Saturday, 3 December 2016

How to stop being wrong about the single market

I have become increasingly annoyed with repeated assertion that staying in the single market is not Brexit. The insistence that we must leave it comes from hardline Brexiteers who believe that taking control of our laws and immigration requires that we leave. This is actually a testament to how effective the remainer propaganda has been. Few believe the nonsense put our by Vote Leave because of their flagship campaign slogan, the infamous £350m, yet untruths about the single market survive in tact.

This is not helped because neither these remain camp nor the leavers are in any rush to challenge this mythology. Particularly those leavers who are only too happy to see us leave the single market.

In order to bring clarity to this we must first set out a few definitions. The single market is, broadly speaking, an area of common regulation and customs cooperation. Those wanting a more precise definition would do well to read the recent Leave Alliance monograph.

The single market comprises of the EU member states and those countries in the European Economic Area (Norway etc), who are categorically not in the EU. In that regard the single market is a cooperative venture and though it is heavily influenced by the EU, it is not the property of the EU. The EUs own internal market is what belongs to them.

The EU internal market is the foundation of common regulation with a good deal more added which makes up the EUs overall body of law. It expends well beyond what is required for the fee movement of good and services. That is what we are leaving.

In that regard, the EEA was developed as an interface to the EUs internal market as a basis for close cooperation. Decisions regarding the functioning of the overall single market are made by a process of co-determination. Despite what has been said, EEA members are not under ECJ jurisdiction.

The question therefore, is what would happen if we did leave the single market as well as the EU. Immediately it would have a detrimental effect on trade since we would no longer enjoy the free movement of goods. There is more to it that simply dropping tariffs.

A better question is what we would gain from it leaving the single market. If we are talking about taking back control of our own laws then we would have that within the single market. From the very first day of Brexit a number of powers are returned to us over multiple policy areas including trade, aid, agriculture, fishing, home affairs, employment, justice, foreign and defence. The only real gain in leaving the single market is the ability to depart from the technical regulations that allow for free movement of goods inside the single market.

That puts us in the position of producing goods for the domestic market and running a separate production line to meet the export standard - to no commercial advantage. This is further complicated by way of the WTO Agreement on Technical Barriers to Trade which compels us to adopt all of the global technical standards and regulations. Without which we could not export at all.

We would, by way of conforming to the global standard, also be nominally EU compliant. In other words we would be making the same things to the same standard, but out of the single market there would be no formal recognition of this, thus would have to pay tariffs to export the same goods. The only way to avoid tariffs is to be formally compliant - ie be in the single market or similar.

Personally I can see no real value in leaving it. It is unlikely that most Brexiteers able to identify any specific sets of base level single market regulation they would change, and if they could it is doubtful that which they do identify would, on balance, make leaving the single market worth the trouble.

The only tangible benefit to leaving the single market is an eventual reduction in payments to the EU. Hard Brexiteers believe these payments are merely a market entry fee and thus extortion, since other countries with access to the single market do not pay. Except that payments to the EU go toward a network of decentralised agencies which are essential to the functioning of a sophisticated trading system. We pay because there is every advantage in cooperating to ensure the safe passage of goods.

The other reason we pay is because Europe is our closest neighbour and customs cooperation costs money. Hard Brexiteers have it that neither Canada or the US pays to have access but then we are not their closest neighbours and have no hard borders with us. The US and Canada spend vast sums on customs cooperation between them for the same reasons the EU does. The idea that free passage of goods happens without extensive expenditure is for the birds.

Consequently, if we did leave the single market we would have to spend the money on domestic enforcement of standards and we would have to beef up our ports and customs. That means not a single cent of the comparative pittance we send to the EU is going to go anywhere near the NHS.

So all things considered there is not a lot to be gained by leaving the single market. The bone of contention seems to be immigration or rather the free movement of people. In this, many are all too ready to believe that freedom of movement is non-negotiable. Nothing in international politics is non-negotiable and there are precedents which establish that there is flexibility in how we manage immigration in the single market.

If it follows that we would want free movement of goods, then it follows that we would want, to a degree, free movement of people. If I produced a specialist airline component of a scientific instrument I would want to send specialist technicians to aid in their installation. Were I not able to secure a base level of free movement without having to fill in forms in advance I would likely lose business. An element of free movement is essential to the functioning of a free market.

What has people concerned is the threat of large scale unchecked immigration exploiting single market freedom of movement. The principle of freedom of movement was established a long time ago before the advent of a global migration crisis. This is made all the more acute by the war raging in Syria. Having had a number of troubling images beamed at them, voters are worried.

