The Gordian Knot problem revisited:

Transcription

1 The Gordian Knot problem revisited: In search of a Smart Brexit V.1 22/06/2017

2 Brexit Timetable: 23 June 2016 the UK votes to leave the European Union in a public referendum. 29 March Theresa May sends Article 50 letter to European Council President Donald Tusk to notify him of the UK s intention to leave the EU June 2017 Negotiations formally begin in Brussels March UK is provisionally scheduled to leave the European Union. 3 Sed fugit interea, fugit inreparabile tempus - Virgil

3 Introduction This week (19/06/2017) Brexit Secretary David Davis visited Brussels for the first days of Brexit negotiations. In this report we offer some suggestions for Her Majesty s Government on the approach they should take to the negotiations and the best type of Brexit they can realistically achieve in the given timeframe. We also highlight some of the potential pitfalls the Government may encounter. Overview The Brexit negotiations are likely to be extremely difficult and granular, with many unforeseen problems. While we believe that while the EU could indeed strike a trade deal with the UK within the two year Article 50 window, we believe that this deal would likely be so basic and narrow that it would have a negative impact on the UK (and EU) economies. Even if this deal was satisfactory, it still wouldn t leave much time for the government to complete the other tasks regarding to Brexit namely making new arrangements with countries around the world that we currently enjoy preferential trading relations with, by virtue of existing EU third country Free Trade Agreements (FTAs). We best hope for a Smart Brexit therefore is for the UK to rejoin the European Free Trade Association (EFTA), which the UK helped to create in the 1960s and then broker a deal with Brussels using the EFTA countries as precedents. This should be relatively quick and straightforward, leaving time for the UK to deal with the myriad of other Brexit related tasks it needs to deal with.

4 The aim of the Brexit process should be to preserve where possible the best elements of EU membership while minimizing the more problematic elements. There are two main ways this could be achieved Option one we rejoin EFTA, retain continuous EEA membership and then seek to reform it over time to include greater co-decision powers for non-eu members and greater restrictions on immigration. Option two we negotiate a new relationship with the European Union, with a simplified UK-EU Free Trade agreement at its core and a handful of ancillary bilateral deals to clarify any remaining grey areas. Ideally we would also rejoin EFTA. This would be similar to the Swiss model but ideally docked to the EFTA court. Whichever option is chosen, the new relationship would be underpinned by the framework of the World Trade organisation (WTO), most specifically its agreements on Trade Facilitation and Technical barriers to trade. When the UK leaves the EU we will regain our seat on the WTO and this will be a key part of the UK s relationships with the rest of the world. Finally, during the negotiations, the UK government should repeatedly cite Article 8 of the European Union consolidated Treaties 4 which states that:

5 Below: A new European framework (option one) graphic This model, incorporating elements of the Norway and Liechtenstein models would see us in the EEA and EFTA, but with a greater degree of control over migration than we have at present as an EU member state.

6 Below: A new European framework (option two) graphic This model, incorporating elements of the Swiss and Canadian options would see us in EFTA, but not in the EEA and with bilateral deals with the EU.

7 Part one: As the Brexit process really starts 1. UK government should request for the Article 50 period to be extended to 3 years, not two. The treaty allows for this extension and it would give both sides more time to ratify the agreements. If agreements are concluded ahead of time, Brexit could still take place in Apply to rejoin EFTA (The European Free trade Association) and its significant free trade portfolio 5. This will smooth Brexit and makes the UK s final position better in lots of other ways, which we will explain later in this document. 3. Write to all the countries which the UK currently has tariff-free or otherwise preferential trade via EU agreements and request that they agree MoUs (memoranda of understanding)/exchange of letters (notes) in order to carry on trade with the UK until more permanent agreements can be concluded. 4. Fishing and re-assuming management of the seas around the UK are going to be major issues post-brexit. The UK government should arrange a series of meetings with officials from the British fishing industry, Regional Fisheries Management Organisations (RFMOs) notably the North-East Atlantic Fisheries Commission (NEAFC), the United Nations Economic Commission for Europe (UNECE), the International Maritime Organization and the International Tribunal for the Law of the Sea (ITLOS) to explore these issues and how they will be impacted by Brexit.

