The terms: Norway Model, Canada Deal and the Chequers Deal (or ‘UK Brexit plan agreed at Chequers’ as it should really be called) are all over the news at the moment and a lot of our members are asking us what these terms actually mean and what the three potential deals/models are.
The Norway and Canada Deals are actually agreed and fully operational whereas the Chequers Deal is merely a proposal at the moment.
Lets look at the two operating models first.
The Norway Deal: This relates to two important European organisations: EFTA (The European Free Trade Association) and the EEA (European Economic Area) of which Norway is a member of both.
The EFTA comprises of Norway, Lichtenstein, Iceland and Switzerland. These four countries trade freely with each other and also have trade deals with non-EU countries; such as Canada negotiated separately with the EU.
The EEA is comprised of all the EU countries plus Norway, Iceland and Lichtenstein. All of the EEA members have full access to the European single market. You can only join the EEA if you are a member of EFTA or a EU country. If and when the UK leaves the EU it could join EFTA and then join the EEA and have access to the European single market.
So what are the benefits and disadvantages? Very simply members of the EEA have to accept free movement, which means no limits to EU wide migration and as a result a certain hostile reception to this model from the Brexiteers; who consider this a key issue. On the other hand this would help solve the border problem between Northern Ireland and Eire as the tariffs and border controls would no longer be the stumbling block they are now if the UK became an EFTA-EEA member.
The Canada Deal. The CETA (Canada-EU Trade Agreement) or (Comprehensive Economic and Trade Agreement) even the acronyms are confusing – focuses on a free trade agreement.
With a free trade agreement of this kind in existence we should see over 98% of goods moving freely across the borders of the UK and the EU; albeit with some border checks. It would also allow the UK to control immigration and remove the influence of European Judges in matters of UK law.
The main downside is the difference between ‘goods’ and ‘services’. Goods are things like food, agriculture, car manufacture and other manufactured products. Services include; banking, healthcare and all manner of things such as legal, employment and contractual relationships.
This is a problem because approximately 80% of the UK’s GDP (Gross Domestic Product) comes from the service sector and any deal which makes things harder for the flow of services across borders will likely lead to economic problems – at least in the short term or until new agreements are reached.
The Chequers Deal. This plan aims to select the best parts of the EU and other models and has been referred to by Michel Barnier recently as ‘cherry picking’.
It would be difficult to disagree and the plan can only realistically be considered as a starting point for negotiations. Essentially the model allows the UK to retain free trade with the EU whilst being able to reach separate trade deals with non-EU countries. It ends the free movement of people and creates a new ‘mobility framework’ which allows the UK to say who comes in, when and from where. It also puts an end to annual payments to the EU Budget.
Whilst this deal would, on paper, be good for the UK many believe it doesn’t constitute a Br-exit and means the UK is still tied indefinitely to the EU. From the EU point of view it has too many of the benefits of EU membership without the financial commitment or regulation.
Quite simply the situation at the moment is as follows:
May and her supporters want a Chequers type deal. Her detractors want a much harder exit without the ties to the EU and the EU favors a Norway/Canada model.
Speaking in New York in July Michel Barnier said that after 12 months of negotiations the EU had agreed 80% of a deal with the UK.
If this is what being in 80% agreement looks like, then the detail that remains to resolve the other 20% may prove to be mountainous.