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UK Prime Minister Theresa May with Germany’s Chancellor Angela Merkel. Photo: Reuters
UK Prime Minister Theresa May with Germany’s Chancellor Angela Merkel. Photo: Reuters

Mapping Britain’s exit from Europe

Britain should aim for an enhanced free trade agreement in its future relations with the European Union

In the two months since Britain voted to leave the European Union, its government has done little to clarify where this project is going. It would be wrong to expect a detailed plan, because the terms of exit and whatever arrangements follow must be negotiated. But surely a statement setting out priorities and basic principles wasn’t too much to expect by now.

What should such a statement say? To begin with, it ought to make a clear distinction between long-term goals and short-term procedures.

One of the main things confounding clear thinking on Britain’s future relations with the EU is the short-term uncertainty arising from the Article 50 exit process. This was devised with the conviction that it would never be invoked, and is therefore as useless as one would expect. The model it appears to have in mind starts with a so-called hard exit: All Britain’s rights and obligations in the EU cease. Only then do discussions about an entirely new relationship begin—to be negotiated from the ground up, as though the UK had never been an EU member.

This is idiotic. Britain and the EU both want, or ought to want, to remain close partners. The exit process ought to minimize the frictions in moving from membership of the EU to this new and still close relationship. Instead, Article 50 promises to maximize the frictions, making a difficult enterprise even harder—making it so difficult, in fact, as to seem almost impossible.

This absurd exit procedure has to be endured, but shouldn’t be allowed to shape the final outcome—one that Britain and the EU may have to live with for decades, not years. Without further delay, Britain ought to describe the basic form of the long-term relationship it proposes, and start making the case to the EU for that outcome. Then, as a secondary matter, it needs to address the transition, with the aim of getting from A to B as quickly and smoothly as possible.

Of course, the EU’s interest in making things go smoothly isn’t as clear-cut: It wants, or ought to want, to avoid needless disruption to its own members’ economies, but it also wants to discourage other exits. As a result, the transition will likely be a mess. So be it. Regardless, the first order of business is for Britain to get clear on where it wants to end up.

With that understood, the main thing, in my view, can be stated pretty simply. The government should say that Britain is leaving the EU because it wants no part of the EU’s supranational ambitions. The relationship Britain ought to propose is one between law-making governments—the UK on one side and the EU and its member states on the other—not one between law-taking subsidiary units of a single constitutional entity. Subject to that, Britain will seek the maximum amount of economic integration and diplomatic cooperation.

Broadly stated as those goals may be, they are clarifying. For instance, they rule out the so-called Norway option, which grants access to the EU’s single market but also requires free movement of workers and automatic application of EU legislation. They also rule out arrangements that would forbid Britain to negotiate free-trade agreements with other countries—so no customs union (with a common external tariff), like the one the EU has with Turkey.

For many Brexit voters, control of immigration was the sticking point, prompting the question: Could access to the single market be separated from free movement? It depends what you mean by “access to the single market", a term that’s used too loosely.

In EU-speak, the “single market" is much more than an economic arrangement: It’s an explicitly supranational undertaking, bound up with free movement of people as well as with free trade in goods, services and capital—all understood as indivisible constitutional principles. By definition, an intergovernmental relationship therefore rules out membership of the single market. But it doesn’t rule out access. Free trade in goods, services and capital, and a high degree of labour mobility are all possible, so long as those things are understood not as the constitutional underpinnings of a supranational order but as the terms of an ambitious free-trade agreement.

And that, in a nutshell, is what Britain should aim for in its future relations with the EU—an enhanced free trade agreement.

A new paper by Jean Pisani-Ferry and colleagues for Bruegel, a European think tank, says more about how this might look.

Britain’s current full compliance with EU rules means that, in economic terms, the straight-line distance from here to there is not that great. In legislative terms, though, the journey is a long haul: EU laws have to be recast as British laws, and the reciprocal obligations of the EU and its members need to be recast accordingly. New agreements with the World Trade Organization and non-EU countries will also be needed. Then allow for the detours demanded by Article 50, and the punitive instincts that an exasperated EU might indulge, and the actual distance between here and there is likely to be exhausting.

That will be the price of Brexit. In the end, though, and inconceivable as it may seem to respectable opinion in Britain, the destination—restoring the UK as a sovereign law-making nation, with a government accountable to its citizens—might be worth it. Bloomberg

Clive Crook is a Bloomberg View columnist.

Comments are welcome at theirview@livemint.com.

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