Canada or Switzerland? The pros and cons of two Brexit options

Boris Johnson says he will resign as Foreign secretary over Brexit if Theresa May decides to signal her interest in a “Swiss-style” arrangement with the EU in her keynote speech on Friday in Florence. Alongside Michael Gove, his fellow Cabinet Brexiter, Mr Johnson stepped up his argument with the Prime Minister, saying he favours an EU deal along the lines of Canada’s. He made clear some of the

things he does not want Britain to drive for in his essay for The Daily Telegraph

last Saturday, writing that “we would not expect to pay for access to their markets any more than they would expect to pay for access to ours”. So, why is he putting his career on the line like this?

I’ve taken a look at the differences between the “Canada plus” option and the “Swiss-style” method favoured by such as the Chancellor Philip Hammond, as a way to ensure Britain delivers on what the people voted for last year.

The appeal of Canada’s deal

Canada enjoys preferential single market access under the Comprehensive Economic and Trade Agreement (Ceta) it signed with the EU, which comes into force from tomorrow. The deal eliminates most trade tariffs, without obliging Canada to accept issues, such as free movement, which Brussels likes to force on trade partners.

Any downsides?

The services sector is only partially covered by Ceta, so copying and pasting it as the basis for a Brexit deal would not give UK financial services the same access they currently enjoy. This is why supporters refer to the iteration Britain would have as “Canada (or Ceta) plus”, indicating they accept that the deal would have to go further.

What about Switzerland?

The Swiss are neither in the EU nor the European Economic Area, but participate in the single market. Switzerland not only has to pay for access, coughing up a net annual fee of €12 per capita, but it doesn’t even get full access for its banking sector and other parts of the services sector. Bear in mind that the service sector makes up almost 80 per cent of the UK’S economic output. Switzerland is also obliged to accept free movement, which means that it has struggled to control the influx of migrants into the country.

The Swiss have

tried to bring in curbs on immigration, as their voters demanded in a referendum, but they were forced by Brussels into backing down in order to keep their single market access.

Which version is a truer Brexit? Neither Canada nor Switzerland are in the EU. They are also not in the bloc’s customs union, so either model would see Brexit fulfilled in spirit, as Britain would end up outside the bloc and able to take charge of its trade policy. However, there is a price to pay in order to emulate Switzerland: Britain would not be able to control its borders without approval from Brussels and would be bound into paying for continued access to the single market. Few Brexit voters would have backed Leave in order to see that happen. That is why Mr Johnson is putting his neck on the line in his fight for a free trading nation which is the master of its borders postbrexit.

He would know that many Brexiters would have voted for that rather than to be perpetually yoked – as the Swiss are – to Brussels.