The EU Is Not The Single Market

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Remainers apparently struggle to understand the very simple concept that the EU is not the Single Market. To clarify, the Single Market is the 31-member state EEA (European Economic Area) agreement, which includes EFTA (European Free Trade Association) members—Norway, Iceland and Lichtenstein—along with the 28 EU Member States.

EFTA/EEA member states enjoy full access to the Single Market without being bound by the Common External Tariff or the Common Commercial Policy, which, under the terms of Article 34 of the Treaty on European Union, empowers the European Commission to speak on behalf of EU Member States in international trade talks and compels EU Member States to adopt the EU’s “common position” on standards-setting bodies at the global level.

It is quite stunning the lengths to which Remainers will go to in order to muddy the water on this particular issue, even to the point of arguing against themselves. No less a figure than the Prime Minister says that the Norway option would not be right for Britain because it would mean paying into the EU budget and accepting free movement of workers. Maybe I missed a meeting, but at what point was it agreed that remaining in the EU would mean any change to either aspect of our current relationship?

Of all the rubbish I have read about the EEA though, this piece from Euroactiv currently tops what is a very long list. If you want to read the entire article the link is there. I am going to focus only on the following sentence:

In practice, Norway was never outside the EU: As a member of the European Economic Area Agreement (EEA), Norway adopts all Single Market legislation just like any EU member state, with the exception of the common agriculture and fishery policies.

I will say it again if I have to, the EU is not the Single Market. This abuse of language is so common among Remainers that one easily becomes inured to it, but what Euroactiv has published here amounts to a lie. Norway is not in the EU and nobody can credibly argue that Norway is in the EU. That would be because the Single Market agreement (the EEA) is not the EU. The use of the words “in practice” change nothing.

There is also the assertion that “Norway adopts all Single Market legislation just like any EU Member State”. Countries that are in the EEA adopt all “EEA relevant” legislation, but, that is not the same as being in the EU. Not even close. At last count, the proportion of “EEA relevant” legislation was around one quarter of the total number of EU legislative acts in force. Adopting all Single Market legislation is not the same as adopting all EU legislation because—say it with me now—the EU is not the Single Market.

For any europhiles trying to follow along, you can leave now. You wouldn’t understand this next bit and I know that new information is the kind of thing that is liable to disrupt your worldview. Still here? Right, get this, I’m about to blow your mind: not only is the EU not the Single Market, but the world does not end at the borders of the EU.

Yes, I know what you’re thinking. You’ve heard all about those dragons at the edge of the map and isn’t the EU a flat disk sat on the back of a turtle being pulled through space by four giant elephants?

No, exciting as the thought may be, Britain and the British people will not be stepping off the edge of the world at the point of EU exit. Transitional arrangements which suit both sides will be hammered out as part of the exit negotiation. The Remainer idea that leaving the EU would mean Britain being “isolated” and “alone” is as pitiable as it is absurd. As far as these timid creatures as concerned, the UK is not a place that “makes history” any more.

To be completely honest, even if that were true (it isn’t), Britain is still my home. It matters to me how and by whom my country is governed even if the time-servers at the FT can’t be arsed to engage with the arguments with any degree of seriousness.

One of the reasons why the Remainers’ view of EU exit is so grossly negative is that (if their rhetoric is to be believed) they genuinely think that the world really does end at the edge of the EU. The fact of the matter, however, is that globalisation is changing everything. The emergence of genuinely multilateral institutions operating on an intergovernmental basis at the global level undermines practically every argument that the Remainers make about having “influence” in the EU. If we want Britain to play an active part in solving the major issues of the 21st century, rather than whinging from the sidelines mired in a grey supranational construct conceived in the 1920s, Britain needs a full seat at the top table.

Britain is plugged into the global system in ways that the Remainers have not even begun to recognise, let alone seriously address. There are a universe of global bodies above the level of the sub-regional EU. The WTO, Codex, UNECE, the ILO, the IMO, and so on. But, as part of the EU, the UK is bound by the EU “common position” on these forums, without an independent voice, vote or right of reservation.

