19 December 2016

We can have our Brexit cake and eat it

By Joseph Hackett

EU leaders continue to insist on the inseparability of the much-vaunted “four freedoms” of the Single Market – free trade in goods, services, and capital, as well as free movement of people.

German Finance Minister Wolfgang Schäuble, for instance, told Britain: “There is only the whole menu or none.” According to Schäuble and his fellow Eurocrats, if Britain wants to maintain, for instance, passporting rights for financial services, then it must also accept free movement and the entire range of EU trading standards.

This would seemingly leave Britain in a quandary: stuck between two options which, though vastly preferable to EU membership, are far from perfect.

Becoming a non-EU Single Market member, like Norway or Iceland, would not give us full control over our laws and borders, and would offer our businesses no relief from EU red tape.

However, some aspects of the Single Market – such as the mutual recognition of standards – are economically beneficial, and retaining them would help Britain fully achieve its post-Brexit potential.

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Fortunately, when it comes to the Single Market, the EU does not exactly practice what it preaches. It is quick to dispense with ideology when one of its failing flagship policies is at stake.

Take the notoriously inefficient Common Agricultural Policy and Common Fisheries Policy, which both involve the application of tariffs to agricultural and fisheries produce from the rest of the world – even from Single Market members like Norway.

There is no way the CAP and CFP can be considered anything other than flagrant violations of the principle of free trade in goods.

The Single Market in goods is further compromised for non-EU members by the EU’s Customs Union. Being outside this bloc, Norway and Iceland find their exports to the EU subject to time-consuming “rules of origin” checks on their export goods, in order to ensure countries such as China are not using, say, Iceland as a middleman to avoid paying EU tariffs.

These customs checks are exactly the sort of irritating non-tariff barrier the Single Market was created to eliminate.

It is not only the EU which can break these supposedly unimpeachable rules. Even Single Market members are able to unilaterally impose an “emergency brake” on any of these four freedoms.

Little Liechtenstein has exploited this right to impose an effectively permanent limit on free movement. Liechtenstein might be small, but it has blown a big hole in EU leaders’ insistence that all four freedoms must go hand-in-hand and must either be implemented wholesale or not at all.

Britain is not as small as Liechtenstein, but, then, we are not asking for Single Market membership. Britain should take heart from Switzerland, a country which has extensive access to the Single Market without being a member.

Although it currently accepts free movement, it is exempt from other aspects of the Single Market, such as the onerous requirement to make all its products abide by EU regulations, even if they are not being exported to the EU.

If Liechtenstein blows a hole in the Eurocrats’ narrative, then Switzerland turns it into a slice of that country’s famous cheese. Though Britain would not want to adopt the terms of the Swiss bilateral deals wholesale, it would do well to take inspiration from their path.

The all-or-nothing choice is a red herring. Especially considering how the “all” option does not actually exist for non-EU countries – except, of course, where it relates to free movement.

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The Single Market in goods is compromised for non-EU states by customs checks, the CAP, and the CFP.

The Single Market in services is compromised for everybody, and it always has been. Though EU leaders are quick to congratulate themselves on their supposed progress in this regard, there is little evidence the Single Market in services is actually taking shape on the ground – or that service providers are actually benefiting.

The sheer diversity of the service sector means it is highly unlikely to ever be “completed”, even if EU countries somehow mustered the political motivation to try.

So, as the triggering of Article 50 draws closer, it is time for the Government to challenge the EU’s hypocritical narrative. The four freedoms are not inseparable – not even Single Market members have all aspects of all four freedoms.

The EU itself will not let the four freedoms get in the way of the CAP or CFP. And there is a fundamental inequality between the them – while the Single Market in services is nowhere near complete, free movement is virtually unregulated.

It is both unfair and inaccurate for Eurocrats to tell Britain the Single Market is an all-or-nothing choice. As we get Britain out of the EU, we should press for access to the aspects of the Single Market which are mutually beneficial to us and them alike, while rejecting aspects which are not.

This is not some unreasonable “have your cake and eat it” request. It’s what’s best for us and it’s what’s best for them.

Joseph Hackett is a research executive at cross-party Eurosceptic campaign Get Britain Out.