One of the layers of complexity to the debate over the United Kingdom’s decision to leave the European Union is the different models we could choose. Sometimes this is framed as the difference between a Hard Brexit and a Soft Brexit. Generally Hard Brexit is understood to mean leaving the EU and falling back on the World Trade Organisation (WTO) framework. Soft Brexit is commonly understood to mean having some form of continued relationship with the EU. Before writing in more detail, for clarity I am on the soft side of Brexit however in this piece I will do my best to explain some of the terms in use and hopefully convince you of why a Hard Brexit is in my view a poor option when we have others.
First up – the customs union. A customs union is a type of trade block, the countries within the trade block can trade freely but they erect a common external tariff. What this means is that someone in Scotland selling agricultural products can do so anywhere within the European Union without having to pay a fee or a charge to sell into that country. There are a number of customs unions in the world, the European Union Customs Union is the one most have heard of but there are others such as the Gulf Cooperation Council.
Customs unions erect what are called common external tariffs; this means that someone outside of the customs union, say an American company selling agricultural products would pay a fee to sell into the customs union. The average EU Customs Union tariff for agricultural products is 11.1%; this means for every $100 dollars of product our American friend sells he must pay a tariff of about $11. Think of being in a queue outside of a glamorous nightclub, you have to pay the bouncer 11% of the entrance fee before he lets you into the queue to buy your ticket. Members of the nightclub are waived through by the bouncer.
The European Union Customs Union (EUCU) is a customs union made up of all members of the EU, micro states like Monaco, territories of the UK such as the Isle of Man and Turkey (which is not in the EU). The customs union was first established in 1958. One of the conditions of membership of EUCU is that the European Commission negotiates trade deals on behalf of all members rather than individual members negotiating their own deals. Technically it is the Common Commercial Policy that prohibits states negotiating trade deals but I think my blog would drift into becoming unreadable if I expanded on that one.
Next up – the Single Market. There are three stages to market integration, the first is what is called a Common Market (remember that). There are a number of common markets in the world, perhaps the best known is Mercosur, the common market that operates across large parts of Latin America. A common market sets up a free trade area amongst its members for free movement of money and services.
The second stage is the single market; this removes most trade barriers for goods and allows free movement of money and labour, enterprise and services. Barriers to free movement such as standards and taxes are harmonised. What is often not explained to people is that the single market is only the mid point to the Nirvana of a unified market. A unified market is the ultimate goal and involves the total free movement of goods, services, people and money irrespective of national boundaries. It is difficult to see how nation states could continue to exist in a unified market – after all what would they have left to do?
Last up – the European Free Trade Association (EFTA). The EFTA is a free trade area; its members are Iceland, Liechtenstein, Norway and Switzerland. The EFTA operates closely with the EU but it is not part of the European Union Customs area which is why EFTA members can negotiate their own trade deals. The EFTA has its own court to oversee compliance with arrangements, unlike the European Court of Justice – the much maligned ECJ, the EFTA court has no ambitions to ever closer union and concerns itself solely with treaty matters.
It is worth noting that the EFTA has a free trade agreement with the EU, also of note countries within the EFTA can limit the number of EU migrants coming to their country i.e. it is not completely free movement and where it happens it is understood to be free movement of labour not welfare. You cannot go to Norway and sign on.
To participate in the single market Norway, Iceland and Liechtenstein are parties to an agreement on the European Economic Area (EEA) regulated by the EFTA court, Switzerland prefers to operate via a series of bilateral agreements with the EU.
This is a very simplistic overview of the models but hopefully I have explained some of the differences. A Hard Brexit means leaving both the customs union and the single market. This means companies that trade with the EU will pay tariffs. So what? I hear you say – we can charge them tariffs as well. This is true but it means our exports become more expensive and the imports we do want become more expensive to the consumer. We are not going to get a free trade deal with the EU within the timescales of the Article 50 process, falling back on WTO rules will be expensive – and lets not forget WTO only deals with trade, it has nothing to say about your rights of access to healthcare when you are on holiday in the EU.
My main concern about a Hard Brexit is that it brings such a shock to the economy as well as all the things we got used to in the EU such as visa free travel that the Remain campaign will seize advantage and take us back into the European Union, this time with no opt outs- so be careful what you wish for, a Hard Brexit could well lead to a Euro in your pocket within a decade. A Hard Brexit is an emotive response, I do understand it but I would argue that the pragmatic one is for us to leave the EU and adopt the EFTA arrangements; this will prevent any shock to the economy and provide us time to negotiate trade deals with partners around the world. So that we are clear, I see the EFTA as staging post to full independence not a place of permanent residence.
As an independent nation we need to carve out a new role for ourselves where we are not wedded to monolithic trading blocks and one that does not blindly follow the mantra of the high priests of economics and their depletion models. For more widely we all need to open our eyes to what is happening both here and around the world. An economic dogma is being imposed on nation states across the globe. If you hear the term common market be aware that a common market is a stepping stone, one that leads to the unified market. This is the piece of information that the people of the world are not being told about, the EU and all the common markets around the globe, they are all aspects of the same thing, a drive to end the nation states of our world, our art, our music, our culture and our history all to be burned at the shrine of Moloch and the one true religion of consumerism. A world where we are broken down as individuals with no sense of identity, fed a diet of falsehoods by our media, terrorisedby a Dark Age cult and bullied into silence by the fake outrage of fake campaign groups funded by a wealthy and malign elite.
Brexit for me is not a simple case of leaving the EU, it is the one opportunity for the world to hear a powerful voice say stop – think about what we are doing, is this really the world we wish to create? Our country, the cradle of the enlightenment is uniquely placed to do this; this is simply too precious to be taking risks with a Hard Brexit, let’s not blow it.