Brexit

Norway-ish Common Market 2.0 Brexit scheme is a waste of time that won’t work

BY Ben Kelly | thescepticisle   /  25 January 2019

The “Norway option” refuses to die. Even now, just weeks away from Brexit day, it has been reincarnated and proposed as the solution to the deadlock. The major obstacle to the “Norway” or EFTA/EEA compromise remains the same, it has too many enemies on both sides of the debate. That’s why the latest incarnation, “common market 2.0”, will most likely fail.

This week I criticised the People’s Vote campaign for adopting a “scorched Earth” policy in rubbishing the Norway+/Common Market 2.0 proposal. However, this is Brexit and in the typical fashion of a political commentator, I am now going to contradict myself but explain why it is consistent.

I supported the EFTA/EEA option in  2016, and each time it has re-emerged in the debate I have re-made the case. Now, with weeks to go until Brexit day, it seems to me that situation has changed. I think the time to pursue that compromise and make it work was after the referendum. Over two years later, too much time has passed and we have run into new obstacles that were not foreseen in 2016. The debate has moved on and the Norway ship has sailed.

Ultimately, at this point, the ludicrous and unviable “Norway for Now” , the nonsense of “Norway then Canada” and even the plausible sounding “Common Market 2.0” is a total waste of time. The reality is that this model is now akin to trying to shove a square peg through a round hole. There are myriad difficulties that nullify what I long considered to be its main advantages.

Back in 2016, a major part of the Liberal Leave / Flexcit pro-EEA argument was that it was an “off the shelf” model that would facilitate the whole process. Now it’s clear that this didn’t take into account the problem of the Irish border nor the cost of increased customs barriers between the UK and the EU. The Norway+/Common Market 2.0 model attempts to address this through a full UK-EU customs union, but this hugely complicates the EFTA/EEA model and weakens the case for it.

A key point of the pro-Norway option argument was that the addition of the UK to EFTA would create a significant trade bloc, with the UK leading a market-based minus political integration alternative to the EU. However, the UK cannot participate in EFTA trade policy while being in a customs union with the EU. Thus, it would require a derogation from EFTA’s free trade deals. Not only would this require complicated negotiations (not exactly taking a model off the shelf), but it negates a key strength of the pro EFTA argument. What is the point in being in EFTA if we don’t participate in its trade policy?

The alternative is to create a new pillar of the EEA Agreement specifically for the UK. This would allow the UK to participate in the Single Market via the EEA Agreement, and perhaps dock on to the EFTA court, but we would operate separately from the EFTA members.  This requires a major change to a treaty which applies to thirty states, meaning the negotiations will be complicated. Far from being the simple solution, this model now begins to look a bit messy.

Another problem that has become increasingly clear is that some of the major advantages of the EEA may not be on offer to the UK. Being in the EEA means the UK would remain in the Single Market for services, retaining the banking passport, and still enjoying the freedom to establish a company and to provide or receive services across the EU. Indeed, this was one the major strengths of the Liberal Leaver argument, but the problem is that we are not Norway, and the EU knows this only too well.

Many Member States are extremely wary of handing the UK services sector the same freedoms as the tiny sector in Norway. Why give a major competitor, that is longer an EU member, such an advantage? Once again, it’s obvious to see that we won’t be taking this model off the shelf. We’ll be bogged down in negotiations and demands will be made for tighter rules on our services sector, more payments, and/or for us to remain in the Common Fisheries policy and who knows what else?

In any case, there is a flipside to this perceived advantage. The EU would set the rules of our financial sector. Yes, like Norway, our influence will be sought in our areas of expertise when it comes to shaping EU regulation, we would definitely have a say. However, the Bank of England and the City have been clear on this. The consensus is that even if the City of London were to lose some business overseas in the short term, autonomy is necessary for financial stability and regulatory independence.

And this is all without mentioning the problems that arise when we get to “freedom of movement”. I have always argued the case for freedom of movement, but political reality suggests that UK-EU migration policy is going to look different to some extent in order to gain consent and get through parliament.

Then come the discussions of what EU agencies and programmes we want to participate in, what payments we will make and on and on it goes, are we sure that on every issue we will want to follow the existing Norway model? Or, indeed, that the EU will allow us to?

The time has come to accept that the relationship between the UK and the EU is unique and thus the future framework must be fully tailored to meet the unique challenges of forging a brand-new partnership. From customs, to services and immigration, it’s ever more apparent that we are not Norway and what we need is not the Norway option, but the British option.

How do we go about this? Well, the first step is simple. Vote for May’s deal. Then we move on to the future framework negotiations and we build a new partnership with the EU based on comprehensive agreements covering trade, security, political cooperation and migration wrapped up in an Association Agreement. In doing so, we will create a dynamic and adaptable framework that will evolve over time. There will be opportunities for further divergence or indeed convergence, but the point is that it will be and be tailored to this special relationship.