What does a soft Brexit look like?

The UK government's Brexit White Paper, championed by Theresa May, favoured a soft Brexit. But with a multitude of different access models already in existence, what does each scenario look like?

The likelihood of a soft Brexit has been increasing since 20 June, when Theresa May secured a crucial vote by making concessions around parliamentary approval of a final deal. The White Paper outlining the cabinet’s vision, published in July 2018, further endorsed the soft Brexit option.
 
The defining characteristic of a soft Brexit is one that allows the UK to remain within the single market and/or a customs union in return for a divorce payment of £39bn, though, as previously noted, this is not finalised. Despite the wording of the original referendum, Brexit (leave or remain) is not a binary phenomenon. Any deal is likely to be an amalgamation of several existing options.
 

The EEA model

The European Economic Area is a collaboration of all EU states in addition to Norway, Lichtenstein and Iceland. All members have access to the European single market. However, membership is only available to EU or European Free Trade Association (EFTA) members. So, in this scenario, the UK would need to leave the EU, join EFTA and then become the 31st full member of the EEA.
 
As a member of the EEA, the UK would have tariff-free access, although goods would have to pass through customs procedures, potentially presenting a problem at the Irish border. Trade in services would be conducted on the same basis as EU members. Trade agreements with non-EU countries would be made under bilateral agreements or EFTAs. EFTA currently has preferential agreements with 35 countries, including Mexico and Canada.
 
35
Number of preferential agreements in place through EFTA, including Mexico and Canada
EU free movement of labour rules would apply, which has previously been a red line for the UK, as would social and labour laws. The UK would not be represented in decision-making but would still be obliged to adopt almost all legislation. Some financial contribution would be required for EU initiatives, such as EEA grants. 
 

The ‘Norway Plus’ model

The so-called Norway Plus model is essentially a bespoke deal based on Norway’s EEA agreement, offering tariff-free access, but with the addition of a customs union to prevent border checks. This would avoid the imposition of a hard border in Ireland while maintaining frictionless trade with the rest of the EU.
 
The UK would be free to make independent trade agreements with non-EU countries and could attempt to secure independence of social and labour law. Free movement of labour would continue to be a challenge for the UK, and ‘voluntary’ contributions are likely to be requested. Norway currently contributes 0.16% of its annual GDP to the EU, compared with the UK’s 0.25%.
 
This works out at about €115 per capita in Norway, while in the UK, the percentage contribution actually works out to only €79 per capita due to the UK’s much higher population.  
 

0.16%

Norway's contribution of its annual GDP to the EU

0.25%

UK contribution of its annual GDP to the EU

 

The Switzerland model

Switzerland is a member of EFTA but not of the EEA. The Switzerland model gives access to the EU market governed by a series of bilateral agreements.
 
However, Switzerland does not have full access to the single market for its banking sector and other services. Taken together, these account for almost 80% of the UK’s economy. Switzerland’s bilateral agreements mean it’s had to accept free movement, although it is permitted limited safeguards. This has proved a contentious issue with the Swiss public.
 
Switzerland can negotiate its own independent trade policies with non-EU countries through EFTA or bilaterally; it currently has agreements with Japan and China. 
 
It makes contributions to enlargement and social cohesion funds as part of its bilateral agreements. The 10-year programme, worth €1.15bn, is currently up for renewal.
 
However, Switzerland’s bilateral deals are currently in danger of unravelling after a referendum two years ago decided in favour of restricting movement of workers arriving from within the EU. While a limit has yet to be implemented, Brussels retaliated swiftly following the referendum result, stalling agreements and freezing participation in education projects.
 
Switzerland has no influence on decision-making but is also not required to comply with EU laws. Even so, it does have to implement some EU regulations to enable trade.
Swiss and Basel's flags on Mittlere Bruecke over the Rhine River in Basel, Switzerland, 30 July 2015. Basel is the country's oldest university city, and its historic landmarks include the Marktplatz with its richly decorated red sandstone Town Hall and the late Romanesque-Gothic cathedral. 40 museums make Basel the city with the highest density of museums in the country, attracting many visitors. Basel's Zoo, with 1.8 million paid visits, is the third ranked touristic attraction in the country.
Switzerland has no influence on decision-making but is also not required to comply with EU laws. Even so, it does have to implement some EU regulations to enable trade.

 

The Turkey model

Turkey is not part of the EEA or EFTA but does, like Andorra and San Marino, have a customs union with the EU. This means it faces no tariffs or quotas on industrial goods exported to EU countries. The customs union does not apply to agricultural goods or services.
 
Turkey also has no say on the tariffs that it must impose on goods it imports from outside the EU, as it has to apply the EU’s common external tariffs. There is no right of free movement and no influence on regulation, despite the need for a degree of equivalence. There is also no financial contribution.
 

In summary

Any of these models outlined above could arguably constitute a "soft Brexit", although clearly there is a huge divergence in the expected degree to which the UK and EU would remain aligned. In any of these eventualities, ties with the EU would be broadly maintained and the existence of a customs market would allow firms to continue trading on conditions similar to today.  
 
The UK being able to maintain current tariff-free access to EU markets for goods and services with minimal customs-related interventions, particularly at the Irish border, is seen by many as the optimal outcome.
 
Yet accomplishing these goals without offering major concessions to EU demands for the free movement of labour or on the provision of social protections is proving difficult to negotiate.

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