No choice between hard and soft Brexit

Posted on July 31, 2016

Should Britain go for “hard” or “soft” Brexit? It is a question laced with unspoken assumptions — the most important being that the UK must have so-called “access” to the single market in exchange for an agreement that means we do not take back control over migration of EU citizens.

Some have accused the Vote Leave campaign
of failing to set out what Brexit looks like. In fact, Vote Leave has offered far more clarity than it is given credit for. Leaving the EU means taking back control of our own laws, trade and borders. The campaign was explicit that this means leaving the single market. When Theresa May, UK prime minister, says with admirable clarity that “Brexit means Brexit”, she is committing to this principle. It is clear that the European Commission and other member states understand this, too.

    Leaving the EU is in principle straightforward; much easier, in fact, than joining since it is not necessary to change domestic laws and regulations. All the laws and regulations that apply by virtue of Britain’s membership can remain perfectly aligned with those of the rest of the EU until they may be changed at a later date. This is how the UK gave independence to the countries of the British empire. 

    There are two crucial legal components of Brexit. The first is Article 50, the procedure laid down by the EU treaties by which we disapply these treaties to the UK in international law. This is implemented by an act of Parliament, which is the second component. This need be no more than a few clauses, including one to repeal the European Communities Act of 1972, which currently implements EU law into our domestic law, and another to incorporate all the EU laws that apply directly in UK law into UK statute. That is what Brexit is; there is no “hard” or “soft” option. 

    The real question is what kind of relationship the UK should develop with our EU partners after we leave. Some vainly advocate retaining features of EU membership after leaving but this is not practical. Concessions such as European Economic Area membership — the so-called Norway model — were conceived as a precursor to joining the EU, not as a reward for leaving. Jeremy Hunt, the health secretary, has correctly insisted that, if the UK were to enter into such intrusive obligations, another referendum would be needed. 

    This is simply not going to happen. Nor is it attractive to spend as long as six years in this invidious state of uncertainty, waiting for the EU to decide the outcome of triggering Article 50 while also remaining subject to all the obligations of EU membership. It would take only one of the other 27 member states to say non at the end of the process to wreck the whole agreement. 

    Some fear falsely that the UK must maintain access to the EU single market. But countries without any agreement export successfully to the EU. In the transitional agreement for trade, we should offer a zero tariff deal and maintain EU tariffs on all non-EU imports, until such time as the EU wants to make a long-term trade agreement with the UK. It would be perverse from their own point of view to impose tariffs, but if they do, the UK would benefit from billions in extra revenue from reciprocal tariffs on EU imports. This could be used to cut business and employment taxes and support industrial and science research.

    As for financial services, passporting
    ,which allows banks and other financial institutions to ply their trade across the EEA without having to be separately authorised in each country, is a convenience but not a necessity. Freedom for the City of London from the more damaging aspects of EU regulation (as well as what is coming down the track) is far more important to our long-term global position than passporting. The UK financial services sector dwarfs that of the rest of the EU — Canary Wharf on its own is bigger than Frankfurt.

    The only danger with Brexit is that we are too fearful of it. We should embrace it and aim to leave in months rather than years. This will put the UK in the strongest position, and we will secure the freedom to develop trade with non-EU countries much more quickly. A former Swiss trade minister recently exhorted a group of MPs: “You have no idea what a strong position you are in.” Another from the old Commonwealth told me he never came to London because we had no influence. That will soon change. 

    The writer is the Conservative MP for Harwich & North Essex and chair of the public administration and constitutional affairs select committee

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