Those hoping to soften Brexit are desperately looking for other models around the world which Britain might be able to copy, as ministers seek a new trade agreement with the EU.
Time is of short supply, as Article 50 negotiations end in October 2018 to allow the governments' of the EU27, the European Parliament and now the House of Commons the time to examine the final package and approve or reject it.
Could they opt for Norway, which respects most of the Single Market rules? This include freedom of movement, which the Labour party, as well as the government, want to replace with a new immigration system.
Might it be Canada? The EU and Canada recently agreed a trade deal, so could London and Brussels just copy and paste its content? The Canadian-EU deal covers manufactured goods where the UK has a chronic trade deficit. It does not cover services like banking, insurance, investment funds, management consultancy, creative industries or education. These are core British exports, it is in these services that Britain has a healthy surplus with trade partners in Europe.
David Davis told the BBC he was keen on “Canada-plus, plus, plus,” as if it would be an easy matter to get Canada to add on all the sectors where Britain makes money. The problem is that under WTO rules, if a country opens its markets to new sectors from one country, it has to do the same for all the other countries it has signed trade deals with.
Known in trade jargon as the Most Favoured Nation clause, this is a core law of all international trade agreements.
So, if Canada won’t work, how about the Swiss model? Twenty-five years ago the Swiss sought to join the European Economic Area, so like Norway they would gain full access to the EU Single Market. But in a referendum in 1992, the Swiss voted down European Economic Area membership.
Instead the Swiss opted for a series of bilateral agreements which took a further ten years before becoming operational. They covered areas including free movement of people, air and road traffic, public procurement, asylum, and statistics. They did not cover the Swiss banking and financial services sector, which is why big name Swiss banks came to London to set up major subsidiaries and do business in the EU market.
But all of these agreements were threatened when the Swiss held a referendum in February 2014 which voted to ban free movement from the rest of Europe. Twenty-six per cent of the Swiss population came from the EU, but a campaign against immigrants was whipped up using similar slogans about loss of control of borders as in the Brexit campaign.
The Swiss tried to persuade Brussels to make a special exemption, but were politely told that if they started discriminating against EU citizens then the other bilateral agreements would fall. After 30 months of fruitless negotiation, Swiss MPs decided to interpret the 2014 referendum as a call to promote more job opportunities for Swiss citizens, not a ban on foreign labour. (Foreign labour is essential for core economic activities in Switzerland, such as tourism, construction, agriculture, health and old-age care.)
The EU were happy with this compromise, and trade and other links continue today as in the past.
So is there any version of the so-called soft Brexit that does not bring with it difficult problems? Robin Niblett, the Director of the Royal Institute of International Affairs, argues that:
“It has become clear in the past two years that economic outcomes are not always the dominant drivers of public opinion. The vote for Brexit was a political act, and a revolutionary one at that, to take back full control over immigration, domestic law-making and trade policy. The response should not now prioritise economic continuity over the demand for political change, and certainly not at the expense of severely curtailing British sovereignty.”
Brexiters will cheer and Remainers will moan at Dr Niblett’s argument. But he is right to define the problem as a struggle between politics and economics. In 1950, Britain’s Labour government rejected sharing sovereignty over the coal and steel industries with other European governments. Europe has always been about both economics and politics. And Britain has never been willing to accept that sharing the economics means sharing some political sovereignty.
A soft Brexit won’t solve that dilemma.
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