8 5. Aviation is also going to be a major issue post-brexit. The UK government should arrange a series of meetings with officials from the UN s International Civil Aviation Organization (ICAO), The Airport Operators Association: AOA (which represent the interests of British airports) and Association of British Travel Agents (ABTA) in order to formulate a negotiating position and a plan to minimise disruption to airlines, air freight and travellers. 6. Nuclear power and atomic energy research issues are also going to experience problems after Brexit since leaving the EU will necessitate leaving EURATOM. The UK s Atomic Energy Authority (UKAEA) lead by MP Jo Jonson (Brother of Boris) should probably seek a partnership agreement with EURATOM/European Atomic Energy Community and also seek immediate meetings with relevant regional and global bodies such as the International Atomic Energy Agency (IAEA) 6 to identify potential problems (and possible solutions) going forward.

9 7. Customs and border issues will be problematic, although these issues will be lessened if we stay in the EEA. HMG should request meetings with the World Customs Organization (WCO) as well as French and Irish officials to discuss customs co-operation after Brexit. The recently ratified WTO Trade Facilitation Agreement (TFA) 7 may prove useful to help resolve some of the issues in this area.

10 Part two: Agree the final bill and discuss future arrangements. Leaks from the EU suggest the European Union is seeking a 60 billion divorce bill, but we suggest that this is merely a negotiation tactic. On the one hand, the UK has pre-agreed commitments to multi-year budgets and EU funding programmes, as well as pension liabilities. On the other hand, we are entitled to a share of the EU s assets upon Brexit, and also we have been a net budget contributor for decades. The UK has only been a net EEC/EU budget recipient in a single year 1975; the year of the European Community (Common Market) referendum. 8 This is really one for the accountants and Sherpas to spend time on. The key thing is that the UK should not be paying an extortionate amount upon Brexit, but still visibly makes some final payments so that we maintain a friendly relationship with the EU27. The EU will allow us to get a good deal as long as we are not seen to be insulting them or getting off scot-free so the issue of the final bill will really be a massive PR exercise for both us and them. We imagine the final settlement will be about 10 Billion Euros; spread out over about 7 years, with each payment being reduced and phased out over the 7-year period.

11 Mr Davis should now agree to pay in principle any legitimate costs, while M. Barnier should agree that the UK will not be asked to pay above and beyond what is reasonable, and both men should leave the issue with the accountants so that they can move on to other issues. Going forward together The UK should also arrange to maintain after Brexit similar access to mutually beneficial Europe-wide programmes and bodies like Europol (but specifically a partnership or strategic agreement, not full membership), reciprocal healthcare schemes like EHIC, science and research programmes etc. These schemes are open to EFTA countries. This access should be negotiated for a period of between 2-5 years after Brexit during this period HMG can examine if these schemes are beneficial and worth participating in going forward. Note: Several non-eu countries have signed agreements with EUROPOL and so the UK could likely do the same. Examples include the USA, Switzerland, Norway and Canada. As the EUROPOL website states: In general, there are two types of cooperation agreement that Europol can enter into with states and other entities outside the EU: strategic and operational agreements both types of agreement are aimed at enhancing cooperation between Europol and the country concerned 9

12 Part three: an interim agreement on Nationals in EU/UK The issue of UK citizens in the EU and vice versa is a complex one and threatens to divert attention away from other important negotiating areas but we don t want to leave people in limbo. In order to give those affected peace of mind and to park the issue for the time being, we suggest that the EU and UK agree that all EU residents resident in UK and vice versa for at least one year at the time of Article 50 Notification are given leave to remain and work etc; for ten years (barring cases where individuals have committed serious crimes). During this time they may wish to apply for permanent residence, citizenship or leave of their own accord at their own pace. The issue can be looked at again on a bilateral basis with countries concerned after Brexit (depending on final deal). Any disputes over the rights and status these nationals during this 10-year period could be arbitrated by a panel of EU and UK judges or perhaps the EFTA Court. Part four: An agreement on free movement UK nationals will want to visit, live, study and work in the EU after Brexit and EU nationals will wish to live, study and work here. It is important to note again that both sides want to save face in these discussions, presenting their citizens with a good deal. There is no reason however, why a mutually beneficial arrangement cannot be struck. Some say that the EU will not compromise on Freedom of Movement (FoM) to which we would reply that freedom of movement has never been absolute in the EU or EEA. Even as an EU member state, the UK has had some rights to control EU migration through European Parliament and Council Directive 2004/38/EC 10 of 29 April This Directive explains that EU citizens visiting the UK can be asked to register with the relevant authorities if they stay over three months, and

