The definitive EU exit plan for Britain Dr Richard A E North With input from the Bruges Group and the assistance of readers of the EU Referendum blog E-mail: [email protected] The sovereign nations of the past can no longer solve the problems of the present: they cannot ensure their own progress or control their own future. And the Community itself is only a stage on the way to an organised world of tomorrow. Closing words of Jean Monnet's memoirs 10 October 2014 v.19d Work in progress – incomplete draft 1 Summary The UK secession from the EU, following an "out" vote in a referendum and an Article 50 notification, will have significant geopolitical and economic consequences. Nevertheless, we expect the exit negotiations to be driven by the political realities of the day, and in particular by the need to conclude them speedily. We do not believe that any options can be considered workable unless an exit agreement can be delivered within the initial two year period allowed for in the formal exit negotiations. Furthermore, we believe - largely as a result of promises that will have to be given during the referendum campaign - that there will be an absolute requirement to continue participation in the EU's Single Market. This suggests as an interim measure the adoption of the so-called "Norway Option" – membership of the European Free Trade Association (EFTA) and trade with EU member states through the off-the-shelf European Economic Area (EEA) Agreement. We would also repatriate the entire body of EU law, to buy time for a more considered review of the UK statute book. These initial elements of this settlement could be assembled with minimum delay, the immediate objective being an economically neutral transition into the post-exit world, where the real negotiations would then start. Subject to a referendum to approve the new deal, the framework for a withdrawal could be in place within two years of starting negotiations. Despite better access to regional and global standards-setting bodies compensating for the disadvantages of the "Norway Option", the immediate outcome will still be far from ideal. We thus propose as a next, post-exit phase, the negotiation of an entirely new EFTA/EU free trade agreement, possibly based on an expanded EFTA, alongside agreements for political co-operation. In order then to replace the EU law-making monopoly, we propose the abolition of the EEA and the creation of a genuine, Europe-wide single market. This would be a community of equals, rather than a Europe of concentric circles, using the Geneva-based UNECE as the core organisation. Thus, the Article 50 negotiations and our exit from the EU becomes the start of an ongoing process, the means to an end, not the end itself. Our post-exit Britain then emerges from the implementation an eight-point programme. The "Norway Option" is merely the opening gambit – in the strict technical sense of the word, as used in chess. Our substantive offering is a networked Britain, committed to a flexible response and continuous development. That, in its totality – the sum of the parts bring greater than the whole - we call "Flexcit". 2 Contents Summary............................................................................................................. 2 1.0 Introduction .................................................................................................. 7 1.1 The changes so far ..................................................................................... 8 1.2 The political context .................................................................................. 9 1.3 The steps towards independence ............................................................. 11 1.4 Factors influencing the negotiations ........................................................ 13 1.4 Structure of the book ............................................................................... 17 2.0 The political background .......................................................................... 19 2.1 The Lisbon debacle .................................................................................. 20 2.2 A forced referendum ................................................................................ 24 2.3 The Europhile counter-attack .................................................................. 30 2.4 Timing complications .............................................................................. 36 3.0 Preliminaries .............................................................................................. 41 3.1 Media operations ..................................................................................... 42 3.2 Public information ................................................................................... 45 3.3 Departmental responsibility for negotiations .......................................... 48 3.4 An independent Advisory Council .......................................................... 50 3.5 Third country treaties ............................................................................... 51 4.0 Negotiating options .................................................................................... 54 4.1 The "free-for-all" (WTO) option ............................................................. 58 4.2 The bilateral (Swiss/Turkey) options ...................................................... 62 4.3 The "Norway Option" .............................................................................. 65 4.4 EFTA+bilaterals ...................................................................................... 68 5.0 Norway versus the Swiss option ................................................................ 72 5.1 The Swiss option and "deregulation" ...................................................... 73 5.2 Norway and "fax democracy" .................................................................. 74 5.3 Norwegian/EFTA spheres of influence ................................................... 77 5.4 Maintaining sovereignty .......................................................................... 79 5.5 "Influence" in perspective ........................................................................ 82 6.0 Freedom of movement, immigration and asylum seekers ..................... 85 6.1 Swiss problems ........................................................................................ 88 6.2 The British dilemma ................................................................................ 90 6.3 Addressing the core issues ....................................................................... 91 6.4 A global perspective ................................................................................ 95 6.5 Devil in the detail: workers' remittances ................................................. 98 6.6 Reducing "push" factors .......................................................................... 99 3 6.7 Reducing "pull" factors .......................................................................... 101 6.8 Trade policy and immigration ............................................................... 103 6.9 A comprehensive immigration policy ................................................... 107 7.0 The role of global governance ................................................................. 108 7.1 The EU role in global governance ......................................................... 109 7.2 The "hidden hand" of global governance .............................................. 113 7.3 An example of the system in action ....................................................... 117 7.4 The role of the World Trade Organisation ............................................ 119 7.5 ISO – an arm of global governance ....................................................... 121 7.6 The UK's global role .............................................................................. 123 8.0 Foreign and defence policy ..................................................................... 127 8.1 The European Union dimension ............................................................ 127 8.2 The need for realignment ....................................................................... 128 8.3 Levels of co-operation ........................................................................... 130 8.4 Foreign policy mechanisms ................................................................... 131 8.5 Neighbourhood policy ........................................................................... 133 8.6 Soft power dynamics ............................................................................. 135 8.7 Defence cooperation .............................................................................. 138 9.0 Administrative co-operation ................................................................... 143 9.1 Co-operation through the EEA .............................................................. 144 9.2 Inter-agency co-operation ...................................................................... 145 9.3 The Single European Sky ...................................................................... 146 9.4 Police and criminal justice measures ..................................................... 150 9.5 Joint customs operations ........................................................................ 153 9.6 Third country sanitary and phytosanitary controls ................................ 155 9.7 Anti-dumping measures ........................................................................