Post-Brexit options for trading with EU.
The principal question affecting capital markets during this period would invariably revolve around the conditions under which the UK retained a form of future access to the EU single market, not least because the most recent figures show that the annual value of exports of British financial services to the EU amount to PS19.4 billion. The corresponding trade surplus, which exceeds PS16 billion, is the equivalent of almost 1 percent of British GDP.
There are four alternative arrangements under which the UK could continue to trade with the EU, although it's worth noting that the terms offered to the UK would be considerably more favourable than those currently in existence as the UK is a hugely important market for EU-based enterprises.
The Norwegian alternative: Under this option, the UK would apply to join the European Free Trade Association (EFTA), a body comprising Iceland, Liechtenstein, Norway and Switzerland; it would also to join the European Economic Area, which includes the EU member states and EFTA except for Switzerland.
If its membership application was accepted, the UK would continue to have unrestricted free access to the EU Single Market, but it would have to comply with the EU's single market regulations under EU law without being able to vote on them. Free movement of labour to and from the UK across the EU would continue, while the UK would continue to contribute to the EU budget.
The Swiss alternative: This would involve joining the EFTA and subsequently concluding a series of bilateral agreements with the EU.
Switzerland currently has around 140 of these, carrying varying degrees of obligation and importance, although there are only seven major ones, negotiated comparatively recently following the rise of the Swiss People's Party in the early 1990s. The Swiss agreements do not cover services in general or financial services in particular, with the exception of life assurance.
Moreover, it must ensure that its regulations continue to mirror those of the EU and also contribute to the EU budget.
The customs union alternative: Theoretically, this would entail the UK joining a customs union with the EU whereby the country would have to accept the EU's external tariffs without having any say in setting them, the conditions under which Turkey currently operates. This provides access to the single market in goods in exchange for adopting relevant EU regulations, although it does not provide not access to markets for services, which would need to be negotiated separately.
The free trade agreement alternative: A fourth option would be for the UK to trade with the EU under World Trade Organisation (WTO) rules, which are subject to the EU's common external tariff. Alternatively, it could negotiate a separate free trade agreement with the EU, under which tariffs would be lower than WTO tariffs, an arrangement recently concluded by Canada which is scheduled to come
<BIf Prime Minister David Cameron were to advise the European Council that the UK wishes to leave the EU after the referendum, then it would be 2018 at the earliest before the ties were formally severed
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|Publication:||The Birmingham Post (England)|
|Date:||Mar 24, 2016|
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