13 can be expelled if they become an unreasonable burden on the social assistance system of the host Member State. This is explained further in the European Commission brochure Freedom to move and live in Europe - A Guide to your rights as an EU citizen 11 which makes it clear: What if you want to stay for longer than three months? Your right to reside for more than three months is subject to certain conditions You may be required to register with the relevant authorities, but only for periods of residence longer than three months economically inactive persons (e.g. unemployed, retired, etc.) must also have sufficient resources for themselves and their family not to become a burden on the host EU country s social assistance system during their residence and have comprehensive sickness insurance cover You may be required to produce documents showing that you meet the conditions listed economically inactive persons should provide proof of comprehensive sickness insurance cover and of sufficient resources not to become a burden on the social assistance system of the host EU country. We suggest the EU and UK agree a new compromise, combining elements of the present rules and agreements signed with the EU by Switzerland, Norway and Liechtenstein. [Note: This does not mean that the UK will be suddenly obligated to join the borderless Schengen Area, as those countries have signed up to that agreement voluntarily.]

14 Swiss rules for EU nationals mean that: no residence permit is required for a stay of less than three months, e.g. as a tourist, if you do not work in Switzerland. But if you plan to stay for more than three months you will require a permit. Cantonal law lays down which authority is responsible. The permit is valid for the whole of Switzerland, but you must notify the communal authority of any change in where you live. The local authorities of your future place of residence will be happy to inform you about the precise procedure. What requirements must I satisfy to get a residence permit? A residence permit will be issued if you have enough financial resources for yourself and your family members to ensure that you will not have to claim welfare in Switzerland; you have health and accident insurance for as long as you are to stay. 12 Norway has a largely untested Emergency brake which could be unilaterally used to restrict EU immigration under article of the EEA (European Economic Area) Agreement. Liechtenstein has (citing its small size) negotiated a quota system controlling the number of workers allowed to enter the country from other EEA countries.

15 The EEA Agreement also allows members to block citizens from the EU or other EFTA states from residing in their countries: On grounds of public policy, public security or public health Article 28 EEA Agreement In addition, there are small but distinct legal differences between EEA freedom of movement and EU freedom of movement, since the former is based around free movement of workers/labour whereas the latter is based around the principle of free movement of people/citizens. The concept of Union Citizenship as introduced by the Treaty of Maastrict has no direct equivalent in the EEA Agreement. The UK negotiating team should cite all these precedents to make a combined proposal: If the UK allowed EU citizens to enter the UK (after adequate vetting) on condition that Her Majesty's Government had an emergency brake which it could use when necessary; could prevent benefit tourism, could set overall migrant numbers and demand that visitors had sufficient means and adequate health and accident insurance - then that could be something that all sides could find equitable. Part five: If not EEA; agree an FTA We do not believe that no deal is better than a bad deal and that a WTO-only arrangement with the EU would be hugely disruptive. If the UK cannot negotiate EFTA/EEA access (ideally with a few UK-specific protocols) then the UK should seek a FTA (Free Trade Agreement) with the EU. However, the EU has a reputation for slowly concluding such agreements and the clock is ticking. In order to ensure that a FTA is not overly-debated and scrutinized to death, it would be best if the length and complexity was kept to a functional minimum. A shorter document invites a faster ratification and approval process and so helps parties avoid a cliff-edge scenario.

16 We should also abide by the age-old design principle of K.I.S.S. - "Keep it simple, stupid". To this end, we suggest the FTA should be largely based on the simple FTAs of the 1970 s like those between the European Economic Community and Norway or Switzerland. The earlier incarnation of the EU, the European Economic Community (EEC) concluded basic FTAs with Austria, Iceland, Portugal, Sweden and Switzerland in the 1970s in seven months. The EEC began negotiations with Norway on a similar FTA in February 1973, which came into force on the first of July 1973 six months from start to finish. The agreement should also include nine or so additional bolt-on annexes which would allow the UK to enjoy a smooth Brexit and economic stability going forward. The 9 Bolt-ons : 1. Validity/Extended Validity of certificates/permits Both parties should agree that any and all time-limited certificates/permits/licenses etc issued which allow companies, financial institutions, individuals, traders, exporters and importers to operate in each other s territories are respected and not retroactively cancelled and are allowed to run their natural course. Both sides should also agree to look favourably on re-issuing them when they expire. This would mean that UK airlines would still be able to land at EU airports on day one after Brexit (and vice versa), and ports will not come to a stand-still as suddenly swathes of paperwork become invalid. 2. Commitment to International trade agreements The Parties should reaffirm their rights, duties and obligations under the WCO, WTO Agreement on Technical Barriers to Trade (TBT Agreement), Agreement on Rules of Origin, Trade Facilitation

