This is a term that is close to being severely overused and typically misrepresented, particularly by the REMAIN campaign. With almost every utterance they attempt to associate Brexit with leaving or being outside of the ‘single market’ to suggest that, in some way, the ‘single market’ would not be there after leaving the EU political union, when the reality is that the concept and practical operation of the single market is actually irrelevant and associated with but not dependent upon the political objectives of the EU or membership of it.
The ‘single market’, or something as practically close to such a pure concept as we can get, is of benefit to all countries whether or not they are members of the European Union. The absence of artificial barriers, such as tariffs or other restrictive import rules will remain a trading benefit for everyone.
A single market generally exists within each sovereign country anyway. The Indian market and the Chinese market dwarf the European one in potential and the US market is also huge though there are often barriers to external suppliers in these single country markets that are hard to get past. The real achievement of the original EEA, now the EU is the harmonisation of rules, regulation and the mitigation of trading barriers, amongst many countries that formerly would have had all kinds of restrictions to protect their own inefficiencies. As it happens the UK has always been a principle proponent of free trade (or as free as you can get) and has consistently driven the need to break down barriers. It is now well understood and being developed by European countries within (and outside) the EU because it is of benefit to everyone.
The UK supports the ‘single market’ and will remain a part of it and will trade with it because that arrangement benefits all countries and it has very little to do with the concept of ever closer union, because these concepts are quite different from each other and can exist independently. To have a single market one doesn’t need closer political union but a process of harmonisation of trading rules between countries for mutual benefit. I’ve no doubt that after Brexit we will still co-operate fully with any EU moves to improve trade as long as it doesn’t unfairly disadvantage us in the process. Ironically, that is something we cannot now control as members.
The single market, or the version of that concept we have managed to develop to date, actually exists and will continue to exist after Brexit, as it exists for China, the USA and about 18 other countries who sell a significant amount to this trading block we call the European Single Market. It is in the interests of all countries to encourage free trade and continue to break down barriers in both the manufacturing sectors and the service sectors, where there is still much work to do.
China sells more to countries within the EU than any other nation, therefore, is selling into the single market. When one considers trade both ways the USA has the edge with €483,926 million Euros to China’s €426,062 million Euros. Both these countries sell a huge amount to this single market without being members, or by allowing free movement of people, or by adhering to all EU directives. All they have to do is meet the product standards of the EU, a requirement of selling to any other country anyway.
The ‘single market’ is, therefore good for people wanting to sell to you as it makes it easier to do and as a result the consumers living within such a free trade area will have easy and wide access to goods and services, which is good for them. However, the ‘single market’ has no effect the other way round unless you sell to another member of the ‘single market’ group. Assuming one has value for money products or services, selling to China means overcoming Chinese barriers, selling to Canada means overcoming Canadian barriers and so on. Therefore, the blindingly obvious connection is that selling to the UK is better for other European countries within the single market if the UK remains linked to the single market. To do this one doesn’t need to be a member of the political union also.
Bearing in mind that the rest of the European ‘single market’ sells the UK far more stuff than if buys from the UK the maintenance of the ‘single market’ principles, which the UK has always promoted, will remain of enormous benefit to us both. It will still be easier for non European ‘single market’ countries to sell to us and we still need to get past their barriers to sell to them and we do that by having quality products at competitive prices. There are many industries where we do this exceptionally well.
The UK earnings from trade with other members of the European Single Market, is around 9% of GDP with 91% being earned elsewhere. The proportion of trade done by the UK with the rest of the world is increasing yet that same proportion done by the EU as a block is falling sharply indicating that there remain huge problems yet to be resolved. As I’ve said a ‘single market’ doesn’t affect earnings generated by trade outside the group except that reducing barriers within the group may convince others to do the same.
Throughout this article I’ve placed the ‘single market’ in quotes and that is because it is a concept not yet fully achieved nor fully honoured. A problem occurs when the ‘single market’ block, itself, introduces tariffs and barriers to goods and services coming from both inside and outside the block, which the EU does. As a consequence we often pay EU prices and not world prices. It’s estimated that on leaving the EU our cost of living would go down by about 8%.
Another departure, from that which Europhiles would have you believe, rests in the internal barriers that remain between countries within the EU. By way of example Portugal imposes a huge import tariff on cars. Cars bought in Portugal incur a massive and additional tax. On top of all that there is 23% VAT. If you live in Portugal and want a new car why wouldn’t you buy a car in Belgium for half the price? The reason is an import tariff masquerading as something else. You have to change the registration after six months and the cost of that is dependent upon the value of the vehicle and will be thousand of Euros effectively bringing the car up to the price you would have paid.
The misrepresentation of the ‘single market’ as something we would be leaving, or no longer a participant in is a meaningless concept because it is already there and has been a real achievement over the years and will continue to benefit all of us.
Unfortunately the REMAIN campaign still choose to misrepresent our future relationship to pretend that trade will suffer if we leave when the opposite is much more likely. Individuals that spread this misinformation, almost certainly, have no real understanding of markets or the ‘single market’ concept and simply read the scripts they are fed, those very probably emanating from the vested interests, often unseen, that sit at the top of this campaign and do very nicely from the existing arrangements.