One of the most used newish words in the world in 2016 was Brexit. But the difficulty is how one defines Brexit. It would seem to come in many different forms – the adjectives ‘hard’ and ‘soft’ might put one in mind of boiled eggs – as well as colours (Grey or Red-White-And-Blue). Sometimes it is even political – “Tory Brexit” – as if the vote to leave the EU was performed solely by Conservative voters trampling down the wishes of the rest of the nation.
The UK’s Prime Minister – Teresa May – attempts to help us all by defining it: she says that ‘Brexit means Brexit’. While this doubtless allays the qualms of Brexiteers concerned about a Remainer as the new PM, the rather circular definition does little to shed light on what Brexit is – or what the many options are.
The precise wording of the referendum question was: Should the United Kingdom remain a member of the European Union or leave the European Union? Therefore Brexit involves leaving the EU. So far things are quite clear; but alas, that isn’t the question being asked or what is being debated to heatedly in the UK and EU. It would seem the question is actually ‘what is the EU’?
The EU is a collection of treaties, organisations and associations that have developed since the signing of the Treaty of Rome creating the European Economic Community in 1957.
There are three main trade memberships in what is commonly called the EU. The loosest is the Customs Union, which means that once an item is imported into any member of the Union, it can be send anywhere within the Union without paying any extra import duty. This requires all nations of the Customs Union having the same tariffs and import duties.
Next there is a Free Trade Area, known as the European Economic Area (EEA). Access to the EEA is limited to EU Member States or the member states of the EFTA – the European Free Trade Association. The EFTA was founded by the UK and a number of other nations as a sort of half-in-half-out deal with the EU in 1960. Since the UK left the EFTA and joined the EU in 1973, it has shrunk as many nations have done the same and it is currently formed of Iceland, Liechtenstein, Switzerland and Norway. However Switzerland is leaving following their own referendum where the people voted against free movement of people with the EU/Single Market.
Although all members of the EEA have access to the Single Market, (sometimes known as the Common Market, typically abbreviated to ESM or ECM) as EFTA Members and Switzerland do not have full membership of the EU, they have limited access and face restrictions.
Lastly there are members states of the EU. However, a Brexit Britain clearly cannot continue to remain in the EU following the vote to leave the EU.
- Soft Brexit supporters wish to leave as little of the EU network as possible, while upholding the democratic wish of the British people, and they are often those who voted to Remain. Those who wish for a Soft Brexit typically propose remaining in the single market, and the main way proposed to do so is by rejoining the EFTA. Boris Johnston, the current Foreign & Commonwealth Secretary, supported this idea during the referendum, arguing that we would continue to be a member of the EEA if we voted to leave the EU.
- Hard Brexit supporters wish to leave everything EU related; all the treaties, communities, courts, common areas, and policies. From there, they will create a new trade arrangement starting on the World Trade Organisation’s rules on trade between sovereign nations. Tory MP Jacob Rees-Mogg, who, in a typically colourful speech, explained it by saying: “There is a plan set out clearly, and that is that we will leave. Everything else flows from that—everything else is leather or prunella. Leaving means, as the Prime Minister said, that there is no more superiority of EU law; the European Court of Justice may advise and witter on but no more will it outrank this House”. Leather or Prunella is a reference from Pope’s ‘Essay on Man’ to immaterial trappings and decoration.
- ‘Grey Brexit’ is a UK Government internal term for a compromise position between Hard and Soft Brexits. It was never a very popular term and has not been mentioned much.
- ‘Red-White-And-Blue Brexit’ is a UK Government external term to state that the government wishes to get the best possible Brexit for Britain. However, as everybody is aiming for what they think the best Brexit is, the term is hardly ever used. It is also a mouthful which might have tendencies to sound slightly jingoistic.
Soft and Hard Brexits are the two options that are discussed on a day to day basis. The big sticking point is membership of, or access to, the EEA – European Economic Area. Practically everybody agrees that access to the ESM/EEA is important, the question is how. Do we want to have access to, or be a part of the EEA – and therefore the Common Market?
