Tuesday, 16 January 2018

Cycle of Brexit: Endangering the Norwegian Model

So it appears that rather that following the Norwegian model of living with the EU Theresa May's vision for what Brexit means looks like it is endangering it.

Norwegian officials have warned Brussels that they are watching negotiations over Brexit closely. If a special deal is reached with the UK this will lead to Norway looking at renegotiating the terms under which it operates with the EU. The fact that May's government wants out of the Customs Union and out of the Single Market while still maintaining favourable conditions of trade and access with the EU is not looking good for countries like Norway who have reached an agreement with the EU and remain outside.

At a time when countries like Ukraine, Moldova and Georgia are also looking to enter the Customs Union the stance that the UK is taking means we are no longer having to appease just 27 other counties. There are also the additional 4 countries in the European Free Trade Association1, the 6 with Stabilisation and Association Agreements2, the 3 in the Deep and Comprehensive Free Trade Area3 as well as the 4 with bi-lateral Customs Union arrangements4. In other words all of Europe until you get to Belarus and Russia.

Now you have to consider that some of the EU nations who border or surround some of those countries affected do more trade with them than the UK. When it comes to consideration of the remaining 27 EU nations all accepting the Brexit deal. The threat of Norway and potentially the others looking to also renegotiate their deal with the EU means that the chances of the special deal that May, David Davis and Boris Johnson say they can get looks less and less likely to happen. The EU cannot afford to give special terms to one nation who pulls out of the EU if it impacts on the deal they have with 17 other nations that the EU also has deals in place with. Effectively Britain is up against 44 not just 27 other nations when we sit at the negotiating table.

If the other 17 are paying something to the EU to benefit from their deals to help them trade with the EU and the UK refuse to pay anything we can expect to get nothing. Seventeen countries willing to pay for special access to the EU is going to be more beneficial than allowing one country to have access who is paying nothing. The Brexiteers have been playing high stakes poker with a bluff in their hand. It is the smaller stacks at the table from the associated nations who the EU will be gauging now that the UK has gone all in. That revenue flow is important to them, they may yet call on our all or nothing bet.

If the UK scrambles away from the EU with nothing David Davis hasn't run the impact reports, but Scotland has. Is it worth it?


1 Norway, Iceland, Switzerland and Liechtenstein
2 Albania, Macedonia, Montenegro, Serbia, Bosnia & Herzegovina and Kosovo
3  Georgia, Moldova and Ukraine
4 Turkey, Andorra, Monaco and San Marino

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