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What exactly does ‘Leave’ entail?

April 14, 2016

Few in the Westminster village need much persuading that the forthcoming EU referendum will be ground-breaking. One of its instantly unusual aspects is the framing of the question; it is not a ‘Yes/No’ or even ‘In/Out’ choice that voters will face on the ballot paper, but a ‘Remain’ or ‘Leave’. I suspect this will place a little less pressure on those wishing to defend the status quo and commensurately more on activists who would have us leave the EU to explain what precisely the UK would look like after we ‘Leave’.

In view of the fact that those who would have us leave have had over forty years to work out the new framework they would prefer, the uncertainty that a Leave vote would generate can scarcely be dismissed as simply ‘Project Fear’ scaremongering.

As to process, if the electorate vote to ‘Leave’, the government will be expected to despatch a formal letter confirming our intention to quit the EU to the President of the European Commission. This invoking of Article 50 of the Lisbon Treaty triggers a two-year process (to be extended in annual increments by agreement) of untangling ourselves from all aspects of EU membership. Presumably, if only for practical purposes, the ideal longstop for exit would be set at June 2019 to coincide with the next set of European parliamentary elections.

The centrepiece of this disentanglement would be a Treaty negotiated between the UK and the remaining EU members which would require approval, if necessary, by qualified majority vote and be subject to a veto of the European parliament…and perhaps as crucially, also by a vote of the UK parliament where if the exit deal was not good enough presumably MPs might refuse what is on offer. In the meantime the UK would maintain all its rights as a full EU member – in theory, at least, although in practice any influence in Brussels would certainly be rapidly diminished.

Naturally it is speculative to predict precisely how EU exit would impact on the UK’s place in the world. Whilst virtually all of our allies beyond the continent fret that diplomatically our interests would be adversely impacted, ultimately this is only conjecture. Where there is a little more certainty is in the sphere of continued trading cooperation with erstwhile EU partners, although even here there seems to be little consensus as to where the national interest lies, nor indeed of the possible scenarios that might be negotiable.

Let’s look at sovereignty. If the argument that we should regain sovereignty at all costs were enough, we would surely be tearing up many more international agreements than our membership of the EU. We give up sovereignty through our membership of NATO, because we are now treaty bound under Article 5 to go to the defence of a fellow member under armed attack. Of course, the House of Commons could vote against such military action, but in doing so would breach the treaty and destroy the institution that is the foundation of our security. We have effectively and willingly ceded unilateral decision-making on one of the most fundamental decisions this country can make – whether or not to go to war – because we think that to do so makes us safer and stronger. That is NATO’s price of pooling sovereignty.

The UK parliament enters international agreements of its own volition because they are judged as being in our national interest. These treaties typically require us to accept a set of rules. We can either choose to try and change those terms or abandon the gains the agreements give us. So it is with our EU membership.

In essence those advocating ‘Leave’ have a choice in economic terms of five potential options. First is to join the European Economic Area (alongside Norway, Iceland and Liechtenstein). Second is the

model adopted by Switzerland, the other former EFTA member which did not join the EU. Their deal involves over 120 bilateral agreements with the EU. All four of these nations incidentally are, in return for access to the Single Market, obliged to sign up to the Schengen Agreement. Insofar as this borderless arrangement persists, the UK would presumably wish to give it extremely wide berth. Seductive as it may sound it is also an illusion that leaving the EU would enable this nation to ‘regain control of our borders’; cooperation with France would surely be strained to breaking point and those currently in Calais camps would simply be encouraged to cross the Channel. Naturally, even outside the EU the UK would remain subject to a variety of longstanding international conventions on the treatment and repatriation of refugees and asylum seekers.

A third option would be to sign up to a comprehensive trading agreement along the lines that Turkey and more recently, in unusual circumstances, Jordan, have negotiated. However a customs union of this type would be unwieldy and unlikely to satisfy the needs of British exporters especially in the services sphere. A fourth possibility would see us relying upon WTO rules alone to access the EU market. Whilst superficially straightforward, as there would be neither obligation to implement EU directives or regulations nor accept free movement of people, nor even to contribute to EU coffers, we might soon find ourselves overwhelmed by non-tariff barriers. Moreover financial services (a key UK interest presumably) are not currently covered under the WTO protocols.

