The technical issue with a deep & special Brexit deal

We have talked a lot about the political problem that makes both Labour and Tory Brexit policy doomed.

In short, a bespoke, cherry-picked deal goes against the essence of what the EU stands for so it is highly unlikely that all 27 EU states will agree to one. Not least because giving the UK a special deal will incentivise other countries to leave the organisation. The EU would be betraying its own principles as well as signposting the route to its own demise.

However, let’s say, as people like Fox, Gove and Johnson predict, that EU resolve will crumble in the face of economic self-interest. There is still a whopping technical barrier preventing the EU from awarding the UK a Canada plus type trade deal.

This issue revolves around the principle of what trade experts call Most Favoured Nation Clauses(MFN).

Most Favoured Nation Clauses have a long history but how they could become a problem for the UK is fairly straightforward to grasp.

Essentially, some nations that have trade deals with the EU have these clauses written into the deal for certain sectors of their economy. Canada, South Korea and Singapour being the most high profile examples. These clauses stipulate that if any other nation negotiates a better deal with the EU in the areas covered by the clauses, then the deal must also apply to the country with the clause.

This means that if the EU offers the UK the best of both worlds type deal Corbyn and May are selling to the public, the EU might also have to give Canada and others a better deal but get nothing back in return.

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The MFN clauses work the other way too.

They prevent countries like Canada and South Korea negotiating better terms with the UK than they have already negotiated with the EU. If they did do that they would have to give the EU the same terms, again with nothing back in return. So they ensure that it is almost impossible for the UK to negotiate as good a deal with countries like Korea as we have now.

That’s before you factor in the obvious point that South Korea wouldn’t want to give the UK as good a deal anyway as it is a much smaller market than the EU.

There are technical ways around the MFN problem.

However, these involve creating an EFTA type zone which both Labour and Tories have de facto ruled out due to their priority of stopping free movement.

So, May and Corbyn’s plans continue to be technically as well as politically troublesome.

There is a more detailed explanation here written by a trade-specialist if you are not one of those people who has had enough of experts.

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