17 Agreement (TFA), WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the GATT (General Agreement on Tariffs and Trade) 1994 and the GATS (General Agreement on Trade in Services). 3. Co-operation via International Organisations The Parties should commit to work together to resolve common problems (especially when they relate to trade, customs and or regulatory issues) with the framework of the relevant international bodies (especially the WTO and World Customs Organization). 4. Enhanced European political dialogue and communications The Parties should commit to hold regular meetings in order to closely work together for mutual benefit and where appropriate, information sharing; at ambassador level; also at regional (European) organisations, bodies and fora including: - Council of Europe - Parliamentary Assembly of the Council of Europe - EDQM - European Directorate for the Quality of Medicines - NATO - North Atlantic Treaty Organization - The NATO Parliamentary Assembly - The United Nations Economic Commission for Europe - Organization for Security and Co-operation in Europe (OSCE) - OSCE Parliamentary Assembly 5. Crime and Terrorism prevention The Parties should commit to work together to address and prevent transnational crime working specifically via the United Nations Office on Drugs and Crime (UNODC) and Interpol. The UK could sign an agreement with EUROPOL but should not seek to remain a full member.

18 6. Dispute resolution Problems should first be addressed by a UK-EU Joint Committee and hopefully will be resolved there. However, the Parties should set out a fair and clear dispute resolution and arbitration procedure in order to address more complex disputes relating to the Free Trade Agreement. This could involve several stages including expert panels, consultations, external arbitration at the WTO or (if the UK rejoins EFTA, perhaps even a decision at the EFTA court). 7. Financial services agreement There are many European banks and other financial institutions operating in the UK and many UK banks and financial institutions operating in the EU. Given the decades of regulatory convergence between the parties and in order to ensure that services trade continues interrupted, the Parties should agree on a simplified passporting system which would allow services to be provided in the UK and EEA countries provided the institutions operated within: Internationally agreed standards and principles such as those emanating from the Bank for International Settlements (BIS) Basel Core Principles for Effective Banking Supervision, International Organization of Securities Commissions ( IOSCO ) etc Any specific rules set by the parties by mutual consent that do not conflict with internationally agreed standards or regulations. This system would be overseen by the financial affairs subcommittee of a UK-EU joint committee. 8. Recognising qualifications The parties should agree to honour any and all currently existing licenses and work permits, and set up a working group which would agree rules around mutual recognition of professional qualifications going forward.

19 9. Customs co-operation and Rules of Origin The UK and EU should sign a new Customs co-operation agreement, and negotiate to sign up to the Regional Convention on pan-euro Mediterranean preferential rules of origin (RoO). These measures should help reduce red tape and costs for importers and exporters. At this point someone will undoubtedly be saying the EU won t accept that it is too similar to the Swiss arrangement, and the EU will be loath to duplicate it. But we believe the EU would accept the above proposals if the UK was willing to submit itself to the jurisdiction of the EFTA Court, which the Swiss currently do not.

20 Part six: rejoining EFTA Benefits of EFTA for Remain supporters: Maintain close, friendly links with rest of Europe (EFTA 4/EU 27) Tariff-free market access (after negotiation) Minimise other trade barriers with the EU Easy movement of students and workers Replicated access to the Single Market Close co-operation on science and education programmes Competences/powers brought back from Brussels could be devolved to the Scottish Parliament, Welsh Assembly and Northern Ireland assembly. Benefits of EFTA for Leave supporters: UK regains control of its territorial fishing waters No longer part of EU Customs Union; UK can sign own trade deals and seek access to EFTA FTA portfolio British citizens get their old-style passports back no longer EU citizens Reduced contributions financial saving can be put towards NHS or schools Much less interference from European Courts EFTA countries (especially Liechtenstein) have negotiated stricter rules and opt-outs around freedom of movement than EU member states. Similar measures could restrict EU migration into the UK Regain from the EU our top seats at the World Trade Organisation and other International bodies such as UNECE to maintain influence on the world stage.

