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Brexit: What are the options?

In the run up to the EU Referendum Neil Warwick from Square One Law, the leading EU lawyer in the region, produced two guides which illustrated the legal processes that a Remain or Brexit vote would kick start. In the first week of the guides being in the public domain the Square One Law website received 158,000 hits on its news pages. Its Twitter feed was also constantly being updated with people sharing and commenting positively on the guides as far afield as the USA and Asia.

So what happens now?

Absolutely nothing to start with, the Referendum has no legal force so the Government then has to act and the Treaty on the Functioning of the European Union requires the UK to serve notice on the European Council to tell them we no longer want to be a member. That will trigger a two year negotiation period where the other 27 member states work out what terms they want to offer us. We also have an unstable political situation and it will be the next Prime Minister who has to serve the Article 50 notice to start the process.

What are the existing legal options to leave the EU?

What is important to say is that the models focus on what the law currently says and I would stress that this is what is entrenched in the law at the minute. There may be several other options if we changed the law, but it’s important that we deal with the facts rather than speculation.

There are four legal options currently available for the UK to follow.

  1. Join the EEA (the so-called ‘Norway Model’): If we follow exactly the same pattern as Norway we would still be contributing to the EU budget. It wouldn’t be at the level that we are now but equally the rebate that we get would be reduced, so there would still be quite a significant contribution to the EU budget.

    At the last analysis, Norway was still bound by 93% of EU laws, including the ability of free movement of people so the huge difference for the UK would be that we would have no say in shaping these laws but may be bound by future laws that the EU introduces.

  2. Join EFTA (the so-called ‘Swiss model’): This model is very similar to joining the EEA. Switzerland does currently contribute to the EU budget and it has agreed to be bound by the laws, although it’s interesting to note that this arrangement took about 10 years to implement through multiple treaties. Switzerland also allows for free movement of people and again, it has no say in shaping EU laws.
  3. A Bilateral Treaty (sometimes referred to as the ‘Canadian or Turkish model’): This is an interesting case because I’ve had lots of feedback on social media stating that obviously Canada and Turkey don’t have free movement of workers. That’s not what our diagram was intended to say. The probability is that as a country we would still have to contribute to the EU budget if we decide to take this option and would have to agree to be bound by certain laws, particularly competition law.

    I think that the likelihood for the UK is that under this model we would also have to have some form of freedom of workers. In my opinion I don’t think it would be possible for us to ask for three of the four freedoms and refuse the fourth one which is very, very important to the EU.

  4. The World Trade Organisation model: This would see the UK disband its membership with the EU. We wouldn’t have to contribute to the budget and we could shape free movement of workers, but there are certain trade tariffs that could be imposed automatically. At the front end of implementation it is likely that there would probably be a lot of clarity needed in the public domain for people to understand exactly what the cost of importing and exporting goods would be.

    It has been suggested by some people that the trade tariffs that would be imposed in the World Trade Organisation Model would actually be somewhat similar to the current cost of being part of the EU, but in reality this would be open to negotiation. Each member of the World Trade Organisation can adjust and negotiate tariffs but it would be done bi-laterally with treaties from individual countries. So it would be possible but is quite an extensive exercise to undertake.

Timescales

The decision regarding which model to adopt will be one that isn’t made quickly and is likely to be played out in the public arena. It is highly unlikely that the UK will leave the EU before the Autumn of 2018 at the earliest. Ironically the guide, which was produced to help with the Referendum, is now being used to explain in simple terms what Brexit will actually mean for us all.

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