What would life look like outside the European Union? It’s a question that the new UK government is going to have to grapple with, and it’s also a question that people all over the continent are starting to ponder. With public disgruntlement with the EU growing, alternatives to EU membership are coming under increasing scrutiny.
How important is it to keep access to the EU Single Market? Would it be possible to revert to World Trade Organization (WTO) rules, without negotiating any special access? Or would it be better to follow the example of countries like Norway and Switzerland, which have both gained access to the Single Market (albeit via different approaches)?
How would trade relations be governed? What about free movement of people? During Britain’s referendum campaign, the actual tangible details of life outside the EU were a bit thin on the ground. So, realistically, what are the options?
Curious to know more about alternatives to EU membership? We’ve put together some facts and figures in the infographic below (click for a bigger version).
We had a comment sent in by Paul, who argues that Britain should aim to trade with the EU under World Trade Organization (WTO) rules, without negotiating special access to the Single Market. Would there be benefits to such an arrangement?
To get a response, we spoke to Professor Thomas Cottier, former Managing Director of the World Trade Institute and the Institute of European and International Economic Law, and currently Emeritus Professor of European and International Economic Law at the University of Bern, Switzerland. What would he say to Paul?
Well, World Trade Organization rules provide the basis for all trade relations, including those of the European Union with third parties. The Single Market rules, however, go beyond WTO rules; the most important area being that within the Single Market there are zero tariffs. By contrast, within the WTO tariffs still exist at an average of 4%.
Furthermore, there are much more advanced rules within the Single Market in terms of reducing technical barriers to trade, such as mutual recognition of standards, and the Principe du cassis de Dijon – which does not exist within the WTO. And then, of course, for Britain in particular it’s very important to have access to the market for services within the EU, which is much more developed than the freedom of services within the WTO. You would also lose, for example, in terms of government procurement: access to cities, communes, and utilities, which is not part of the WTO agreement. So, there is a ground floor with WTO rules, but it doesn’t go as far as the Single Market.
We had a comment sent in from Mandy and PJ, who argued that it would be “ideal” for Britain to aim for a similar relationship to Switzerland, with a series of bilateral agreements with the EU. Would that work? Could Britain be a “Greater Switzerland” outside the EU? How would Professor Cottier respond?
Well, Switzerland started off with the 1972 free trade agreement of EFTA countries, which is the legacy of Britain joining the EU, and which has gradually evolved to a body of some 130 agreements. Now, first of all, it takes a very long time to make this special arrangement, and it would not be possible, I think, to negotiate the same amount of agreements in a reasonable period of time to serve the case of the UK.
Moreover, Switzerland has been, increasingly as time has gone by, a ‘rule taker’ instead of a ‘rule maker’. The EU has insisted on Switzerland basically adopting EU rules, and has moved away from the original model of equivalence which defined the free trade agreements of 1972. So, you get some 90% of market access into the EU, which serves the country well – as we are, after Luxembourg, the second most closely economically related with the EU – but you don’t have a say in drafting the rules, and you are essentially a rule taker.
Finally, we had a comment from Perky, who thinks that the most likely option for Britain is to join the European Free Trade Association (EFTA), and retain access to the EU Single Market through the European Economic Area (EEA) agreement – otherwise known as the so-called ‘Norway option’. How would Professor Cottier respond?
I certainly think it has more potential for the UK than the Swiss solution, because the EEA agreement is a full-fledged agreement which basically covers the four freedoms, except agriculture, and, of course, it doesn’t entail the common commercial policy. But it’s basically an advanced free trade agreement that EEA countries benefit from.
However, it also comes with free movement of persons, and you cannot expect any concessions here if you want to get Single Market access. That is, by the way, also true in the case of Switzerland. Switzerland has been struggling with free movement of persons and has not been able to extract any concessions from the EU, despite the fact we have provisions in our constitution which were introduced via populist vote. So, we basically have the same problems as the UK here, and the EEA solution would probably not help with this. But the great advantage is that it’s a package which already exists; there are institutions ready, including the EFTA court and EFTA surveillance authority, to which Britain could actually join within a reasonable period of time.
What is the best alternative to EU membership? Would you choose the Norway, Swiss, or WTO option? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!
IMAGE CREDITS: Razvodovska – Bigstock.com
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