Can Britain opt for the Norway model?


Norway is member of the European Economic Area, part of the single market but out of the EU.

Both the leaders of the ‘Leave’ campaign and the European leadership have said that they want to expedite the U.K.’s exit from the EU. But still, the vote doesn’t mean that Britain will be immediately out of the club.

Under the Lisbon treaty, a member state wishing to leave the EU should first notify the European Council its decision, triggering Article 50. This would set in motion a process by which the member and the EU leadership will negotiate the terms of the departure and reach and agreement in two years. This means even if the British government invokes the Article 50 now, the earliest exit of Britain will take place after two years.

Upto the new PM

Constitutionally, the decision to invoke the article is the Prime Minister’s alone. Prime Minister David Cameron had said during the campaign itself that he would do that if the British people decided to leave. On Friday, while announcing his resignation after the vote, Mr. Cameron said the people’s decision should be respected.

Mr. Cameron is likely to step down in October when the Conservative Party chooses a new leader. So it is up to the new Prime Minister to decide whether Article 50 should be triggered. If Boris Johnson, one of the leading voices of the ‘Leave’ campaign, becomes the leader, Brexit talks are likely to be expedited. But one doesn’t know what will happen if the Conservatives elect someone else as their leader, say George Osborne, the Chancellor of the Exchequer who has been a ‘Remain’ campaigner.

The new British Prime Minister will also have to keep in mind the Scotland factor, besides a potential market/pound meltdown.

Even if the new British Prime Minister triggers the Article 50, Britain need not necessarily leave the EU after two years. If there’s no agreement by the end of the two-year period, the EU could unanimously extend the talks.

Some economists have already suggested that one of the options Britain could follow in the wake of a Brexit vote is the Norway model.

Norway, along with Liechtenstein and Iceland are members of the European Economic Area (EEA). They have access to the single market while staying out of the EU. They also make contributions to the EU budget. There is separate secretariat in Brussels to manage the relationship between the EU and EEA countries.

If Britain chooses to leave the EU but join the EEA, it will be a half-in-and-half-out arrangement, and the long-term impact on either side will be minimal. German Finance Minister Wolfgang Schauble had said during the campaign that Britain won’t get access to the single market if it decides to leave. However, once actual talks begin, grounds for compromise could emerge.

Only if both sides fail to reach an agreement and extend the talks at the end of the second year, the real Brexit will happen. The U.K. will then move towards the WTO rules under which it will have to pay tariffs for the goods it sells to the EU countries.


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