BREXIT DIRECTIONS FOR BRITAIN OUTSIDE THE EU RALPH BUCKLE • TIM HEWISH • JOHN C. HULSMAN IAIN MANSFIELD • ROBERT OULDS BREXIT: Directions for Britain Outside the EU BREXIT: DIRECTIONS FOR BRITAIN OUTSIDE THE EU RALPH BUCKLE TIM HEWISH JOHN C. HULSMAN IAIN MANSFIELD ROBERT OULDS First published in Great Britain in 2015 by The Institute of Economic Affairs 2 Lord North Street Westminster London SW1P 3LB in association with London Publishing Partnership Ltd www.londonpublishingpartnership.co.uk The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. Copyright © The Institute of Economic Affairs 2015 The moral right of the author has been asserted. All rights reserved. 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Typeset in Kepler by T&T Productions Ltd www.tandtproductions.com CONTENTS The authors vii Foreword ix Acknowledgement xii Editorial note xiii List of tables, figures and boxes xiv 1 A blueprint for Britain: openness not isolation 1 Iain Mansfield Framing the endeavour 1 External negotiations 2 Internal preparations 20 Outcomes 37 Conclusion 42 Appendix A: Analysis of trade policy options 45 Appendix B: Analysis of outcomes 49 References 57 2 Britain’s post-EU future and the development of EFTA plus 59 Robert Oulds Introduction 59 The EU and ‘free’ trade 60 Aims and objectives: the desired outcomes of negotiations with the EU 62 Negotiations under the Article 50: the EU’s prescribed method of withdrawal 66 EU law post-Brexit 70 British post-Brexit influence in the EU 72 Post-EU trade and migration policy 74 v Contents The process of rejoining EFTA 98 Reforming the EEA and EFTA: re-establishing the original purpose of the EEA 99 Conclusion 104 Appendix A. The alternatives 106 Appendix B. Additional benefits of EFTA/EEA membership 108 Appendix C. Problems with the Swiss option 109 References 110 3 Old links, new ties – global free trade through the Anglosphere and Commonwealth 112 Ralph Buckle and Tim Hewish Introduction 112 Why the Commonwealth and Anglosphere nations? 113 Current economic trends 119 The Internet 122 Should Britain join an enlarged NAFTA? 124 EFTA – a possible stopgap? 125 A trade deal down under: Australia and New Zealand 127 Conclusion 142 References 143 4 Reviving the age of Drake: how a Global Free- Trade Alliance (GFTA) can transform the UK 146 John C. Hulsman Introduction: the benefits of thinking big 146 The Global Free-Trade Alliance (GFTA) 148 GFTA criteria in detail 151 Initial GFTA membership and the updated cohort 153 The advantages of living in Drake’s world 156 Conclusion: deciphering the riddle of Drake’s prayer 159 References 159 About the IEA 162 vi THE AUTHORS Ralph Buckle Ralph Buckle is a director and co-founder of the Commonwealth Exchange. He has considerable political, campaigning and event management experience, having worked for think tanks, politi- cians, public affairs agencies and political communication spe- cialists. He has a BA in Politics, Philosophy and Economics (PPE) from the University of York. Tim Hewish Tim Hewish is a director and co-founder of the Commonwealth Exchange. He has a masters in Imperial and Commonwealth His- tory and a strong knowledge of the Commonwealth as author of Common-Trade, Common-Growth, Common-Wealth. Dr John C. Hulsman Dr John C. Hulsman is the president and co-founder of John C. Hulsman Enterprises (www.john-hulsman.com), a global politi- cal risk consulting firm. An eminent foreign policy expert, John is a senior columnist on foreign affairs for City AM and also writes regularly for the Aspen Institute of Italy and Limes, the premier Italian foreign affairs journal. A veteran of think tanks in Europe and America, Hulsman is a life member of the Council on Foreign Relations. Author or co-author of ten books, Hulsman has also vii The authors given 1,470 interviews, written over 330 articles and delivered more than 450 speeches on foreign policy around the world. Iain Mansfield Iain Mansfield is the Director of Trade and Investment at the UK’s embassy in the Philippines and has previously worked for the Department of Business, Innovation and Skills. He lives with his wife, Sarah, who teaches at the British School, Manila. Iain is also the author of the novel, Imperial Visions, and has a masters in Natural Sciences from the University of Cambridge. Robert Oulds Robert Oulds, MA, FRSA, is the longstanding Director of the Bruges Group, the respected think tank which for the