Basically, the EU compromises on free movement of labour (they make arguments as to why the supposed indivisibility of the four freedoms should be reviewed in their policy paper), and the UK compromises on an autonomous trade policy and full regulatory control.
- The backstop provision in the withdrawal agreement is dropped.
- The United Kingdom permanently delegates all trade policy matters in goods to a newly created European Customs Association (ECA) in which the EU is also a member. Neither the EU nor the UK pursues independent trade policies, and the ECA represents them the World Trade Organization (WTO) in the same way as the EU has done until now for all 28 EU members.
- The UK has voting rights in the ECA, as do all other member states. Together with the other members of the ECA, it mandates the EU Commission to negotiate trade agreements with third parties.
- Decisions are taken with a double majority as defined in the Lisbon Treaty, and the European Court of Justice (in an extended form including all participating countries) continues to supervise all law- and policy-making in the field of trade.
- The ECA covers all ‘classical‘ areas of trade policy, such as tariffs, quotas, rules of origin, trade defense, etc. On these issues, the EU has exclusive competence.
- Areas in which the EU has no exclusive competence and in which countries have veto rights (trade in services, intellectual property, direct foreign investment, audiovisual and cultural services, and social, educational and health services), should not fall under the ECA. During a transition period, the pertinent provisions in the EU treaties continue to apply. For the future, arrangements in these areas are made by means of one or several supplementary bilateral agreements.
- In existing trade agreements with third parties, provisions pertaining to ‘classical‘ areas or areas covered by bilateral agreements continue to apply to the UK, as well as those currently or in future negotiated
At this stage it’s completly unrealistic, in my opinion, that either side would be willing to give up these red lines. However, the paper makes a well reasoned detailed argument for why they should, and I think it’s interesting that a very prominent European economic think tank is publicly arguing this.
I could vaguely understand why Ireland might be inclined to accept an agreement like that but don't see why Poland or Italy for example would. I can see the advantage for Britain (it sounds pretty perfect for Britain actually) but it looks like a lot of compromises for the EU without many advantages (keeping the British as trading partners and maintaining the GFA seems about it?)