During the general election campaign, the divide between the political parties was over what kind of deal should replace the current relationship which exists under the EU Treaties between the UK and the rest of the EU. That current arrangement involves the UK being inside the EU Customs Union and participating in the EU Single Market. What then should replace that current relationship and how would it compare with the present arrangement?
The first point to make is that participation within the Single Market is a very mixed blessing. In our article Brexit and the Single Market, we explain that the rules of the European Single Market are made up of a number of different elements, some of which are helpful to trade, some of which (such as harmonised regulations) have benefits and disadvantages which counterbalance each other and may have different positive and negative impacts depending upon the sector concerned, and others of which are positively harmful and negative for the UK. In that latter category are the ‘Fortress Europe’ rules of the Single Market which positively require us to impose restrictions on trade between ourselves and non-Member States, so driving up costs to our consumers and industry.
Therefore the aim should not be to preserve participation in the European single market with its negative features. Instead, the aim should be access to the single market.
The EU trade tail should not wag the global dog
Before turning to what kind of deal with the remaining EU we should aim for, we should first ask what is the dog and what is the tail? Over the past 10 to 15 years, there has been a dramatic decline in the proportion of our trade which goes to the EU as compared with our trade which goes to the wider world. Continue reading “Brexit – doing a deal with the EU”