Brexit Made Simple – Issue 11, A ‘NORWAY-STYLE’ TRADE DEAL

What is the issue?

Following last week’s General Election in which the Conservatives emerged with an 80-seat majority, many have presumed that Boris Johnson will now seek the hardest form of Brexit available to him.

But it may not be that simple.

A hard Brexit would be a disaster for the United Kingdom.

I have argued since the 2016 referendum that a “Norway-style” trade deal is the least damaging vehicle for the UK to leave the EU. 

A responsible UK Government, which is genuinely concerned about the welfare of all its people, would pursue this outcome. 

The Brexit path Boris Johnson now chooses will tell us whether his priority is serving his country’s best interests – or his own political survival.

What might a “Norway-style” trade deal look like?

Very similar to what we have now, which is a big part of its attraction.

It would allow the UK to benefit from being as close as possible to the EU without remaining as a member.

However, it does require membership of two other organisations: the European Free Trade Association (EFTA) and European Economic Area (EEA), which means we would still have some friends. 

Norway, along with Lichtenstein and Iceland, is a member of both whilst Switzerland is only part of EFTA. These four countries trade between themselves and also have free trade deals with non-EU countries including Mexico and Canada.

Meanwhile, the EEA includes all EU member states as well as Norway, Lichtenstein and Iceland. 

Crucially, each country has full access to the Single Market and minimal trade barriers with the EU.

Sounds eminently sensible. Are there other benefits?

Lots.

By having access to the Single Market, EEA membership would allow the UK to retain the benefits of the “four freedoms” – namely, the freedom of movement of goods, services, capital and people.

UK citizens would therefore be able to continue to live and work in the EU, with EU citizens permitted to live and work in the UK and protect the huge economic benefits this brings us.    

What’s in it for Brexiteers?

Plenty. 

As well as achieving their ambition of the UK leaving the EU, the path to an attractive trade deal with Brussels would be considerably smoother and quicker since a template already exists. 

In addition, following the Norway model would allow the UK to withdraw from the EU’s Common Fisheries Policy and Common Agricultural Policy. To borrow a phrase from the Leave campaign, the UK Government would be able to “take back control” of its own policies in these areas so vital to our domestic economy.

Arguably even more thrilling for Brexiteers, the UK would no longer be subject to the judgements of the European Court of Justice and would be exempt from EU rules on justice and home affairs.   

What about customs arrangements?

To avoid obtrusive checks in Northern Ireland, the UK would need to agree new customs arrangements with the EU.

These would remove any need for physical infrastructure on the border with the Republic, as well as the virtual border in the Irish Sea which is part of Boris Johnson’s Brexit deal and opposed by every political party in Northern Ireland itself.

How does business feel about a Norway-style trade deal?

A recent poll of almost 1,000 members of the Institute of Directors found that 55% of small businesses want rules similar to Norway for goods and services post-Brexit.

And Boris Johnson?

Judging by his past comments, he should be strongly in favour.

Addressing business leaders in December 2012, Johnson said that the UK could “construct a relationship with the EU that more closely resembled that of Norway or Switzerland.”

Interviewed by Sky News in 2013, he said: “I’d vote to stay in the Single Market. I’m in favour of the Single Market.” 

Speaking later that year, he expressed his view that the “overwhelming majority of people” want to remain “firmly in the Single Market.”

During the 2016 EU referendum campaign, he signed a public pledge that “EU citizens will automatically be granted indefinite leave to remain” after Brexit.

And immediately following the Leave victory, Johnson said that the UK would retain “access to the Single Market.”

What does he think now?

We should know shortly after 31 January 2020 when the formal trade negotiations begin. 

Dr Jason Aldiss BEM

Managing Director, Eville & Jones

17 December 2019

You can follow me on Twitter @JasonAldiss