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What is the difference between a “hard” and “soft” Brexit?

Posted by hkarner - 7. Oktober 2016

Date: 06-10-2016
Source: The Economist

May cc 1THERESA MAY, Britain’s prime minister, promised the Conservative party conference this week that she would invoke Article 50 of the European Union treaty, the only legal route to leave the EU, by the end of March 2017. She also said that, after Brexit, she wanted a deal that gave British companies the maximum freedom to trade with and operate in the EU’s single market. But at the same time she insisted that after Brexit Britain would become a fully independent, sovereign country that was able to make its own decisions on issues ranging from how to label its food to the way it chose to control immigration. And she said that Britain could not leave the EU only to find itself still subject to the European Court of Justice.

The problem with this is that these goals seem to be incompatible with each other. If Britain wants to benefit fully from the single market, which eliminates all tariff and most non-tariff barriers as well as customs controls, it will have to abide by most European laws, including the free movement of people from other EU countries and a huge clutch of single-market regulations that are ultimately enforced by the European Court. That is what countries like Norway and Switzerland, which are outside the EU but largely inside the single market, have to do; they also pay into the EU budget. Were Britain to choose a similar path, this would amount to a “soft” Brexit that kept many of the advantages of EU membership but at the price of some significant constraints on its independent policy freedom.The alternative “hard Brexit” would put Britain in a position more like third countries such as America. The Americans are not subject to free movement of people from other EU countries or to all the EU’s single-market regulations, and nor do they make any payments into its budget. But that means they are also not part of the single market, which makes their exports into it subject to both tariffs and non-tariff barriers. Because the EU accounts for 44% of Britain’s exports, including its crucially important financial-services exports, any such barriers would substantially raise the costs that Brexit will impose on the British economy.

Brexiteers say they are looking for a beneficial compromise that would let Britain retain unfettered access to the single market, while at the same time controlling its own borders, laws and money. But the other 27 countries have said they will not agree to this. They insist that Britain cannot be allowed to have all the benefits of the single market without accepting any of its obligations, not least because if it is, a few other EU countries might try to follow the British example. In the end it is for Britain to make the choice: between the tougher migration controls and untrammelled sovereignty that would accompany a hard Brexit, and the economic advantages of the single market that go with a soft one. It is not yet clear which way Mrs May will jump, but her speeches to the Tory conference seem to most observers to be leaning towards hard Brexit.

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