The Single Market

We are constantly hearing Ministers and business leaders insisting on the importance of “access to the Single Market” (though to be fair to Philip Hammond, he’s also on record as insisting that we must leave the single market – it’s not clear whether he meant “This is policy”, or “This is the damage that Brexit has done”).  It’s become a mantra, almost an article of faith, for many in the debate.  It’s also, perhaps deliberately, a massive ambiguity.  So let’s try to deconstruct it.

The EU’s Single Market is an old-fashioned Customs Union, overlaid by massive and damaging levels of regulation and bureaucracy.  The conventional wisdom is that it makes trade within the Single Market much easier – though there are exporters who say that exporting to the rest of the world involves less hassle than exporting within the EU.  But it’s the concept of “access” that embodies the ambiguity.

All trading nations have access to the Single Market: The plain fact is that all trading nations have access to the Single Market.  All that varies is the terms of trade.  The three biggest suppliers of goods into the Single Market are the USA, Russia and China.  They are not members of the EU.  They currently have no preferential trade terms with the EU.  They are simply third-party, arm’s length suppliers – yet they are hugely successful.  Britain would also trade successfully with the EU if we were in the same position after Brexit – and that is absolutely the worst case we can envisage.  All likely outcomes are better.

Many countries have bilateral Free Trade Deals with the EU: Several dozen countries have established Free Trade Agreements with the EU (I always think of South Korea as my prime example, as I spent a number of years running businesses there).  These countries also have “access to the Single Market”, but on tariff-free terms.

A few countries have quasi-membership terms: A few countries, notably Switzerland and Norway, have quasi-membership terms with the EU, giving them tariff-free market access but subjecting them to budget contributions, EU regulations and free movement.  Yet these few examples were constantly quoted by the Remain side in the referendum – because they are so obviously a bad deal.

28 countries are EU members: 28 countries including the UK are currently EU members (with more, including Turkey, queuing up to join).  These have full tariff-free market access – but are subject in full to all the negatives of EU membership.

We have just voted against the fourth option – membership.  Clearly we don’t want the Swiss/Norwegian option, which is the worst of both worlds.  We could well live with the second option (the tariffs we would pay on exports to the EU would be less than half our net budget contributions).  Ideally we should press for the second option – a straightforward free trade deal.  And there are increasing signs that we could get such a deal.  The phrase we keep hearing from our continental partners is “a mutually beneficial relationship”.  Since  an FTA offers mutual benefits, that seems the most likely option.

But above all we must not be hoodwinked into accepting free movement or EU budget contributions as a price for “access to the Single Market”, which we will have anyway.

Theresa May visits Northern Ireland to discuss borders: There is a genuine issue with regard to the border between Northern Ireland and the Irish Republic. No one wants to see border controls or customs posts being reinstated.  It is worth noting that Option Two above (total independence for the UK, plus a UK/EU free trade deal) would eliminate the need for customs posts on the border.