Bloomberg: What Britain should ask for in Brexit negotiations

David Davis is the U.K.'s new 'Secretary of State for Exiting the European Union.' - Photo: Chris Ratcliffe/Bloomberg

Bloomberg View Editorial Board

The United Kingdom’s new prime minister, Theresa May, has said that Brexit means Brexit. There’ll be no second referendum. Leaving the European Union, she says, is her mandate.

That much may be clear – but little else is. Britain’s future relationship with the EU could take many forms. At one extreme is an acrimonious divorce that would leave Britain more separated from Europe’s economies than many current non-members. At the otherr extreme is something so close to EU membership that in economic terms Brexit would make little difference. The greatest danger for Britain and Europe lies in letting this uncertainty persist.

As yet, there’s no blueprint. Supporters of Brexit never agreed on what they wanted. Opponents – such as May’s predecessor, David Cameron – gave the matter little thought, hoping it would never happen. And Europe’s treaties offer no guidance: only a two-year deadline to complete the process, wherever it leads, after the now-famous Article 50 has been triggered.

Norway and Switzerland have been discussed as possible models, but they’re of little use. True, both are non-members of the EU with (mostly) unrestricted access to the union’s single market – but they accept Europe’s rules on trade without being able to vote on them, and are required to allow free movement of workers into and out of the EU. This last obligation is one May can’t agree to, since restoring control over migration was a main plank of the Brexit campaign.

It’s been taken for granted up to now that terms like Norway’s or Switzerland’s are the best Britain can expect, or even legitimately suggest. But Britain is a far bigger economy, with much more to offer the rest of the union. There’s no reason it shouldn’t ask for, and be granted, a new kind of deal.

To be sure, if Britain wants access on the same terms as members to the EU’s single market in goods, services and capital, it will have to accept Europe’s rules on trade. Yet it should also be able to maintain a degree of control on migration.

The EU’s leaders insist that free movement of workers is indivisible from the other freedoms it provides. All they really mean is that, up to now, they have decreed it to be indivisible. Nothing is stopping them from lifting that decree, and letting Britain remain in the single market for trading purposes while granting it a measure of control over movement of people.

Some argue that this would be unfair – a case of Britain wanting the privileges of EU membership without the obligations (German Chancellor Angela Merkel calls it “cherry-picking” and says it mustn’t be allowed). This is a puzzling argument. Opting out of free movement carries significant costs in its own right. If Britain is allowed to restrict immigration from the EU, its own citizens will face restrictions on their ability to work and live in Europe. That’s a tough choice for Britain to make – but there’s no reason to deny a non-member the right to make it.

Britain’s new minister for exit, David Davis, may already be the world’s most overworked politician. He needs to plan not just for the most mutually advantageous settlement, but also for what happens if the talks go badly. Nonetheless his first job, before Article 50 is triggered, is to float a proposal that minimizes the disruption and makes sense for both sides.

Forget precedent: There isn’t one. Forget Norway and Switzerland. Maximum economic integration plus control of migration is the right place to start, and Europe’s leaders should open their minds to it.

© 2016, Bloomberg View

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