The Brexit Bill has gone to the Lords, so the Brexit Select Committee is looking at countries which have trade deals with the EU but are not EU members.
We want to understand the options we have for the future relationship with the EU.
Canada now has a Free Trade Agreement which covers goods but not services. This ensures that the goods we trade between each other share the same health and safety standards, are manufactured under similar working conditions and with similar environmental and animal rights protection rules, what’s called ‘regulatory alignment’. So whilst ‘regulatory divergence’ is seen by Brexiteers as an act of freedom from the shackles of EU regulation, ‘regulatory alignment’ is the order of the day for countries who want to trade with the EU.
The so-called EFTA countries like Norway, Iceland, Switzerland and Liechtenstein are in the single market but not the customs’ union. EFTA countries have opted out of specific areas of common EU regulations - Switzerland to protect its banking sector, Norway to protect its own fisheries and agricultural industries. However, the Select Committee heard that there is a large amount of ‘pragmatism’ going on. When Norwegian lorries full of fish were stacking up along the Swedish borders because the EU was not accepting certain aspects of the goods, the Norwegians quickly changed tack. In the end what matters is trade.
The advantage of being outside the customs union is that countries can set their own tariffs and make their own trade deals with other countries, but all EFTA countries have proper customs borders and however well these are managed electronically and with advance clearance, they all have physical border checks to avoid smuggling. The Irish border problem would remain unsolved for any UK deal that doesn’t involve a customs union.
Decision time is coming nearer.
It is important to understand that there are trade-offs. We will not get as good an economic deal with the EU than we already have. A customs border will mean physical border checks. No new trade arrangements with countries outside the EU can immediately compensate for the loss of current trade with the EU (especially if we completely crash out of the EU) and most non- EU countries are looking for closer ties with the EU not looser ones.
The Brexit Select Committee is due to publish its next interim report before Easter.