFTA, where the EU offers tariff-free access to the UK that has exited its regional trading bloc could possibly raise charges that the WTO Most Favoured Nation (MFN) rule, discriminating against other Non-EU potential trading partners, is infringed.
Similar to the Canadian CFTA, the UK-Ukraine AA took many years to negotiate and ratify, meaning that a long term transitional agreement would be required. Full circle almost back to the first EEA option.
Most seriously, the negotiation of a CFTA involving continuing UK frictionless trade with the EU and its continued enjoyment of the benefits of SM membership while jettisoning key obligations, such as FOM, rests upon the willingness of the EU to flexibly adjust the institutional architecture of the SM to Britain’s particular interest or requirements. Why should it?