Our politicians cede our power at the global level in exchange for “influence” in the EU. But what purpose does that “influence” serve if it means that the voice of the people is never heard?

The Remainers want us to believe that it would be really, really dangerous for Britain, one of the world’s oldest and most successful nation-state democracies, to embrace the same level of independence as say, Australia, Norway, Switzerland, Canada, the United States, etc. Then they act incredulous when we say that we don’t believe them.

This great country’s days are not over. Leaving the EU would be but the first step in a great global journey towards greater prosperity and purposeful political engagement. There is a lot of work to be done to rebuild our democratic institutions and policy-making expertise, but the first step is to leave the EU.

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20 thoughts on “The EU Is Not The Single Market

    • No it does not.

      “No less a figure than the Prime Minister says that the Norway option would not be right for Britain because it would mean paying into the EU budget and accepting free movement of workers. Maybe I missed a meeting, but at what point was it agreed that remaining in the EU would mean any change to either aspect of our current relationship?”

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  1. Both sides believe or interpret what they want to convey.
    I believe most people have a brain of their own and will decide on the day,as they do in all aspect of their lives !

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    • Of course people will decide for themselves. This is a referendum. Everybody has a vote, not just politicians. All the more reason for people to get as informed as possible in order that they can make up their own minds.

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  2. Aren’t two of the reason a lot of people want to vote leave, The fact we pay into the EU budget and that there is free movement of workers between countries? Would this not be the same if we followed the Norway example? But with no say in any of the legislation?. Just trying to get this clear in my head.

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  3. I think there actually has been quite a clear distinction between the two – it’s been widely discussed that if we were to leave the EU, the best option for us is to remain a member of the EEA to have access to the single market.
    In terms of trade, there are still distinctions however between the EEA and the EU.
    Firstly, non-EU members of the EEA are not members of the customs union. Norway for example has to therefore comply with costly rules-of-origin regulations (if a Norwegian producer has used imported inputs, the products can’t be sold duty-free within the EU.
    Second, the EU can, and has, also use anti-dumping measures against the rest of the EEA – imposing tariffs on imports such a Norwegian salmon when they feel it’s harming EU fishermen. The import duties on fish vary as to whether its raw or processed – the 13% tariffs on processed fish means that many Norwegian firms have actually moved processing plants to countries inside the EU, removing much of the processing sector from the local economy. Processing is where much of the value-added is generated, so we want don’t want to impose tariff barriers on ourselves that will lead to our firms moving processing elsewhere.
    Norway also has no say in the regulations that govern trade in the EEA. These regulations are useful – a bit like traffic rules, they help producers and consumers know what they can sell and what they are buying. It’s easier to develop and export a car if you know you have to fulfill the same safety requirements whether you sell it to Italy or Poland. It’s more reassuring to buy food when you know the stamp on it indicates its been grown according to certain quality requirements that are consistent within our trading block. Given we trade so much with the EU, surely we want to be at the table influencing which are the important regulations to help ease trade, and which are not, so that we get the best deals for our exporters and consumers.
    A lot of the UK’s trade with the EU is in services. Most of the barriers to trade in services are invisible – they are non-tariff barriers. I would argue that in this sector it’s even more important that we are present and active in negotiations to reduce barriers to trade in services – outside the EU, we could easily find ourselves subject to new regulations that we’ve been excluded from setting up that restrict the access to the EU market of our financial services firms for example – inside the EU, we have the weight to ensure any regulations are developed to our mutual advantage.
    If we were in the EEA and not in the EU, yes we would have to abide to fewer EU regulations – the ones concerning trade alone. However, many of the other laws at an EU level respond to European wide issues – the environment (pollution doesn’t stick within borders), or worker rights (with free movement of labour, which we’ll most likely be required to keep to be an EEA member, employment laws across the EU matter to us). The pro-brexit economic study of Minford et al. assumes the removal of all of these regulations, unilaterally removing all tariff and non-tariff barriers with the rest of the world, in order to reach their numbers which give positive impact of Brexit. Sure, there are a few people who believe in free-markets to such a degree that they think we shouldn’t protect our environment or workforce, but those views don’t I think reflect the majority (and in any case, unilaterally removing all barriers removes much of our political capital to negotiate other countries do the same, if that’s what you really wish for.
    These costs to us in terms of leaving the customs union and not having a say in EU regulations aren’t compensated by particularly lower costs of membership for the EEA. Per person, Norway is still paying over 80% of what we are. As an EEA member, we’d most likely have to continue accepting freedom of movement as well (which I personally regard as a good thing, but if you don’t, leaving the EU won’t stop it.)
    Looking beyond the EEA, sure we want to (and do) trade with the rest of the world. Empirically though, it’s well-established that geography is a strong determinant of trade – as you double the distance between pairs of countries, trade flows approximately half. So increasing costs/reducing trade with our near neighbours might lead to some more trade elsewhere, but it’s highly unlikely to compensate for the amount lost.
    Outside the EU, we could negotiate our own trade agreements. However, I believe that any potential gains we would get from being able to better tailor an agreement to our own interests are more than compensated by the strength we get from negotiating as part of the world’s largest trading block. For example, Canada, despite being USA’s neighbour, has had to accept an ISDS clause in their agreement with the US – which means that US investors can directly bring claims against the Canadian government if they implement rules that harm the US investors (eg, US tobacco firms in response to a Canadian law requiring plain packages can sue the Canadian government). This clause is one of the main points of negotiation for TTIP – for example the health sector has already been excluded from it, meaning if we were to sign TTIP, US firms would not be able to sue the British government if they decided to bring a privately-provided service back in house – the EU together is stronger and more able to negotiate trade deals with clauses that work in our favour.
    Apologies if this isn’t written that concisely/clearly – but while yes, maybe politicians skim over the finer details, you can be sure that economists are very much aware of the distinctions, and when it’s stated in the media that economists are overwhelmingly in favour of us remaining in the EU, you can be sure that the hundreds of economists whose opinions have lead to this statement have thought through these finer points.

