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How about the Ukraine model?

by Michael Emerson | 16.12.2016

There are five familiar models for how the UK might relate to the EU post-Brexit: WTO, Norway, Switzerland, Turkey and Canada. Each has its qualities but each suffers from one defect or another. That validates the prime minister’s remark that there will be “no off-the-shelf model”.

There is however a new sixth model: the Association Agreement with neighbouring countries, including the Deep and Comprehensive Free Trade Area (DCFTA) formula for trade, as for Ukraine. This has several features that the UK wants or needs: in particular, a high degree of single-market inclusion for three of the four freedoms (goods, services and capital, but not labour). It has all the core prerequisites: zero tariffs, elimination of technical non-tariff barriers to trade, service sector liberalisation, etc.

There are further sectoral provisions of the highest interest to the UK.  For financial markets in particular the Ukraine DCFTA retains exactly the same conditions for “passporting” as in the EU’s internal legislation. Regarding transport, the UK would want to make a civil aviation agreement with the EU, in order to remain in the single European sky. On climate change, the UK will surely intend to remain complaint with the Paris agreement, but will have to work out how far to remain integrated into the EU’s mechanisms for implementation.

On employment and social policy it is notable that the Brexit minister, David Davis, has said that since EU employment law has not stopped the UK having a flexible labour market he would see no problem in retaining it as UK law. This would be helpful in meeting the “social dumping” concern.

Among chapters unrelated to trade, there are several where the UK has the highest interest in minimising the departure from the status quo, such as for scientific research, higher education, and many of the EU’s technical agencies. The Association Agreement model provides explicitly for participation in these, even full participation in the case of Horizon 2020 for scientific research.

Two other parts of the Association Agreement would be of definite interest to the UK. First there are open-ended provisions for cooperation over foreign, security and defence policy, including possible participation in EU military missions. Second, as regards police and judicial cooperation, the UK has recently announced that it wants to continue with the decision taken last year to opt back into around 30 measures for combatting crime and terrorism.

In the Association Agreement model there are no provisions for the free movement of people, because the EU side feared too much immigration from its neighbours. One conceivable outcome is that immigration to the UK from the EU may drop drastically in the next year or two, or even turn negative. In that case, a safeguard clause like the Swiss agreed with the EU in 1999 could turn out to be relevant. This would allow measures to be taken if there were a renewed surge of immigration.

On contributions to the EU budget there will presumably be a negotiation, with various parties on the EU side already saying that the UK will have to pay for single market inclusion, unlike Ukraine which gets aid, and more like Norway and Switzerland which do pay.

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    At the technical level, the Association Agreement model has two potentially useful features. First, much of the legal drafting, including institutional provisions, could be carried over if a similar structure were adopted, thus shortening the time needed to nail down a deal. Second, Association Agreements provide for a very large degree of “provisional application”, including all the trade provisions, from the moment of signature, without waiting for the necessary ratification of the full treaty text by all EU member states and the European Parliament. This could be one way of avoiding a cliff-edge when the Article 50 two-year negotiating period comes to an end.

    The EU’s formal position is to decline to give any advance indication of what it might agree to. The UK has to shoot first. However there are some well-known fundamentals on the EU side, notably how it favours a comprehensive deal and rejects “cherry-picking”. The Association Agreement model is a good example of a comprehensive deal which avoids cherry-picking. Even if the Ukraine model can’t just be copied, It is a useful reference for both sides.

    Michael Emerson is Associate Senior Research Fellow at CEPS, Brussels.

    More detail behind the present note is contained in M. Emerson, ‘Which Model for Europe?’, CEPS Special Report no 147, October 2016. The Ukraine Association Agreement is explained in detail in M.Emerson and V. Movchan eds., ‘Deepening EU-Ukraine Relations – What, Why and How? CEPS, 2016.

    Edited by Hugo Dixon

    Tags: Categories: Articles, Post-Brexit

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