LEAVING EUROPE? WHY THE UNITED KINGDOM NEEDS A UNIQUE TRADING ARRANGEMENT WITH THE EUROPEAN UNION THAT TRANSCENDS THE DEFICIENT EUROPEAN MODELS.

Author:Patel, Hetan
 
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  1. INTRODUCTION

    When the British public voted to leave the European Union through a referendum, global leaders were surprised as to why a key member of the European Union, since 1973, decided to leave. (1) Although E.U. membership has numerous benefits, such as access to the world's largest economic entity for trading, one of the reasons why the public voted to part ways was due to the surge of immigrants entering the United Kingdom. (2) In addition, a significant amount of money was continuously injected into the European Union as required for their E.U. membership. (3) In an effort to avoid being heavily regulated by E.U. laws, the United Kingdom will have to create a separate trade agreement with the European Union where they can access the single market without being an active member. (4) The two most popular trading models that have been proposed for the United Kingdom are the European Economic Area (EEA), also known as the Norwegian Model, and the Swiss Model. (5) The United Kingdom has a difficult task in deciding which trading arrangements they want to create with the European Union in order to remain the fifth largest economy in the world. (6)

    This Note explores Britain's options for alternative trade agreements with the European Union by criticizing two trading models: The Norwegian Model and the Swiss Model. (7) Part II of this Note discusses the evolution of Britain's relationship with the European Union since 1973. (8) Part III of this Note will explain Brexit and how the people of Britain voted in the June 23, 2016 referendum. (9) Part IV of this note will explicate reasons why the Norwegian Model and the Swiss Model are not sufficient options for Britain following their departure from the European Union. (10) Finally, Part V of this Note will conclude that in order for Britain to have more autonomy over their trading regulations, they will have to establish a distinctive trading arrangement. (11)

  2. HISTORY

    1. Foundations of the European Union

      1. Treaty of Paris

        In 1950, following the catastrophic impact of World War II on continental Europe, a French statesman named Robert Schuman proposed the creation of the European Coal and Steel Community (ECSC). (12) This proposition helped mitigate the fears that Germany's dominance in the coal and steel industry would hinder Europe's ability to economically recover by opening up the Franco-German steel and coal alliance to other European countries. (13) This community was officially established under the Treaty of Paris in 1951, with the sole purpose of gaining closer integration with Europe. (14) It was the first time a group of European countries formulated an entity for future economic recovery and prosperity. (15)

      2. Treaty of Rome

        The Treaty of Rome, created in 1957, expanded on the ECSC and created the European Economic Community (EEC) that strived for stronger economic relations between European countries; the EEC expanded on the Treaty of Paris in order for its members to achieve Schuman's vision of a single European entity. (16) It was initially an economic model that grew into a global model for European integration, but falling short of Winston Churchill's idea of a "United States of Europe." (17) In an effort to promote prosperity, this Treaty established a common market and a Customs Union for economic interactions between members. (18) Costs were kept low and tariffs for trade were eliminated. (19) The Treaty of Rome also established important European entities, such as the European Parliament and the European Commission. (20) As the EEC has expanded over time, the members were able to implement polices to improve the living standards of its citizens and access other areas to promote equality and transparency. (21)

      3. Treaty of Maastricht

        In 1992, the Treaty of Maastricht was signed and formulated to be a response to the economic situation caused by the re-unification of Germany. (22) This treaty created a cohesive political and economic union building upon the principles established by the Treaty of Rome. (23) Additionally, the treaty created the three pillars of the European Union: the European Communities, the Common Foreign and Security Policy, and the Justice and Home Affairs. (24) The pillars covered all the political, economic, and social aspects of European life to implement the European Union's vision of a more unified Europe. (25) An example of this unity came in the form of the single currency adopted by a majority of the members. (26) Ultimately, the Treaty of Maastricht was one of the most important treaties in European history for establishing the most powerful economic entity in the world, known as the European Union. (27)