Proponents of Soft Brexit argue that membership of the EEA was not voted upon and that being a member of the EFTA is very different from being a member of the EU. Furthermore, it would mean the European Court of Justice would no longer overrule UK courts, and that the UK could create its own trade arrangements with other nations. If the UK wishes to rejoin the EFTA, the members have indicated their support, but if the UK does not wish to rejoin the EFTA, the ‘Swiss Model’ is also available.
The Swiss have been able to access the Single Market like an EFTA member due to a number of separate treaties, which grant them de facto membership of the EEA. This is an interesting scenario, in that what they have achieved is a set of treaties that gives near complete access to the Single Market.
However, hard Brexit supporters argue that membership of the EEA via rejoining the EFTA or the Swiss Model is not the right goal. The UK would still:
- Have to pay into the EU Budget
- Have to accept Freedom of Goods, Services, Capital and People (The Famous ‘Four Freedoms’)
- Have to accept most EU Legislation, but would be unable to amend or propose it.
For these reasons, Hard Brexiteers argue that membership of the EEA is even worse than membership of the EU in that it retains nearly all the negative aspects of EU membership, but removes nearly all influence the UK has in shaping EU policy. The reasons why being a member of the EFTA/EEA is unacceptable to many Brexiteers are plain to see: we argued that to Vote Leave was to:
- Regain control of borders – i.e. refusing to accept one of the key ‘Four Freedoms’
- Restore Parliamentary Sovereignty – i.e. EU legislation would not be binding.
This had led some Hard Brexit supporters to describe the discussion over Hard vs Soft Brexit to be merely re-fighting the referendum all over again. To them any current option for access to the ESM via the EEA is not a true Brexit at all – merely a “Smoke & Mirrors Brexit”.
On the other hand, Soft Brexit supporters ask “What do Hard Brexiteers offer?”, and it is a question of considerable import. They warn that relationships must remain friendly and warm, and that neither party can afford to risk a trade war.
This is very true – the EU is still a major trading partner with the UK and therefore it behooves both parties to come to a trade agreement. The sticking point is that the UK wants free movement of goods, services and capital with the EU – but not free movement of people. On the other hand, many are willing to pay for this semi-access to the Single Market. Further, the Prime Minister has refused to rule out paying for access, which suggests that it may well be a negotiating chip. Indeed, Jacob Rees-Mogg suggested that access could be paid for ‘from our overseas aid budget, because it will be supporting poor countries.’
The EU has recently signed one of the most remarkable trade agreements with Canada – the CETA (Comprehensive Economic Trade Agreement), which removes nearly all tariffs on goods. Hard Brexit supporters say that the UK can achieve a similar arrangement with the EU, too. However, the weakest point in the argument for a Hard Brexit is the UK’s economy is services oriented, and the financial megahub of the City of London needs to retain its ‘passporting’ rights to the Single Market. ‘Passporting’ means that a company from any member-state of the EEA can do business in all other EEA states.
Supporters counter that like most other EU trade, the EU needs the UK more than the UK needs the EU and therefore the EU will want to retain ‘passporting’ rights to the City. Of note is that the EU’s chief negotiator Michel Barnier was quoted in leaked minutes to say that the EU wanted access to the City, so it would appear that the Hard Brexiteers are correct in this matter.
To some extent, however, the discussion between Hard and Soft supporters is now immaterial. Mrs May’s speech clearly outlined that the UK was aiming for a Hard Brexit, much to the jubilation of many Brexiteers, myself included. This leaves the UK seeking a Free Trade deal to gain as open access as possible to the Single Market for Goods, Services and Capital.
I hope this assists in the understanding of what Brexit is and what it can become, and simplifies the quite confusing EU systems and Brexit options. If I may hazard an opinion, I think Mrs May has selected the right strategy and one that will establish a clear cut basis for our friendly and mutually beneficial relationship with the EU. I think we do not want to be entangled in the EU system any more, and the British people are tired of confusing EU legislation – we definitely don’t want to have the EU dictate to us any more, on borders, laws or anything else really. And yes, I do agree with Mrs May’s position that no deal and returning to the WTO (World Trade Organisation) rules is better than a bad deal – that’s why we voted Leave: We’ve had enough with the EU and its bad deals.