The Single Market and Options for Brexit

brexitMany of our politicians (from both the Brexit & Remain camps) are calling for access to the EU’s Single Market (more properly called the Internal Market[i]) if we leave the EU as a way of minimising the damage Brexit will cause to our economy and help to protect jobs.

Unfortunately, they are wrong.  Access to the Single market is available to any country, even North Korea, willing to meet the Single Market standards for goods & services and willing to accept the tariffs & quotas that the EU will impose.

So even if we leave the EU we will be able to carry on trading with the EU and sell goods into & buy from the Single Market, just that everything we sell it will attract the basic EU 3rd part Tariff (e.g. 10% on new cars[ii]) which will make many of these exports uneconomic.

If we want to protect jobs in the UK and to mitigate the economic damage that Brexit will cause, the UK does not need “access” to the Single Market, we need to be part of the Single Market.  This is not just important to our cars makers (see above) but also to our Financial Services Industry as London’s position as the centre for Euro Clearing will be lost unless we can stay inside the Single Market.  Many other important parts of our economy also depend on being in (not just having access to) the Single Market.

Being part of the Single Market does means that we will need to accept the Four Freedoms that underpin the Single Market (Free movement of goods, Free movement of capital, Freedom to establish and provide services and Free movement of persons) as these underpin the whole arrangement.

Whatever British Politicians say, unless we accept all these Four Freedoms, the UK cannot be part of the Single Market, those leading the EU side in the upcoming negotiations have been very clear about this[iii]  Being part if the Single Market is not just important for our economy, it will also mean UK students can carry on being part of the Erasmus programme[iv] and UK Universities can continue to access EU Research funding[v].  We could however get exemptions for certain areas (as Norway has on Agriculture & Fishing[vi]) from EU rules if we so wanted through negotiation.

The other big downside is that the UK would still have to pay into the EU budget and apply EU rule & regulations (except in exempt industries) but have no say in designing these rules.

So, where does that leave us in relationship to Brexit?

The options for the UK are as follows:

  1. We leave the EU totally and, until we conclude a Trade Agreement with the EU (a process that takes years at a minimum and would need every EU members to agree), face having to pay EU trade tariffs to trade with the EU. While we will not have to apply EU regulations to UK industries & products, we will still need to make sure anything sold into the EU does meet those standards.  We will however not have to pay into the EU budget and we can control immigration into the UK rom the EU as we do currently from non-EU countries.

 

  1. We leave the EU but retain membership of the Single Market. This means UK companies can trade without tariffs with the EU but the UK must pay into the EU budget (indeed we might have to pay in more than we do currently as our budget rebate would disappear) & accept EU regulations.  We will though be free to area Trade Agreements with other counties although they will take time to be put in place.

 

 

  1. We decide on consideration that leaving the EU is not a good idea and decide dealing the political crisis this would create is easier that dealing with the deep economic crisis leaving the EU will create. We stay part of the Single Market & we keep our say in how the EU is run.

 

If the Government decide to invoke Article 50[vii], then unless there is an agreement otherwise, by default, Option A will come into force 2 years later.

If Article 50 is not invoked, Option C, the status quo, continues to be in force.

If we want to retain membership of the Single Market, then the Government must start negotiating for option B as soon as they invoke Article 50.

By saying that they want to retain membership of the Sigle Market but not allow a part of the “Four Freedoms” (i.e. Free movement of persons), the May Government is being either deluded or mendacious.   Either way that are not working in the best interests of the UK.

What we need now, before Article 50 is invoked, is a clear statement from the UK Government of which of the three possible options they want the UK.  We do not need the full details of negotiating positions, the redlines not to be crossed or the aspirations to try to get, just a simple (but realistic) statement of principle will do.  Until we do, then it seems that they have already decided on Option A but are too scared to tell the British people that they are in for an economic crisis the like of which the UK has not seen in decades

[i] https://en.wikipedia.org/wiki/European_Single_Market

[ii]http://ec.europa.eu/taxation_customs/dds2/taric/measures.jsp?Lang=en&SimDate=20161107&Area=BR&Taric=87032110&LangDescr=en

[iii] http://uk.businessinsider.com/interview-guy-verhofstadt-european-union-brexit-negotiator-article-50-britain-2016-11

[iv] http://www.erasmusprogramme.com/

[v] https://erc.europa.eu/

[vi] http://www.norway.org.uk/norwayandcountry/Current-Affairs/Norwegian-Politics/NORWAY-EU-AND-EEA/#.WCDigvmLTIU

[vii] https://en.wikipedia.org/wiki/Article_50_of_the_Treaty_on_European_Union