      4. Treaty of Lisbon

        The Treaty of Lisbon was signed in 2007 and introduced changes that would build upon the regulations effectuated by the Treaty of Maastricht; this was achieved by expanding the scope of the European Union as a supranational entity. (28) Article 49 A is a key provision of the Treaty of Lisbon that signifies the formal process that a member has to follow in order to leave the European Union. (29) By officially triggering Article 49 A, an E.U. member has two years to negotiate its departure from the European Union by negotiating out of all the agreements that the E.U. member has incorporated into its domestic laws. (30) The two-year period also allows the E.U. member to negotiate a new trade agreement with the European Union to ensure that both parties continue to sustain a positive economic relationship. (31)

        The European Union also grew as an institution with twenty-seven members by 2009, being governed by regulations that were aimed at regulating the activity of its initial members that signed in 1992 or shortly after. (32) The members wanted to reflect these changes in the E.U. Constitution to keep in touch with the changes in the global political realm. (33) There will unlikely be more amendments to the E.U. Constitution for many years to come due to the established nature of the European Union as a single economic entity; it is a vital trading partner for countries such as the United States and it is important for the European Union to remain a stable political and economic entity. (34)

    2. The United Kingdom's trade relations with the European Union

      Prior to becoming a member of the EEC, the United Kingdom's economic growth was relatively low compared to other members of the EEC, which fortunately changed when the United Kingdom did become an active member. (35) On January 1, 1973, when the United Kingdom joined the EEC, they gained access to a supranational economic entity that did not exist beforehand. (36) In order to do this Britain had to create the European Communities Act of 1972 that formally integrated the EEC into U.K. law. (37) When the idea of the EEC first developed, Britain's response was to be part of the European Free Trade Association (EFTA), as a source of competition to the EEC. (38) Britain soon realized how uncompetitive this association would be against the EEC because of the vast number of people that the community covers. (39) French President Charles de Gaulle had opposed the United Kingdom's entry into the EEC for a multitude of reasons, one of them relating to his belief that Britain would do anything to maintain its independence; despite his efforts, de Gaulle resigned in 1969 allowing the United Kingdom to eventually join the EEC in 1973. (40)

      When the United Kingdom participated in a referendum two years after joining the EEA, then Prime Minister Harold Wilson was relieved that the public voted to stay in the EEC. (41) After the referendum, the United Kingdom was able to economically prosper with the creation of the single market. (42) Prime Minister Margaret Thatcher further contributed to this success by providing stern opposition to any proposed idea to expand the scope of the single market. (43) The United Kingdom had come to terms that their continued relations with the British Commonwealth, from an economic perspective, would not be beneficial, as the EEA granted them access to a larger market. (44) Rather, they focused on participating in a trading community in Europe that was not politically motivated; this community had a particular focus on free trade between the Member-States. (45) Ultimately, the United Kingdom utilized the support of the British Commonwealth for the integration of the EFTA to reducing internal disagreements between domestic political parties; the United Kingdom understood that European integration would be a difficult process. (46)

    3. Norwegian Model: The European Economic Area

      The EEA is an economic entity formulated in 1994, with the sole purpose of furthering the integration of countries that are members of the EEA into the E.U.'s internal market. (47) In 1945 following the conclusion of World War II, then U.S. Secretary of State, George Marshall, created a plan to rebuild Europe. (48) He believed that in order for the United States to remain as the leader of the capitalist world, it was essential to restore the European economy. (49) In order to implement George Marshall's ideas, the Organization for European Economic Co-operation (OEEC) was created to ensure that Europe would receive the necessary aid after World War II; the creation of this entity, along with the EFTA, laid the foundation for the EEA. (50) The cooperative nature of the OEEC enabled certain countries to participate in this entity because their sovereignty would be respected. (51) By 1977, EFTA members such as Iceland, Liechtenstein, and Norway were able to remove import tariffs on industrial goods by entering into trade agreements with EEC. (52) The same Member States entered into an agreement with the EEC to create a European Economic Space, in which the active members would be able to further their collaborations in trading goods. (53)

      The EEA incorporates the four freedoms of the internal market: free movement of goods, people, services, and...

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