21 The EFTA convention does not put a time limit on the application process. The relevant section of the EFTA Convention (Article 56) merely states: Any State may accede to this Convention, provided that the Council decides to approve its accession, on such terms and conditions as may be set out in that decision. The instrument of accession shall be deposited with the Depositary, which shall notify all other Member States. This Convention shall enter into force in relation to an acceding State on the date indicated in that decision Any State acceding to this Convention shall apply to become a party to the free trade agreements between the Member States on the one hand and third states, unions of states or international organisations on the other. As Ms Allie Renison, Head of Europe and Trade Policy at the Institute of Directors wrote in their recent report 'Navigating Brexit: Priorities for business, options for government': "We urge the government to consider the merits of rejoining Efta...there are some significant benefits to being part of Efta with respect to governing trade ties with Norway, Iceland and Switzerland, who make up six per cent of the UK s trade. The UK will need to negotiate new trade arrangements with them in any event to maintain our existing preferential access afforded to us through the EU s various Efta agreements. Efta also has a number of technical cooperation agreements with the EU in the area of customs and trade facilitation" 13 How the EU and EFTA differ EFTA is different from the EU (European Union) in many ways. It doesn t promote itself to the same extent that the Brussels bloc does, and it rarely gets involved in the internal affairs of its member states. It just gets on with the job of promoting trade and negotiating free trade deals for its members.

22 Because it only focusses on essential work it is remarkably efficient. The EFTA secretariat is lean; only employing 100 people spread between Geneva, Brussels and Luxembourg while the European Commission by comparison employs people. Because EFTA does not try to duplicate the work of member state governments, it is also incredibly cheap to run. While the UK contributes Billions of pounds to the EU budget each year, the entire EFTA budget for 2016 was only CHF (Swiss Francs). If the UK were to be accepted back into EFTA, we would have to apply to take part in EFTA s extensive free trade portfolio of 27 free trade agreements (covering 38 countries). 14 What would facilitate this process is that several of the EFTA-third country FTAs have built-in accession systems. Take for example the EFTA-Hong Kong Kong agreement, which states: ARTICLE Accession 1. Any State becoming a Member of the European Free Trade Association may accede to this Agreement, provided that the Joint Committee approves its accession on terms and conditions to be agreed upon by the Parties. The instrument of accession shall be deposited with the Depositary. 2. In relation to an acceding State, this Agreement shall enter into force on the first day of the third month following the deposit of its instrument of accession, or the approval of the terms of accession by the existing Parties, whichever is later. 15

23 Further Benefits of joining EFTA The EU and EFTA have agreed a Common Transit Convention 16 in the movement of goods which would undoubtedly make things easier for UK firms after Brexit. Unlike the EU, EFTA has a unique two-track trade deal system. EFTA s negotiators work to negotiate trade deals for the bloc as a whole, while allowing member states to negotiate their own bespoke trade deals. An example of this is that all of EFTA has a trade deal with Hong Kong, but EFTA member Switzerland has a separate trade deal with China. EFTA has many experienced trade experts and negotiators on the payroll, while the UK hasn t had to negotiate its own trade deals for decades and is now currently scrambling to recruit sufficient personnel. Britain could become part of the EFTA trade network and still sign her own separate deals when we have re-established the necessary negotiating teams; a win-win situation for the UK. In addition, if we left the EU and returned to EFTA we would be exempt from the: EU Common Agriculture and Fisheries Policies; EU Customs Union; EU Common Trade Policy; EU Common Foreign and Security Policy; EU Justice and Home Affairs EU Monetary Union (EMU).

24 If we transfer from the EU to EFTA, we can still have a good working relationship with Brussels, however. Parliamentarians from the EFTA states have regular meetings with MEPs and officials from the EU, and EFTA has offices in Brussels. EFTA countries participate in many mutually beneficial European programmes such as: Reciprocal Healthcare systems 17 Education programmes 18 Science and research programmes 19 Co-operation with EUROPOL 20 A final point regarding trade deals If the UK does rejoin EFTA, it will be applying to take part in its existing trade portfolio - 27 free trade agreements (covering 38 countries). We believe that the states that EFTA has signed FTAs with would agree to our participation, and we also could find that many of the countries we have preferential trade relationships via the EU would also wish to carry on business as usual. This would make the UK in EFTA a world-leading Free Trade nexus.

