IF THE United Kingdom votes to withdraw from the European Union on June 23, it will have two years to complete the process.
What is not clear is what these negotiations would entail and what the outcome of Brexit would actually mean.
There are two broad alternatives: an arrangement with the EU to retain access to the single market on much the present terms; or a strategy of “go it alone” in world markets, without any privileged relation with the EU.
Continued access to the European single market could be secured by joining the European Free Trade Area (EFTA) and then the European Economic Area (EEA), which provides access to the single market for Norway, Iceland and Lichtenstein.
The downside is that EEA states have to accept the rules of the single market, but do not participate in making them.
There is some consultation and involvement in working parties but no vote in the Council of the European Union.
It is not even certain that the UK would be allowed to join the EEA, since it was designed for small states, which would not affect the overall European balance of power and, in the case of Norway, whose government really wanted to join the EU but lost two referendums.
Another variant of this applies in Switzerland, which does not belong to EEA but has a series of bilateral treaties under which it also has to accept most EU laws but without a vote in determining them.
The arrangement is so complicated that progress on updating it has stalled and the EU has made it clear that it would not be open to other countries.
Both the EEA and the Swiss arrangements provide for free movement of labour, so this would not satisfy the demands of most Brexit supporters. Both Norway and Switzerland contribute, in different ways, to EU spending without getting anything back.
The alternative to these arrangements would be to abandon a special relationship with Europe and rely on the trading rules of the World Trade Organization (WTO) and on bilateral treaties with other states and trading blocs.
In this case, the UK would not be subject to the supranational authority of the EU and would recover full sovereignty.
It would control migration and movement of labour and not be subject to EU rules on matters like environmental policy or working conditions.
It would not have to contribute to the EU budget.
The downside is that UK exporters could face tariffs exporting to the EU (in the case of cars this is about 10%), non-tariff barriers, and barriers in exporting services.
There is some protection under the WTO but WTO negotiations on trade liberalization stalled after the failed Doha Round and the trend now is towards regional free trade organizations like NAFTA (North America), MERCOSUR (South America) and ASEA (Asia-Pacific).
The EU, as a major trading block, would be a bigger force than the UK on its own.
Michael Keating is speaking at the Chamber’s The EU: what's best for business? event on May 20