This leads us to a final option suggested by Eurosceptics – the notion that we could negotiate a bespoke deal in keeping, so we are told, with our size and economic clout. It is often, correctly, pointed out that the UK runs a substantial trade deficit with the remaining EU nations and that the EU accounts for virtually half of our export market. Surely, so the argument goes, the EU would not be so foolish or short-sighted as to undermine such a captive market for their goods. In truth, of course, the history of international diplomacy is littered with examples of political leaders behaving irrationally and given that Britain accounts for a mere 9% of the EU’s export market, our bargaining position may not be anything like as strong as presumed.

Ultimately we – states as much as individuals – all respond to incentives. Where precisely would the incentive lie with the remaining EU nations to make life easy for a departing UK? Indeed the existential threat implied by Brexit would arguably lead to a highly restrictive exit deal if only to act as a strong warning for any other prospective leavers. The ‘Swiss’, ‘Norwegian’ and ‘Turkish’ models outlined above are special agreements struck with neighbouring states contemplating future accession or some sort of closer union. As a consequence they may offer considerably better benefits than anything the UK might reasonably anticipate after negotiating a journey in the opposite direction.

Geopolitically, it is difficult to argue that the UK outside the EU would retain its global influence, especially in a world increasingly dominated by continental-sized powers such as the United States of America, China and India. Harping back to a wistful place at the heart of the British Commonwealth is surely little more than that – an unrealistic, naïve reluctance to cast off post-imperialistic pretensions.

That is certainly how such a UK ‘alternative to the EU’ seems to Indian opinion formers. Indeed Prime Minister Modi made it clear in his visit to the UK last November that he fully supports the UK’s continued membership of the EU and regards us as a key gateway for his nation’s exporters to the EU. It is a view shared by each and every other head of government of our key trading counterparts, bar Vladimir Putin of Russia. For Australians (especially since Malcolm Turnbull took the helm as premier) and New Zealanders, meanwhile, the world has moved on. Whilst the love-in with monarchy shows few signs of abating any time soon, these countries increasingly regard themselves as twenty-first century Asian nations. Nor have they forgotten the sense of betrayal when we joined the EEC. As for Canada…well, their pride in the Royal Family owes more to desire to differentiate historically from an internationally unpopular USA, but their economic and strategic interests lie firmly within their own continent. New Premier, Justin Trudeau, is certainly no Anglosphere supporter in the style of his predecessor Stephen Harper.

Even for the dwindling number of arch-Atlanticists in our Party, I fear that the prospect of swapping EU membership for NAFTA is painfully unrealistic especially as the US political fraternity – Republican and Democrat – increasingly turns its attention to relationships across the Pacific.

It would be remiss not to make passing reference at this point to another Union, whose ties would be sorely tested by Brexit – the United Kingdom. What would be the impact on Scotland – and more pressingly – Northern Ireland if we were to leave the EU? Simply asking this question highlights the risks that Leave would pose.

Consistently disappointing PISA-OECD reports on UK educational standards reveal that we have nearly as many functionally illiterate and innumerate adults than mid-sized European neighbours like Norway and Switzerland has as an overall population. Our decades-long failure to educate a future indigenous workforce for the rigours of earning its way in the global race will be a massive drain on the UK welfare budget for generations. This remember is a welfare budget that despite Thatcherite rigour in the 1980s and austerity since 2010 has risen relentlessly: it is difficult to see how we can retain social cohesion in the sort of streamlined welfare system that a newly competitive, unshackled UK would demand. Let’s face blunt facts here – in all honesty, modern Britain is neither nimble enough nor sufficiently well-endowed in commodity terms to reinvent itself as a Norway or Switzerland on the global economic stage any time soon.

Conservatives who are weighing up this crucial choice recognise that we have long sought a European arrangement which acknowledges Britain’s unique circumstances and separates us from the drive towards a superstate. The proposed deal entrenches the special status in the EU which we want, and so gives us the best of both worlds: outside the Euro, and protected from deeper integration, but able to access the single market; in the world’s greatest trading block of over 500 million people, but still outside the Schengen area and so able to maintain our borders.

We would have to be very sure of the alternative before throwing these advantages away.

‘Leave’ campaigners are inviting the public to take a giant leap into the dark, gambling Britain’s economic success on an alternative which they cannot begin to spell out. If even Brexit campaigners cannot agree what the future holds, why should the British public take the risk of leaving? Surely it is a betrayal of instinctive British values over the past half millennia to walk away from troubles and retreat into isolationism. Yes, the EU is an imperfect, troubled institution; the world at large faces economic and terrorist threats on an unprecedented scale, but the British way, the Conservative way, is to confront those challenges. Not for us isolationism or crossing the street when international troubles brew.