25 Frequently asked Questions: Q: If the UK re-joins the EFTA, will it need to join the EEA (Single Market)? A: Not if it doesn t wish to. The UK is currently a member of the EEA. All EU members are in the EEA but not all EFTA members are in the EEA. Q: If the UK re-joins the EFTA, will it need to abide by freedom of movement with EU states? A: We have covered this elsewhere in this document, but technically speaking, joining EFTA only means that the UK would have free movement with the EFTA states, Norway, Iceland, Switzerland and Liechtenstein. (Technically this state of free movement with the UK already exists, but since the EFTA countries have similar or better average incomes than the UK, we have not seen any mass migration into the UK from these countries.) While the current EFTA states have free movement with the EU (with some caveats and restrictions) that is because they have voluntarily signed up to free movement in the case of Norway when they signed up to the EEA agreement, in the case of Switzerland it was when they signed a bilateral agreement on free movement. Q: If the UK re-joins the EFTA, will it need to pay money to the EU budget? A: No. EFTA membership does not mean that we would need to pay money to the EU. Current EFTA countries do make payments; but these are to voluntarily take part in mutually-beneficial Europe-wide

26 programs relating to reciprocal healthcare, science and education and aviation to name a few. The EEA signatory countries do however make contributions to some continental charitable programmes (The EEA and Norway grants) which is in effect, those countries diverting part of their foreign aid to neighbouring countries in order to maintain good relations. This video explains the arrangement in more detail: Q: If the UK re-joins the EFTA, will it need to obey EU rules and regulations? A: it depends on the deal struck. We could end up only obeying them when exporting goods to EU countries, and providing services to EU residents and companies (depending on final agreement). Q: If the UK re-joins the EFTA, will it be subject to the European Court of Justice (ECJ) rulings? A: EFTA countries are not subject to the ECJ as a result of their EFTA membership. The EFTA/EEA countries are subject to two bodies when dealing with trade with the EU the EFTA Surveillance Authority and the EFTA Court.

27 The EFTA Surveillance Authority is led by a College with members appointed by the participating EFTA States. Its role is to oversee the EEA agreement and report disputes and breaches of the EEA agreement to the EFTA court. The EFTA Court is made up of judges from the EFTA states. It arbitrates on issues passed to it by the EFTA surveillance authority. According to the President of the EFTA court Professor Carl Baudenbacher: Our setup [the EFTA court] is more sovereignty friendly than the EU s. There is no written obligation on any court of last resort to make a reference to us, and our rulings in these reference cases are strictly speaking advisory. There is no direct effect and no primacy of EEA law, and if you do not implement an infringement judgment there is no possibility to impose a penalty payment. That shows greater flexibility. Q: If the UK re-joins the EFTA, does it automatically get free trade access to the EU market? A: No. EFTA has no FTA with the European Union and members currently have to make their own separate arrangements with the EU.

28 Q: Could the UK rejoin EFTA and then just sign a FTA (Free Trade Agreement) with the EU? A: That s a possibility, yes. Switzerland s relationship with the EU is not via the EEA (European Economic Area) but as the European Commission website states: The cornerstone of EU-Swiss relations is the Free Trade Agreement of Q: How long would such a FTA deal take to reach? A: That is difficult to answer. While EU free trade agreements are notoriously long to conclude, this has not always been the case. The earlier incarnation of the EU, the European Economic Community (EEC) concluded basic FTAs with Austria, Iceland, Portugal, Sweden and Switzerland in the 1970s in seven months. The EEC began negotiations with Norway on a similar FTA in February 1973, which came into force on the first of July 1973 just six months from start to finish. Critics will likely say that this earlier generation of trade deals were far simpler and as a result easier to conclude which is true. However the UK is already synchronised with EEA rules and regulations which should reduce overall negotiation time. Q: Why would the EU agree to such a deal? A: It is in the interest of the EU to reach a fair and sensible deal with the departing UK. In addition, the EU would be strongly encouraged to conclude an agreement with the UK under Article 8 of the Lisbon treaty, which states that: The Union shall develop a special relationship with neighbouring countries, aiming to establish an area of prosperity and good neighbourliness, founded on the values of the Union and

