export_ofoct.com (1)

[00:00.46] Some time between now and 2017, the British government will hold a referendum on whether to leave the European Union.

[00:07.63] We will give the British people a referendum with a very simple in or out choice.

[00:14.54] But what does leaving the EU actually mean?

[00:17.99] There's a few scenarios for what could happen.

[00:22.24] The first is total independence.

[00:25.70] Britain becomes just another country that sells to the EU but doesn't have to follow any of its silly rules.

[00:32.34] Just like the United States.

[00:35.26] This sounds empowered, like Britain is finally releasing itself from the shackles of Eurocrats and Brussels.

[00:45.35] But what it really means is that Britain would have to negotiate everything it sells to Europe on a case-by-case basis.

[00:50.93] This type of complicated bargaining leads to real costs.

[00:54.92] US companies pay a 10% tariff on any car they sell in Europe.

[00:59.96] Tariffs on clothing are 30%.

[01:03.41] This scenario could cost Britain as much as 14% of its GDP.

[01:08.46] That's as much as Greece lost in the first four years of the financial crisis.

[01:15.10] Alternatively, Britain could leave the EU but stay in the European Economic Area.

[01:21.48] Under this scenario, Britain becomes Norway.

[01:25.73] It still buys and sells from Europe, but it's not a member of the club anymore.

[01:29.71] The only problem is, this doesn't actually get Britain out of European control.

[01:34.76] Members of the European Economic Area still have to contribute to the EU budget.

[01:38.21] And they still have to follow EU regulations on everything they sell in Europe.

[01:43.52] A lot of the arguments for leaving the EU are about the weird rules that British companies have to follow when they export to Europe.

[01:50.96] But Britain would still have to follow all those rules, it just wouldn't have a say in making them anymore.

[01:58.40] The third option is for Britain to negotiate a special deal.

[02:02.91] A bilateral trade agreement custom-made for its own economy. Under this scenario, Britain becomes Switzerland.

[02:10.35] It's not officially a member of the European Economic Area or the EU, but it still gets all the benefits of selling its goods there.

[02:18.05] The problem with this scenario, though, is negotiating power.

[02:22.04] According to Brussels, the market can't be divided up sector by sector.

[02:27.09] If you want free trade, you have to agree to open up other parts of your market as well.

[02:32.40] Including the labor market.

[02:36.38] This is exactly what happened to Switzerland.

[02:39.30] In 2014, Swiss voters demanded restrictions on EU migration.

[02:44.09] But Brussels said no.

[02:46.48] If Switzerland wanted European trade, they had to take European workers as well.

[02:51.26] Switzerland, as a single country, just didn't have the negotiating power to stand up to 28 European countries at once.

[02:58.96] Most people who want Britain to leave the EU want freer trade and stricter immigration.

[03:05.33] But with the EU facing an unprecedented migration crisis, it's unlikely that Britain will get both.

[03:14.63] Maybe the EU is too rigid and too boring.

[03:17.55] Maybe it does need to adapt as the world changes around it.

[03:20.74] Maybe the exact thing it needs is a big, liberal, pragmatic member to push it in that direction and do it from the inside.

[03:30.83] I wonder who that could be.