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Leaving the EU Single Market doesn’t necessarily mean disaster for EU-UK trade. A number of non-EU countries have secured trade relationships with the EU that work well for both parties. But only one – the Canada model – aligns with all the UK’s conditions for leaving the EU.

Crossing the line: which model aligns with the UK’s post-Brexit wishlist?

Crossing the line: which model aligns with the UK’s post-Brexit wishlist?

Source: European Commission, Based on slide presented by Michel Barnier, European Commission Chief Negotiator, to the Heads of State and Government at the European Council (Article 50) on 15 December 2017

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Related content

The Brexit trade trade-off 

When the UK leaves the European Union, it also leaves the world’s largest single market. We assess which alternative trade scenarios could be viable for the UK, post-Brexit.

Brexit: Safeguarding the UK’s powerhouse sectors 

Post-Brexit, the most important sectors of the UK economy will require more than just a free trade agreement with the EU to maintain their level of activity.

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Provides deep integration with the EU single market and membership of the European Free Trade Association (EFTA) while remaining outside the EU and Customs Union.

This means Norway:

  • has no voting rights on EU matters
  • contributes to the EU budget
  • accepts free movement of people and EU market regulations
  • is subject to customs procedures on EU trade, including Rules of Origin
  • has restricted single-market access for agriculture and fisheries

In short: Probably deemed too close to the EU status quo to gain political support in the UK

Offers the greatest access to the EU single market based on a series of bilateral agreements negotiated over 20+ years.

This means Switzerland:

  • contributes to EU-funded programs
  • accepts free movement of EU citizens
  • has access to the single market for goods (limited for agriculture)
  • has no access to the EU single market for services and no passporting for financial services
  • is de facto aligned with EU regulation

In short: May present too many compromises without securing the UK’s services sectors' access to the single market.

Entails an ambitious bilateral free trade agreement with the EU, the Comprehensive Economic and Trade Agreement (CETA).

This offers:

  • extended free trade of goods with some restrictions and customs procedures
  • limited service sector trade provisions – financial services is excluded
  • mutual regulatory recognition for limited number of sectors
  • limits set by each party’s Rule of Origin and Most Favoured National provisions

In short: Offers the least access to the EU single market - but may be an attractive model for building global trade.

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Learning from Canada

As the country that meets all of the UK's post-Brexit 'red lines', Canada's model may provide a template for UK policymakers. But to replicate its success, the UK needs to recognise the years of effort Canada has invested in terms of both securing trade agreements and building its global trade infrastructure.

Crossing the line: which model aligns with the UK’s post-Brexit wishlist?

Firm ‘red lines’

If the UK government holds firm on its ‘red lines’ for leaving the EU, it will have to leave both the single market and the Customs Union. If this happens, an ambitious trade policy based on comprehensive Free Trade Agreements with a wide range of trading partners may be a viable way to assure resilience of UK trade in the future.

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