last 20 years has been at the forefront of the debate about the UK’s re- lationship with the EU and the wider world. He is the author of Everything You Wanted to Know about the EU but Were Afraid to Ask. Robert Oulds is also the author of Montgomery and the First War on Terror. The book details a little-known period of Monty’s career. Bernard Law Montgomery, later Field Marshal Viscount Montgomery of Alamein, faced guerrilla forces in Ireland in the early 1920s and Palestine on the eve of World War II. That book explores the lessons of Monty’s victories in those conflicts and how they should be applied today in the modern war on terror. viii FOREWORD During 2013–14, the IEA ran a competition to find the best blue- print for Britain outside the EU, with the objective of securing a free and prosperous economy should we leave. The IEA does not have a position on whether Britain should leave the EU. However, it is part of our educational mission to promote a wider understanding of the importance of a free economy and the institutions that are necessary for a free econ- omy. We therefore regarded it as important to promote debate on the best way to achieve this in the event of the British people choosing to leave the EU: that was the main purpose of the competition. To provide a longer-lasting contribution to this debate, the IEA decided to publish this monograph examining the various options using, in the main, entries to the Brexit competition. There was a wide range of possible approaches suggested by entrants to that competition. Some proposed that Britain should promote free trade and openness through the unilateral removal of trade and other barriers to economic activity; others proposed maintaining formal relationships with European countries through the Euro- pean Free Trade Association and/or the European Economic Area; still other entrants took the view that Britain should seek to form economic and political alliances and partnerships with countries outside Europe – for example with the Commonwealth or the Anglosphere – normally with a view to that being a gateway to free trade with as much of the world as would be willing. Inevitably, Foreign Office diplomat Iain Mansfield, who was the winner, received most of the publicity at the end of the competition. ix Foreword However, in understanding how Britain can be free and prosper- ous in the event that we leave the EU, it is worthwhile considering a range of other approaches to Brexit. It is only through determining the best destiny for Britain outside the EU that the correct decision will be taken about whether to leave the EU and, if so, how. This monograph therefore brings together Iain Mansfield’s submission with edited versions of two other entries. One of those, by Robert Oulds, proposes that the UK remains a member of the European Economic Area and rejoins the European Free Trade Association; another, by Ralph Buckle and Tim Hewish, proposes that Britain pursues free trade through the route of the Commonwealth and the Anglosphere. The final contribution to this monograph, by John Hulsman, was not an entry to the competition but re- examines and brings up to date an approach to promoting free trade first proposed in his IEA monograph published in 2001, The World Turned Rightside Up. This involved the development of a global free- trade association. Overall, this monograph is an important contribution to the debate about how Britain should leave the EU should it choose to do so. It distils clearly the different options and the advantages and disadvantages of alternative approaches with reference to the objective of promoting a free and prosperous economy. Clear- ly the authors have different views about how to achieve the same objective. It is hoped that, by presenting those different views in this volume, the debate will move beyond ‘Britain – in or out?’ to a debate about something just as important: ‘Should Britain leave, how should it leave?’ The views expressed in this monograph are, as in all IEA publications, those of the author and not those of the Institute (which has no corporate view), its managing trustees, Aca- demic Advisory Council members or senior staff. With some exceptions, such as with the publication of lectures, all IEA monographs are blind peer-reviewed by at least two academics or researchers who are experts in the field. The content of this x Foreword monograph was not peer reviewed.