The Single Market in Goods: The Latest News by Lucy Siers
Tomorrow marks 2 years since the referendum. Are we now seeing a movement on May’s initial defiant stance on Britain’s withdrawal from the single market?
What is the single market?
In brief, the objective of the original EEC Treaty 1957 was to remove barriers in order to free movement of goods, persons, services and capital between member states (four freedoms).
The treaty allows for the EU to legislate, creating a single set of rules on which products can be made and distributed within the EU.
Criticism of the EU’s rule-making position has argued that the EU is going too far. However, subsidiarity ensures that the EU only has competence to act (legislate) where the EU is provided with such competence. This principle means that, where possible, decisions in contentious issues or regarding implementation should be made at local, regional and national - rather than EU level.
May’s initial hard approach
This critique of the EU’s rules on the four freedoms was the main reason for May’s initial defiant determination to leave the single market. May wanted to free Britain from what she conceived were restrictive trading rules. “Brexit means Brexit,” she declared and all the Remainers wondered what that really meant, realising as her premiership descended into Brexit compromise and delay tactics, that it makes a good headline, without really meaning anything.
Freedom of movement is one of the four pillars of EU membership; May has viewed its ending as a red line in the Brexit negotiations. The four freedoms are indivisible therefore ending one will disable all four.
Now: a single market in goods? (VAT area)
This initial defiance to leave the single market in its entirety seems to be wavering.
There is talk that Britain may attempt to negotiate a trading relationship with the EU that sticks to the rules on manufactured goods. Writing for the Financial Times, Charles Grant (director of the Centre for European Reform) has argued that by allowing a single market for goods, it might be the only way to solve the controversial issue of the Irish border problem - avoiding any friction at the border. Grant highlights that this relationship would prevent major disruption of manufacturer’s supply chains.
This agreement would strike similarities with the trading agreement that the EU has with Ukraine, differing from both the ‘Norway’ model and the free trade model that it has with Canada.
The position comes with difficulties, as the UK would have to accept all of the EU’s controversial rules covering trade of goods.
What about freedom of movement?
This rumoured commitment to the single market only covers the trading of goods, neglecting the topic of freedom of movement.
It seems unlikely that the EU will allow Britain to ‘cherry-pick’ their commitment to the single market, which includes freedom of movement. It now appears likely that May might have to deviate from her initial red line on this topic.
This potential relaxation of May’s initial position on freedom of movement could upset Brexiteer ministers (such as Johnson) who valued these hard lines as their core purpose of leaving. Fashion Roundtable has since its inception 7 months ago supported #FreeMoveCreate which advocates freedom of movement for all UK creatives within the EU and EU creatives in the UK, since the EU remains our largest trading partner.
Softening this line may have benefits for the Irish border issue and the desire to protect EU-UK trade, but could result in significant cabinet upset in the need to compromise on freedom of movement.
This issue is likely to be discussed at the Chequers talks on July 3.
Eszter Kantor our EU Expert had this to say:
“While the UK is working to figure out what economic model to follow, the clock is ticking down to March 29, 2019. One would have expected general objectives to be clarified at the time the UK submitted its request to detach itself from the EU, however this had not been the case. Questions remain over the status of NI, the customs policy between the EU and the UK as well as the UK`s ability to strike its own, independent trade deals, which means that it cannot sign onto the single market or become a full member of the Customs Union. The European Council meeting in July was supposed to be the deadline by which a draft agreement is agreed upon, unfortunately this deadline is likely to be pushed out to October/November. Should there be no deal by the end of this year, businesses may have to adapt to a sudden halt to trade and increased costs of operation. Businesses that are working with suppliers or buyers in Europe are advised to follow the Brexit preparedness documents published by the European Commission, which detail the necessary steps businesses can tale to mitigate risks. For now, the key theme of Brexit remains uncertainty.”