Brexit: The Deals

There has been a lot of talk recently about potential deals the UK could make with the EU.

When Article 50 was triggered on 29th March 2017, the UK and the EU entered into a negotiation period of two years, to form the UK's exit agreement from the EU. 

Any potential deal agreed to at this stage will not be fully formed - there are limitations on Article 50 which state that substantive trade talks cannot begin until after the negotiation period ends on 29th March 2019.

However, the shape of the deal we choose now will inform those further discussions. I have set out below a summary of the proposed deals mooted by politicians and the media in recent weeks, which I hope you will find helpful.

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Chequers

A broad term used to describe the Prime Minister’s proposals for a withdrawal agreement with the EU, proposed to and agreed by members of the Cabinet at the time, following the Cabinet meeting at Chequers in early July. A three page document was published on 6th July, summarising the Government’s approach to the negotiations. 

Further detail on their specific policy aims was published in the White Paper on the UK’s future relationship with the EU on 12th July. 

Notes: White Papers are policy documents produced by the Government that set out their proposals for future legislation. They provide a basis for further consultation and discussion with interested or affected groups, and allow final changes to be made before a Bill is formally presented to Parliament.

Here is a summary of the proposals:

  • A free trade area for goods, including agri-food, and a common rulebook for standards on certain goods.
  • Leave the Common Agricultural Policy and Common Fisheries Policy, with transitional arrangements for subsidies and detailed domestic policy post-Brexit.
  • The phased introduction of a facilitated customs arrangement between the UK and the EU to eliminate the need for border checks, whilst enabling the UK to control tariffs for the rest of the world.
  • Mutual recognition of professional qualifications to enable movement between the UK and the EU for business.
  • A new economic and regulatory arrangement for financial services.
  • Reciprocal arrangements for business visas.
  • No free movement of people, but reciprocal arrangements for visa-free travel to and from EU countries.
  • Reciprocal air transport agreement.
  • Continued cooperation with EU security agencies.
  • Continued participation in European Medicines Agency (EMA) and other European agencies to ensure continued access to medicines and treatments.
  • Reciprocal arrangements on health insurance, pensions, and other cross-border benefits.

Canada/Canada Plus

There have been suggestions that the UK models its relationship with the EU on Canada's recently established relationship with the EU. The propositions have been that our deal would be based on the EU-Canada Comprehensive Economic Trade Agreement (CETA). This agreement was ratified on 30th October 2016, and came into force provisionally on 21st September 2017.

Here is a summary of the agreement:

  • 98% of tariffs eliminated on industrial goods.
  • Tariffs eliminated on most agricultural products.
  • EU firms can bid for public procurement contracts in Canada.
  • No barriers to EU business investment in Canada.
  • Mutual recognition of standards on certain goods.
  • Border checks take place to ensure regulatory standards are met.
  • Mutual recognition of professional qualifications.
  • No free movement of people.
  • Canada has limited access to the EU’s services market, allowing for explicit exclusions for different sectors.
  • Canada’s financial services do not have full access to the EU market.
  • Canada is free to make trade deals with the rest of the world.
  • No ‘subscription fee’ to the EU.

The mooted ‘Canada Plus’ or 'Canada Plus Plus' deal would aim to build on this arrangement, which does not address issues with the UK’s service-based economy and the commitment to retain no hard border in Northern Ireland.

Norway

There have also been suggestions of a proposed deal based on Norway’s current arrangements with the EU. Norway is not and has never been a member of the EU.

Here is a summary of their agreement with the EU:

  • Member of the EFTA (European Free Trade Association) and EEA (European Economic Area).
  • Participation in the single market.
  • Free movement of goods, people, services and capital.
  • Subject to a proportion of EU laws.
  • Most trade with the EU is tariff-free.
  • Norway does not adhere to the Common Agricultural Policy and Common Fisheries Policy.
  • Norway is not part of the Customs Union, so there is more administration involved when exporting into the EU, but this is managed by technology and does not result in physical border checks.
  • Norway pays around €869 million a year to various EU agencies for these benefits.

WTO Rules/No Deal

If the UK fails to strike a deal with the EU, we will have no free trade agreements with EU countries, and will therefore default to trading independently under WTO (World Trade Organisation) rules.

Here is a summary of what this would involve:

  • 164 countries including the UK are currently members of the WTO.
  • WTO rules are mainly based on trade tariffs, set for each country and vary significantly for each sector.
  • The average tariffs set by the WTO for agri-food products are particularly high.
  • Other non-tariff barriers like product standards would need border checks if no mutual recognition agreements between trading countries can be reached.

The Government has recently published extensive guidance in the form of technical notices for each industry on how to prepare for a no-deal scenario.