But what we must note is that if we really did have open borders with Europe then the camp at Calais simply wouldn't exist and there wouldn't be an enormous fence. Britain already has agreements which prevent non-EU citizens making it to our shores and for the most part they are successful. The maintenance of which does not come for free - one should note.

It is these images which have been exploited by the media, presenting the more egregious symptoms of the crisis as a large scale looming threat which could destabilise the country. That is a nonsense. The basis of the objection is the nationwide institutional memory from the Labour years where there were sudden influxes from accession states. Such is not to be repeated. What one would not is that assimilation happened fairly quickly and for the most part is less of a problem than thought. The main concern is non-EU immigration.

The questions is whether we should let a false narrative concocted by the media influence our policy making. In a perfect world we would not but in the real world the issue is politically sensitive and we must take such feelings into account - not least since the working classes are the ones most likely to feel the negative externalities of immigration.

In that regard there is nothing stopping us coming up with a modified proposal in order to stay in the single market, which would likely be accepted since leaving the single market also has considerable costs to the EU. It should also be noted that the devaluation of the pound will have more of an impact on casual movements of labour than any single policy. 

The short of it is that absolute control of our laws is neither practical or necessary and the act of leaving the EU without leaving the single market returns all the powers that matter. In terms of customs codes and trade we become an independent country in our own right and political union comes to an end. That is what I voted for and see no reason to go to the further trouble of leaving the single market when the advantages are so few and so marginal.

Even if we do leave the single market, there will necessarily needs to be a high level of regulatory harmonisation and a convergence of customs systems and even if we were to revert to the state we were at before freedom of movement, that was still a considerably liberal system.

Thus, any arrangement we negotiate would have to aim to me very similar to single market membership. Those who would have us break away entire need to explain why the extended uncertainty is worth the trouble. The EEA agreement took eight years to fully agree and it is unlikely that we could build a similar bespoke agreement in less time.

It should be noted that we could not leave the EU until such a time as an agreement had been secured - and so insisting that we aim for a bespoke agreement sees us remaining in the EU for longer, increasing the risk of talks collapsing and increasing the risk of staying in the EU. In that regard it is deeply ironic that remainers should now be pushing for the single market while the Brexit headcases are doing their bit to keep us in for longer.

It is sad to see that this debate, for all the volumes that have been written on the subject is still marred by a fog of incomprehension. In this, it is easy to see where the fault lies. To understand a beast as complex as the EU one must break it down into its constituent parts. As with any problem you have to understanding the distinct elements. There has been a deliberate conflation of the issues from day one.

Most of the supposed advantages of the EU are in fact the consequences of economic and technical, not political integration. It has never been the case that we needed be a subordinate to a supreme government of Europe to enjoy the freedoms we have. Politicians have sought to conflate the EU with the single market in order to sow confusion. It has worked. The result being a debate mired in misapprehension with each side doing the other's work for them. I have never known anything quite so bizarre.

In that regard, the lie that is central to this confusion - that the EU is the single market - is far greater than a marketing slogan on the side of a bus. Worse still it distracts us from the reason we are even leaving the EU. Our political union with the EU is the very thing that prevents us nurturing the same level of economic and technical integration with other countries as we have with Europe.

Because the EU functions as a bloc, it tries and fails to advance that agenda, but is held back by the lack of a common position inside Europe. This is why TTIP is most likely dead and CETA is no foregone conclusion. The confusion that exists over the single market is magnified many times across the entire continent and beyond.

As notes, we cannot afford to be bogged down in this debate over the first steps of Brexit. This interminable squabbling is clouding the bigger picture and losing sight of the fact that single market membership is only a stepping stone to our full departure, whereby we can use our independence to evolve the single market and make it wider and more inclusive. It is not the sole property of the EU and outside the EU, possibly as part of Efta, we can restore the regional balance as well as kick starting out stagnant export sector.

The hang ups about the single market are really the domain of political nerds. The public has only a thin grasp of what it really means. We have media that is not interested in informing the public and lacks the capacity to do so. In all this our sense of purpose is lost and we risk embarking on a Brexit that is not instrumental to a longer term vision.

That is ultimately the consequence of campaigning for Brexit without a plan, campaigning for a departure rather than a destination. If the government is unable to find that clarity of vision then we should at the very least stay in the single market until such a time where we can see a way forward. Anything else would be a wanton act of political vandalsim.

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