LeaveHQ, 01/04/2016  
 


This week, Lord O’Donnell exposed a longstanding weakness of eurosceptics who advocate negotiating a bespoke bilateral trade agreement in the event of a vote to leave. Although they confidently assert that the UK could obtain an agreement, they are extremely vulnerable when it comes to the time that it takes to conclude them.

 

Vote Leave again rejected the idea that negotiations would have to take place along the lines set out in the Treaty, claiming the UK could negotiate its withdrawal at any time without triggering the formal process. They are promoting repealing the 1972 European Communities Act, thereby unilaterally breaking our treaty obligations. We deal with this here, and the “WTO option” here, explaining why their scenario is not feasible and beyond the realm of practical politics.

 

What have had in response from Leavers is optimism by the bucket-load. The EU, we are told, will want to do business with us as we have a huge trading deficit with them. They will find a way of doing a deal, we are assured. 

That optimism might be justified in any one of them could point to a single instance of the EU reaching a quick deal with any party. But, for the EU, prolonged negotiations are the norm. One example is the Mexico-EU FTA: preliminary talks started in 1995 and finished on 24 November 1999, the agreement coming into force on 1 July 2000, taking nearly five years to complete. 

The Colombia-Peru deal was launched in June 2007 and provisionally applied in the first trimester of 2013, also taking nearly five years. Its 2,605-page length, with 337 articles and dozens of schedules, give clues as to the complexity of the task confronting negotiators, but the UK deal will be more complex still. The Single Market acquis alone is more than 5,000 laws, running to several times the length of this deal. 

A deal which was recently cited as a model by David Davis is the EU-Canadian Comprehensive Economic and Trade Agreement (CETA). Yet work on this started in June 2007 and it took until October 2013 for its key elements to be agreed, a period of just over five years. Yet this excludes agricultural and food products – of vital interest to the UK. 

Another potential model is the EU-South Korea FTA. Negotiations on this started in 2006 and the final agreement entered into force on 1 July 2011. However, this was only the last stage of a process which had started in 1993. Delivery of the current 1,336-page trading agreement, alongside a broader-ranging 64-page framework agreement on political co-operation, had taken almost 18 years. 

Not all negotiations are successful. The EU-India free trade negotiations were launched in 2007 and have still to come to a conclusion nine years later. It was hoped that an agreement might have been reached in 2015 or even later, but the Indian general election changed the political order and introduced new uncertainties. We are still no closer to a conclusion.

The putative EU-Mercosur agreement has an even more chequered history. Negotiations were launched in September 1999 but, despite a re-launch in May 2010 and nine further negotiation rounds, no agreement has been reached after more than ten years. 

Talks floundered over European agricultural subsidies and the opening of Mercosur industries to competition from Europe. So substantial are the differences that, in June 2014, EU External Action Service Director Christian Leffler declared: "There is no sense in holding discussions if both sides are not ready". 

Then there is the trade agreement with the East African Partnership, being negotiated under the aegis of the Africa Caribbean Pacific (ACP) European Union Economic Partnership Agreement (EPA) negotiations. The talks were launched in 2002 under the Cotonou Partnership Agreement (CPA) where parties agreed to conclude WTO-compatible trading arrangements, removing progressively barriers to trade between them and enhancing cooperation in all areas relevant to the CPA. 

Early agreement proved elusive, leading to the signing of an interim agreement in 2007, running to 487 pages.That brought duty-free, quota-free access for some products exported to the EU but, after 12 years of negotiations, the remaining contentious issues were unresolved. The latest round of talks was concluded at the 39th session of the ACP-EU Council of Ministers in Nairobi, Kenya on 19 June 2014, without an agreement being reached. 

Even more limited pacts can take many years. Negotiations for the Turkish readmission agreement – allowing for the return of illegal immigrants entering EU member state territories via Turkey – started in November 2002, but the agreement was not signed until 16 December 2013 – an interval of 11 years.

Remember, this is an EU that spent ten months since the Conservative Party election win giving David Cameron the run around over a mere four “baskets” of modest reform proposals – this is in the context of a “renegotiation”, a crisis of a sorts, with the EU ostensibly striving to keep the UK in the Union.

When it comes to the Article 50 negotiations, there are no short cuts. With the best will in the world, and with all the pressure negotiators from both sides will be under from the UK Government, Member State governments, transnational business and our global trading partners, negotiations will still be extremely complex and cannot simply be fast tracked on a whim.

British negotiators will be up against 27-nation states. There will be no common position and we’ll be dealing with 24 working languages. The hard reality of the mechanics of negotiations means reaching an agreement will take time.

This is why the deadline is very important; we have that two year time limit. There is a significant problem of what happens if an agreement is not reached by the deadline, and the other Member States refuse to extend the time. With unanimity a requirement, this is not a small risk. It only takes one country to say “no” and we are cast adrift. Therefore, we must assume that the deadline is two years and work according to those parameters

It is extremely unlikely that a bespoke bilateral agreement under the aegis of Article 50 could be concluded in two years. Ten years is the figure being bandied around, though five years is potentially realistic. Nevertheless, to bring home an agreement within a reasonably short time, a different strategy will have to be considered.

Notably, Dominic Raab also sai: “Of course we’d strike a new deal, and relatively soon, with transitional arrangements if necessary” We have proposed adopting an existing model as a political and legal framework to allow for a safe transition out of political and judicial union. This would be our “transitional arrangement”, it will give us a “soft landing” and act as a stepping stone.

 

This, along with a negotiation strategy that avoids unpicking treaties and any attempt to quibble over the body of law in the first instance, greatly simplifies the negotiation process and would be achievable in two years.

 

That model is the EFTA/EEA route, otherwise known as the “Norway option”, which is the optimal “market solution” to leaving the EU (although there are alternatives detailed in our plan). We have been promoting and defending this strategy for some time, while the major Leave campaigns reject it.

 

In light of today’s intervention, I do hope more eurosceptics will stop, think and reconsider. It provides us with a viable “transitional arrangement” that can be concluded by the deadline and neutralises the fear mongering over economic uncertainties. It is the realistic, pragmatic and achievable solution that we should unite behind. 

We knew these issues would arise, that’s why we have a plan. Read Flexcit: The Market Solution

Read more about the EFTA/EEA route:






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