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      • The EU governs the single market and sets the rules – the EEA members have to implement these to trade within the single market. EEA members theoretically have a right to veto EU directives, but Norway has never used this right as there would be inevitable political consequences (most likely through the imposition of import duties, which Norway cannot prevent). This results in non-EU, EEA members having no say in the regulations of the single market.

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      • The EEA agreement has a two-pillar structure in which both EU and EFTA members participate. EFTA members also play a full role in joint committees and are equal participants in a process known as “decision-shaping”. Only around a quarter of the EU acquis is what is deemed “EEA relevant” and a very large percentage of that involves implementing international standards made at the global level where independent countries have full voting rights while EU Member States adopt the EU’s “common position”.

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  4. Which fits with what I said – “If we were in the EEA and not in the EU, yes we would have to abide to fewer EU regulations – the ones concerning trade alone. However, many of the other laws at an EU level respond to European wide issues – the environment (pollution doesn’t stick within borders), or worker rights (with free movement of labour, which we’ll most likely be required to keep to be an EEA member, employment laws across the EU matter to us)”

    The quarter of EU rules that you refer to which are EEA relevant are those which concern our trade – yes, a lot of these laws are international standards, but a large number are EU specific standards, that affect the whole single-market, and EEA members wishing to trade in goods and services affected need to abide by them. There is scope within these for the EU to easily establish non-tariff barriers against us (in addition to the tariff barriers they could also impose for us being outside the customs union), such as, in my examples above, barriers that work against our financial services firms, or barriers which limit the potential for British car brands to sell in the EU market.

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    • You’re not right. Regulation has gone global. The WTO TBT Agreement mandates that where an international standard exists national or regional regulations shall comply with the international norm. The EU would not be able to restrict entry of any standards compliant product.

      Your favoured examples are a case in point. Financial services regulation stems from the FSB, an agency of the G20, and vehicle regulations are made by WP.29, a working party of the Inland Transport Division of the United Nations Commission for Europe (UNECE), based in Geneva.

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