29 characterised by close and peaceful relations based on cooperation. 22 Q: Even if we got a Free Trade Agreement with the EU that meant we have zero tariffs on trade in goods, what about Technical barriers to trade and other Non-Tariff Barriers? A: Firstly, after decades of EEC/EC/EU membership, the UK s rules, standards and regulations are almost identical to EU/EEA equivalents. On the day of Brexit we will be entirely compliant with EU rules and the morning after Brexit, we will still be equivalent. Secondly, future EU-UK trade would be subject to international agreements like GATT, the WTO Technical Barriers to Trade (TBT) Agreement, General Agreement on Trade in Services (GATS), WTO Agreement on Rules of Origin and WTO Trade Facilitation Agreement. These agreements mean that as long as our goods comply with international standards the EU should largely accept them (at least on paper), and the EU is obliged to co-operate with the UK on removing other barriers to trade. As the WTO website states: GATT Article 3 requires that imports be treated no less favourably than the same or similar domestically-produced goods once they have passed customs. GATS Article 17 and TRIPS Article 3 also deal with national treatment for services and intellectual property protection. 23

30 Q: How much will this cost? A: Cheaper than EU membership, but difficult to say an exact figure. The House of Commons Library released a report which concluded that the Norway option could save UK 17% in contributions and the Swiss option could lead to a 60% reduction. 24 British Model We have in this document discussed two main Brexit variations, but our future bespoke British model could take many forms dependent on the outcome of negotiations. Britain could for example re-join EFTA and then trade with the EU primarily on WTO (World Trade Organisation) rules: EFTA/WTO (although our relationship would be improved by additional agreements the EU has already signed with EFTA such as the Convention concerning the simplification of formalities in trade in goods 25 ) we wouldn t recommend this however.

31 Instead; we could re-join EFTA and then attempt to negotiate an Association Agreement (AA) with the EU: EFTA/AA - or re-join EFTA and then attempt to negotiate a Free Trade Agreement (FTA) with the EU: EFTA/FTA - or re-join EFTA and retain a member of the EEA agreement: EFTA/EEA Part seven: Boosting the UK s voice on the world stage There are now more international organisations than it is easy to count we mentioned a handful in the previous sections. In order to maintain or even boost our influence in global affairs the Foreign & Commonwealth Office must embark on a significant recruitment drive. The diagram on the below page highlights just some of the international bodies and fora which UK officials and representatives attend. With a significantly increased staff, the FCO can take a smart, holistic approach and use our reclaimed voting rights on international bodies to systematically direct and shape international rules, legislation and standards to benefit UK citizens and businesses. One of the themes of the EU referendum campaign was Take back control if we are smart we can still be a rule maker, not a rule taker. If we retain EEA membership through EFTA, the UK would have a say, but not a final vote on Single Market rules and regulations. However, we would regain our seat and vote on the WTO (World Trade Organisation), the NATO Parliamentary Assembly, The Council of Europe and other international and regional bodies which would mitigate this loss of influence.

32 Indeed, since we would be no longer be bound by the EU s Common Foreign and Security Policy and common position rules our diplomats would be free to speak and vote in the best interests of the UK. Above graphic working with the EU after Brexit via regional and global structures

33 Conclusions Re-joining EFTA is clearly the best next step for the UK. It has no discernible downsides, only advantages and is achievable in the timescale. We would no longer be subject to the ECJ, have control over who stays here and regain our sovereignty. The membership fee is trivial compared to EU membership contributions and we could help revitalise the trading bloc for the 21st century so it would be mutually beneficial. We believe the EU will go along with this, since as a recent report by the Civitas think-tank stated: Whereas 3.6 million UK jobs are linked with exports to the EU, 5.8 million EU jobs (excluding the UK) are linked with EU exports to the UK The government should be now writing its reapplication letter to our friends in EFTA. The Brexit process is highly complex but the question of whether we should rejoin EFTA or not is an easy one to answer. In closing then, no model will satisfy all sections of the British public. But this approach would satisfy a large proportion of the British public and go a long way towards healing divisions. Go on, cut that Gordian knot, Mrs May apply to rejoin EFTA.

34 EFTA 4 UK is in no way affiliated with EFTA itself, we are a grassroots organisation made up of concerned British citizens efta4uk@mail.com common-provisions/6-article-8.html