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EU Trade agreement options

(35 Posts)
ElizabethG81 Sat 25-Jun-16 11:01:58

As I understand it, to retain access to the single market, we would have to agree to freedom of movement, contribute financially to the EU and abide by their laws. Yet we wouldn't have any say and wouldn't be able to vote on anything. A Free Trade Agreement would not allow access to the single market and is much less favourable.

What is it the Brexiters are hoping to negotiate? Do they accept that we would have to agree to the above terms if we want access to the single market? Or do they think we wouldn't have to? What's their alternative, do they think a Free Trade Agreement would be "enough"?

Mistigri Sat 25-Jun-16 11:40:28

The problem with answering this question is that brexiteers were united about the "problem" (the EU) but deeply divided about the solution.

You won't get any sane answers, because no one even knows who will be in charge of negotiations, but if the UK does leave the EU (and there are good reasons to think it may not) then from a purely practical standpoint, the most likely outcome is an EEA type arrangement. It will be a difficult political sell, but buyers' remorse is already setting in among leave voters, which will make it a little easier.

PosiePootlePerkins Sat 25-Jun-16 12:45:15

Misti please can you explain (in simple terms if possible!) why you think there are good reasons to think we may not leave the EU? Bit baffled by this. confused Am genuinely interested in the answer as a remain voter. Thanks.

BungoWomble Sat 25-Jun-16 12:51:13

Yes, I'm under the impression that the EU's attitude now is 'sod off then'. Where've you got the idea that 'no' doesn't really mean no from?

Mistigri Sat 25-Jun-16 14:02:59

please can you explain (in simple terms if possible!) why you think there are good reasons to think we may not leave the EU?

May not, not won't - I think the most likely outcome now is that we become a less rich version of Norway.

But the argument is as follows: if the Conservative party was serious about brexit, article 50 would have been triggered immediately as Cameron had promised. It wasn't. So article 50 cannot now be invoked until late September or early October at the earliest, by which time a serious case of "buyers' remorse" may have set in among the "soft leavers" in the electorate - meaning that the government can no longer rely on the country supporting brexit. At this point, how easy will it be for the new PM to pull the trigger? Especially if the new PM is a soft leaver himself, like Boris, or a remainer, like May. There would be major political hurdles to overcome of course - and it would perhaps require a general election - but there are also serious political consequences involved in invoking article 50, as the rash of brexiteers advising that we delay doing it would seem to confirm!

KittyandTeal Sat 25-Jun-16 14:15:03

I think part of the issue will be that eu members will not want it to look like leaving gives us a good deal. They will want to discourage other states leaving. That along side them wanting things to get moving on brexit now and the Conservative party wanting to wait to trigger a50 until after a leadership election. That's going to piss Eu off even more.

I'm not confident of us getting a decent set of trade deals that the leave campaign were talking about.

Politics and economics look very shaking and unstable at the moment.

Chalalala Sat 25-Jun-16 14:24:02

in the event of Brexit, I see three options:

1) an EEA-type deal that gives access to most of the Single Market (but with all the costs and obligations, including free movement), whether formally the EEA like Norway or a series of bilateral agreements like Switzerland, in practice the two are fairly similar

2) giving up on the Single Market entirely, because it's the only way to not have free movement. Which means much more limited access to the European markets, and would require redirecting the entire UK economy towards the rest of the world. Would be economically traumatic, not to mention that it's not clear exactly which countries are chomping at the bit to welcome UK imports.

3) something in between the two? Meaning some access to the European markets (not as good as 1) and not as bad as 2)), in exchange for a decently high cap on EU immigration - no idea if that's even feasible or how it could be implemented though.

So 1) is the obvious solution, 2) is the option only really hardcore Leavers would go for and really unlikely to happen, and 3) is a wild card that I just made up on the fly

whydidhesaythat Sat 25-Jun-16 14:37:25

Thanks for starrting the thread it is helping me move on (slightly)

KittyandTeal Sat 25-Jun-16 14:41:43

Yes, thank you.

I am a remain voter. I'm very sad and worried but I don't think another referendum is a good idea. I think part of democracy is that you accept a vote and work out ow to make it work.

Deep down I am scared, I think there are very serious implications to leaving but there's absolutely bugger all we can do now except looking sensibly at what our next best option are now.

Mistigri Sat 25-Jun-16 14:45:58

I'm confident we won't get Chalalala's options 2 or 3. The reason for this can be given in one word - passporting (of the financial variety). This issue is probably the main reason for the frantic back-pedalling on invoking article 50.

Basically it comes down to option 1 - stay in the EU and option 2 - EEA membership. I'd give option 2 a narrow advantage at this point (assuming that passporting rights can be negotiated as part of this deal).

