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'Shared market' proposal could calm fears around post-Brexit trade deal, think tank says

PUBLISHED: 09:05 18 December 2017 | UPDATED: 09:05 18 December 2017

Leave voters are not the majority, according to one reader. Picture: Stefan Rousseau/PA Wire

Leave voters are not the majority, according to one reader. Picture: Stefan Rousseau/PA Wire

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Creating a "shared market" between the UK and the remaining European Union member states could be a way to resolve problems around a post-Brexit trade deal.

The left-of-centre Institute for Public Policy Research (IPPR) suggests an agreement on regulatory alignment between the UK and the bloc would secure the benefits of the single market, with a comprehensive customs deal to replace the existing union.

The think tank says the proposal will allow the UK to diverge from EU rules, a key demand of Brexit backers, with “proportionate” consequences to the trading relationship.

But the plan would involve making a continued financial contribution to the Brussels budget – a move unlikely to win approval from Brexiteers.

The think tank will put its report to Brexit secretary David Davis at a meeting on Tuesday.

Tom Kibasi, director of the IPPR and an author of the report, said: “The shared market is a practical proposal that honours the referendum result while securing our economic interests.

“It is neither remaining in the EU nor crashing out in a hard Brexit.

“This isn’t a proposal for the 15% of extremists on either side: it is a proposal for the 70% of people who want a sensible deal, built on precedents, that would work for the whole country.”

The plan draws on elements of relationships the EU already has with “third countries” outside the bloc.

Ukraine’s agreement allows for increased single market access as its regulations align with the EU’s - the proposed UK deal would reverse that, with a loss of market access as regulations diverge.

A new UK surveillance authority and court of justice - with judges from both Britain and the EU - would have jurisdiction, in a similar way to the European Free Trade Association’s arrangements.

There would be compromises on the freedom of movement, echoing the EU’s deals with Switzerland and Liechtenstein, the think tank argued.

Under the terms of the proposed deal, as the EU and UK updated their regulations, they would need to ensure continuing alignment.

If divergence were to occur, a “declaration of incompatibility” would be issued giving the UK and EU six months to agree a plan to bring their regulations back into alignment before losing a proportionate level of the preferential trading relationship.

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