The United Kingdom is torn between an “Australian” Brexit or a “Canadian” treaty

With the negotiations between the United Kingdom and the European Union (EU) at their peak, the two relationship models that remain on the table, after several years of talks, are reduced to two: a trade agreement such as Canada’s, or resign yourself to ending without a specific agreement, as is the case with Australia.

British Prime Minister Boris Johnson often uses the term “Australian-style pact” as a euphemism for the option of an abrupt Brexit, which for most economists would be particularly damaging to UK finances.

This week the head of Government was willing to adopt this model on December 31 if Brussels does not make concessions in areas such as the distribution of fishing quotas and the rules on state aid that the EU requires to comply with in exchange for favorable access to its market of 450 million people.

Johnson has long since ruled out a more ambitious association with the community club like the one Norway maintains, which contributes to its budget and complies with much of the European regulations for unrestricted access to the single market.

These are the main characteristics of the possible models:

Canadian accord

In 2017, the free trade agreement between the EU and Canada, known as CETA, began to be provisionally applied, which eliminates most tariffs in the exchange of goods, although not all (they are maintained, for example, for meat and the eggs).

The agreement expands the commercial quotas between both parties, although it does not eliminate them completely either.

Similarly, the United Kingdom would stop paying contributions to the community budget and would regain control of immigration, among other aspects that Johnson seeks, but would be forced to establish border controls and other trade barriers that did not exist between both sides of the Canal. La Mancha in recent decades.

One of the most problematic aspects of this possibility is that it does not contemplate mutual access for financial services, one of the main pillars of the British economy.

UK negotiators used terms like “Canada plus” and “super Canada plus” to refer to a free trade agreement that includes facilities for the British financial industry to continue operating on the rest of the continent.

Australian pact

Australia does not have a free trade agreement with the European Union, but rather a Framework Cooperation Agreement, so close that it obliges both of them to have most of their exchanges governed by the generic rules of the World Trade Organization (WTO).

In practice, this model implies almost completely canceling the commercial cooperation between the United Kingdom and the EU, which has been in force for the last 40 years.

UK exports and imports would be subject to tariffs, UK companies would not have preferential access to the single market, and UK banks would lose their right to operate in the Union.

In addition, an agreement of these characteristics could trigger the prices of cars and some foods such as cheese, milk and meat in the United Kingdom, added to the possibility of making it difficult for industries located in the British Isles with chains of assembly that depend on their parts crossing the border without problems.

Norway’s discarded model

Johnson puts the UK’s ability to legislate without outside interference in areas like immigration, fisheries and state subsidies before having to keep customs open with the European Union.

For this reason, since he came to the Government he rejected the possibility of joining the single market as an external country, as did Norway, which belongs to the European Economic Area (EEA), but not to the EU.

The Scandinavian nation makes substantial contributions to the community budget and is obliged to comply with much of European regulations in exchange for unrestricted commercial access, something that the British prime minister ruled out from the outset.

Taken from Infobae

With information from EFE

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