Article in the FT which helps explain why the Tories are shitting themselves now:

Mistigri Sat 25-Jun-16 14:55:05

If anyone wonders why I'm so confident - see the link below. There is a credible estimate that the loss of passporting rights would cost the UK economy £10bn per annum in exports of financial services. That's without counting the cost of associated job losses.

timetobackout Sat 25-Jun-16 15:08:10

Leadsom who has city experience suggested in the campaigning that passporting was the biggest red herring going. Firms would just set up a brass plate operation in the Eu and just route transactions through there,whether this stands up to scrutiny or further punitive legislation will like so much become clearer in the months ahead.

Mistigri Sat 25-Jun-16 15:15:56

I think reality might be about to bite her in the backside - many suggestions have been made in the last few weeks that were obviously hopelessly optimistic...

BritBrit Sat 25-Jun-16 15:27:55

The 1 & only thing the UK wants from the EU is free trade (no tariffs) we don't need anything else. We should aim to create a unique UK-EU trade deal similar to what Mexico/South Korea have with the EU, they have free trade with the EU with no tariffs, no immigration & no EU fees. The UK also has the economic clout to get this deal because the trade deficit is gigantic in the EU's favour, it is heading for £100 billion in 2016, we also buy about 1 in 3 German cars they sell in the world. We have the leverage to get tariff free trade

Chalalala Sat 25-Jun-16 15:46:30

Firms would just set up a brass plate operation in the Eu and just route transactions through there

Surely if this was possible any country could have done it before now. Switzerland for one is unhappy with only have very limited access to financial services in the Single Market, one would assume they've looked into every possible "trick" such as this one.

ElizabethG81 Sat 25-Jun-16 16:03:25

I think the stumbling block will be the fact that we rely so heavily on the financial services industry. As I understand it, anything less than access to the single market would be pretty disastrous for financial services? But I can't see us being allowed access to the single market without commitment to freedom of movement, etc.

BritBrit Sat 25-Jun-16 16:20:06

ElizabethG81, if the EU did not want to include services in the deal than the UK should reject the offer, the EU heavily rely on the UK for goods, it works both ways. The EU also has free trade deals including services without free movement, the EU-South Korea deal included services so S.Korean services can be sold to the EU. The EU also allowed free trade with Mexican services in 2000, the UK is a far bigger market for the EU than South Korea or Mexico

Mistigri Sat 25-Jun-16 17:18:25

BritBrit the UK is in a very weak negotiating position, made weaker every day that goes by and no politician is brave enough to invoke article 50. If the future was so bright and brave outside the EU, wouldn't they be in more of a hurry? Hmm?

Mistigri Sat 25-Jun-16 17:26:09

we also buy about 1 in 3 German cars they sell in the world

Rubbish, the figure is under 1 million out of 5.7 million. Still big, but more like a sixth than a third. Meanwhile, 58% of UK car production is exported to the EU.

Chalalala Sat 25-Jun-16 17:45:59

As I understand the Mexican and South Korean deal are "free trade" in name only, they're not nearly as comprehensive as being in the Single Market. There are still some tariffs, and financial services aren't included.

Also, economics aren't the only factor here. It's politically impossible for the EU to agree to give the UK access to everything, in exchange for nothing.

Lilmisskittykat Sat 25-Jun-16 17:46:34

A less rich version of Norway are selling that as a bad thing! Norway has not net national debt (compared to our trillions) aspiring to be Norway isn't a bad thing

Chalalala Sat 25-Jun-16 17:51:41

We're not talking about being Norway here, we're talking about being Norway without all the extra oil money.

But I agree it's no bad thing in itself. Certainly the least bad option on the table right now.

caroldecker Sat 25-Jun-16 17:55:49

The EU sell us far more goods and service than we sell to the eu - we have an annual deficit of £68bn. Anything which impacts this will hurt the EU more than the UK.
It is possible the EU will choose to damage themselves in this way, which is why EU stock markets fell more than UK ones as a result of Brexit, but it does not make any sense to do so.
We will also be able to import goods from other countries without duties, thus making things like food cheaper.

gunting Sat 25-Jun-16 18:00:30

While it is true that there is a trade deficit, EU trade makes up 13% of our GDP but only 3% of their GDP. It's not really true that they need us more than we need them.

Pangurban1 Sat 25-Jun-16 18:41:45

If/When UK leaves and is looking for access to the single market, I'd imagine it will not be simply free movement any more that is put on the table. That was an opt out, given preferentially to a member state. I reckon they won't offer anything less than Schengen.

So, people could be looking back nostalgically at the good old days of non-Schengen free movement of Labour.

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