Economic partnership

Following the decision of the people of the UK in the referendum, the UK is leaving the EU, and as a result will leave the Single Market and the Customs Union – seizing new opportunities and forging a new role in the world. At the same time, the UK wants to protect jobs and support growth through a new economic partnership with its nearest neighbours. This proposal respects the UK’s sovereignty, building in a  clear role for Parliament, and preserves the constitutional and economic integrity of the UK’s own Union.

A deep and comprehensive economic partnership between the UK and the EU would have distinct benefits for both sides. The UK is the world’s fifth largest economy, and the EU is the UK’s biggest market.

The UK’s proposal, set out in this and other sections reflects the unique ties that exist between the UK and the EU economies, businesses and consumers. It represents a serious offer, which the Government believes would benefit the UK and its close partners in the EU. In formulating this offer, the Government has listened carefully to the positions that the EU has set out.

This proposal respects the EU’s autonomy and the integrity of the Single Market. These principles, together with strong reciprocal commitments on open and fair trade, and propositions for a new institutional framework, inform the design of the UK’s proposal.

The UK hopes that this will be the basis of a serious and detailed negotiation in the coming weeks and months that will lead to a historic agreement in the interests of both sides.

Free Trade Area

At the core of the UK’s proposal is the establishment by the UK and the EU of a free trade area for goods. This would avoid friction at the border and ensure both sides meet their commitments to Northern Ireland and Ireland through the overall future relationship. It would protect the uniquely integrated supply chains and ‘just-in-time’ processes that have developed across the UK and the EU over the last 40 years, and will remain important given our geographical proximity, and the jobs and livelihoods dependent on them.

These close arrangements on goods would sit alongside new arrangements for services and digital, recognising that the UK and the EU will not have current levels of access to each other’s markets in the future. This would provide regulatory flexibility that is important for the UK’s services-based economy.

Every trading relationship has varying levels of market access, depending on the respective interests of the countries involved. The EU has adopted different agreements with countries beyond its borders and outside the Single Market, which are tailored to the depth and nature of its relationships with the countries concerned. It is right for the UK and the EU to take a similarly tailored approach.

At the same time, the UK recognises that the Single Market is built on a balance of rights and obligations, and that the UK cannot have all the benefits of membership of the Single Market without its obligations. The UK’s proposal therefore establishes a new framework that holds rights and obligations in a fair but different balance. This would be to the economic advantage of both the UK and the EU. It is a principled and practical response to a unique situation, and offers a constitutionally appropriate solution to the UK and the EU’s commitments on the Northern Ireland/Ireland border.

Key Elements of Partnership

The UK’s proposal for the economic partnership would:

  • establish a new free trade area and maintain a common rulebook for goods, including agri-food, covering only those rules necessary to provide for frictionless trade at the border.
  • The common rulebook would be legislated for in the UK by the UK Parliament and the devolved legislatures, as set out in detail in other sections.
  • The UK would also seek participation in EU agencies that facilitate goods being placed on the EU market, and the phased introduction of a new Facilitated Customs Arrangement (FCA);
  • include new arrangements on services and investment that provide regulatory flexibility, recognising that the UK and the EU will not have current levels of access to each other’s markets,
  • new arrangements on financial services that preserve the mutual benefits of integrated  markets and protect financial stability, noting that these could not replicate the EU’s passporting regimes;
  • end free movement, giving the UK back control over how many people come to live in the UK;
  • include a new framework that respects the UK’s control of its borders, enabling UK and EU citizens to continue to travel to each other’s countries and businesses and professionals to provide services, and to help students and young people to enjoy the opportunities and experiences available in the UK and the EU – in line with the arrangements that the UK might want to offer to other close trading partners in the future;
  • include new arrangements on digital trade, including e-commerce, which enable the UK and the EU to respond nimbly to the new opportunities and challenges presented by emerging technologies, recognising that the UK and the EU will not have current levels of access to each other’s markets;
  • incorporate binding provisions related to open and fair competition, with a common rulebook for state aid, cooperative arrangements on competition,
  • reciprocal commitments to maintain current high standards through non-regression provisions in other areas, such as environmental and employment rules The UK has already made strong domestic commitments to maintaining high standards;
  • provide for socio-economic cooperation in areas including energy, transport and civil judicial cooperation; and
  • be consistent with the UK’s ambitions as a global trading nation, with its own independent trade policy – able to represent itself at the World Trade Organization (WTO), to make credible and balanced offers to third country trading partners, and to implement a trade remedies and sanctions regime.

The UK will be seeking specific arrangements for the Crown Dependencies, Gibraltar and the other Overseas Territories. These arrangements should take account of the significant and mutually beneficial economic ties between these economies and EU Member States, including their overseas countries and territories.

This Article draws on the White Paper The Future Relationship between the United Kingdom and the European Union Presented to Parliament by the Prime Minister July 2018 Cm 9593. UK public sector information is reproduced pursuant to the Open Government Licence  The Legal Materials contain UK public sector information licensed under the Open Government Licence v3.0. The Licence is available  at http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/ (the UK Licence).

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