Brexit Part II - You Can’t Have It Both Ways: Response to Leave, Part I

Jason’s argument is premised on the assumption that the UK could leave the EU and do away with its expensive regulatory provisions while maintaining free trade, “like Norway.”  From this premise, he goes on to cite securing the borders, propping up small business and dodging EU budget payments and regulatory costs as crucial arguments for a Brexit. He’s right: it would be hard to see a Brexit being justified if the UK maintained free trade but lost out on its other demands. The benefit for Britain lies in securing the borders and cutting costs; preserving free trade is simply maintenance of the status quo. On the flipside, losing free trade even in light of other gains puts Britain in a grave place indeed. Unfortunately, Britain can’t have it both ways: accessing the EU’s free market will likely require that it also contribute to the EU budget and abide by the four EU freedoms.

In this post I’ll challenge the macro assumption that Britain could leave the baggage of the EU behind while keeping its benefits. In my next post - part II of the response - I’ll engage directly with Jason’s individual claims.

The problem here is one of a necessary trade-off. Of the two European countries which have brokered deals with the EU to continue accessing the single market - Switzerland and Norway - both were forced to make big concessions over the other issues where Brexit proponents stake their arguments. Norway maintained access to the free trade benefits of the European Economic Area by remaining a member of the European Free Trade Association, but in return had to continue paying into the EU budget and remained bound by its “four freedoms”- including the free movement of people. True to form, Open Europe notes that in 2013 “Norway was the destination of twice as many migrants per head as the UK” despite not being an EU member.

Switzerland negotiated a series of independent agreements giving it access to the single market, but it also wound up agreeing to pay into the EU budget to facilitate those deals. Additionally, EU negotiators proved unwilling to grant Switzerland access to EU financial services.  Major Swiss banks got around this lack of cross border access by establishing subsidiaries in other EU countries, but the high cost of this approach meant that it could not be mimicked by smaller financial firms. As a result, small businesses in the Swiss financial sector have found it increasingly hard to compete. The UK could take the Norway or Switzerland-style approach, buteither way it ends up sacrificing the other demands Brexit supporters stake their claims on (immigration control, freedom from budget payments, and small business protection, to name a few) to maintain free market access.

Even if Britain were to attempt a negotiation entirely of its own, the prospects of securing free trade without the added baggage still appear thin. The UK is already having trouble negotiating with the EU; why would the EU grant unprecedented concessions to an independent UK when it now no longer contributes to the EU budget? This argument gets compounded by the fact that the EU has a strong reason not to make these concessions: it sets a secessionist precedent other EU countries fear.

 Finally, it’s worth noting who will actually be sitting at the negotiating table for the British side in a post-Brexit scenario. In the event of a “yes” vote, leaders of the eurosceptic movement are likely to be the ones making the deals: a vote to leave the EU means at worst a defeat for David Cameron’s Conservatives in the next election, and at best an increase in power for the eurosceptic factions both inside and outside his party. In either case, it would be hard to deny the eurosceptic leaders the right to lead negotiations - this is the right they fought their exit campaign for. If the UK delegation were led by politicians hostile to the EU, it’s unlikely that negotiations would take place in a collaborative spirit.

Either the UK surrenders free trade, or it surrenders many of the other benefits it would want to leave the EU for. Neither single group can win the debate: without the full package of arguments from the “exit” side, a Brexit leaves the UK with a reality paling in comparison to the status quo. In my next post, I look forward to explaining why even the full complement of Jason’s Brexit arguments would make Britain worse-off. But for now, know that the necessary tradeoff between free trade and benefits makes the smart choice all the more clear: stay.


Lloyd Lyall

Works Cited

Picture taken by Ben Cremin on December 29, 2013, titled "Big Ben at Night", obtained through creative commons.