Speaking in Washington on Friday night after four days of testy and inconclusive talks in Brussels with EU negotiators, the British minister overseeing Brexit negotiations, David Davis, offered the admission that Britain is weighing whether to join the European Free Trade Association (EFTA).
Such an arrangement could at least be temporary while Britain tries to negotiate a better deal for itself with the EU, the country’s largest trading partner.
Joining the EFTA would allow Britain to secure access to the EU’s Single Market and customs union, and avoid crippling tariffs and trade restrictions when it exits the EU in March 2019.
His open admission surprised some in the audience at the U.S. Chamber of Commerce, where in a speech, he also appeared to take aim at U.S. President Donald Trump and warned against the West turning its back on globalization and free trade. Without mentioning Trump directly, he said, “It feels to me it is necessary to make the case once more for free trade and capitalism.”
‘Hard Brexiters’ may bulk
It is Davis’ disclosure that Prime Minister Theresa May is considering the possibility of Britain applying for membership of the EFTA, however, that’s likely to prove explosive when it comes to so-called “hard Brexiters” in the Conservative Party and populist nationalists, such as Nigel Farage, who want a clean break from the EU.
“It is something we’ve thought about,” Davis said in reply to a question from Iceland’s ambassador to the U.S., Geir Haarde, about whether Britain could opt for the so-called ‘Norway option.’ But the British minister cautioned “it’s not at the top of the list.”
One drawback with the EFTA for the May government is that it would not offer the same kind of unrestricted access for the country’s lucrative banking and financial services sector as Britain currently enjoys with its EU membership. Also, EFTA membership would prevent Britain from imposing immigration controls on Europeans wanting to live and work in the country — something May and hard Brexiters want to do.
The current members of the EFTA are Norway, Iceland, Liechtenstein and Switzerland. The group has free trade deals with various non-EU countries, including Canada and Mexico.
Joining the EFTA would allow Britain to apply for automatic membership of the European Economic Area, giving it full access to the EU’s Single Market, as currently enjoyed by Norway and two other EFTA members. Some analysts describe the EFTA as “backdoor EU membership.”
Brussels talks stalled
Davis’ admission came after a torrid week of acrimonious Brexit negotiations, which saw the British minister and his EU counterpart Michel Barnier snipe at each other publicly at the end of what is the third round of formal exit discussions between London and Brussels. Officials from both sides concede the two sides are as far apart on key issues as they were before the third round started.
Europeans accuse the British of being unclear about what they want, while the British argue the EU negotiators’ insistence on agreeing on the terms of departure before negotiating a free trade deal is unhelpful. Remaining stumbling blocks include a reported $89 billion “divorce bill” Brussels is demanding to cover budget payments, and project and structural loans that Britain committed to before last year’s Brexit referendum.
On Thursday the EU’s chief Brexit negotiator, Barnier, said progress was hampered by a “lack of trust” between the two sides. And at a joint press conference with Davis, he evoked the Brexiters’ oft-repeated slogan of “Brexit means Brexit” to ask his adversary whether Britain wasn’t missing the bloc after all.
The British say the EU divorce sums don’t add up, and on Friday in Washington, Davis called the Brexit negotiations “probably the most complicated negotiation in history and our enemy is time… it is getting a bit tense.”
The EU won’t even begin talks on a deal until there has been “sufficient progress” on the divorce terms.
‘More ripples ahead’
With time running out before Britain’s exit, there’s a growing movement within the Conservative Party — and with the support even of some prominent figures who campaigned in last year’s referendum for Britain to exit the EU — for an EFTA option.
The leaders of Iceland and Ireland have been urging Britain for weeks to apply for EFTA membership, and behind the scenes so have major British business leaders, who fear a hard Brexit would see Britain fall off an economic cliff.
This week’s bruising talks triggered in their wake another spasm in the war of words between Europeans and hard Brexiters. Liam Fox, Britain’s minister for international development, accused the EU of trying to extort London, saying “Britain can’t be blackmailed into paying a price.”
And John Redwood, a senior Conservative, and onetime challenger for the party leadership, tweeted: “Mr. Barnier wants the UK to set out its calculation of the exit bill. That’s easy. The bill is zero. Nothing. Zilch.”
The British tabloids and European newspapers have been trading sharp barbs all week, as well. Switzerland’s Der Bund newspaper accused Britain on its front page of being the “Laughing Stock of Europe,” and it described Brexit as “comical.”
Britain’s Sun newspaper headlined: “Michel Barnier and his EU team truly do excel in being the most inflexible and arrogant bunch of people going.”
In Washington Friday, Davis distanced himself from the blackmail comments of his cabinet colleague Fox, but he said, “We are in a difficult, tough, complicated negotiation; it will be turbulent and what we are having is the first ripple, and there will be many more ripples along the way.”