Brexit is the term for the UK’s withdrawal from the EU. In political debate, two different variations of Brexit tend to be raised ‘Soft’ and ‘Hard’. ‘Soft Brexit’ refers to a scenario where the UK joins a free trade area. Tariffs would remain at zero, non-tariff barriers (including customs checks, border controls, etc) would increase the costs of trade Clayton & Overman (2017, pp.2). ‘Hard Brexit’ refers to a scenario where the UK and EU default to trade under World Trade Organisation (WTO) rules Clayton & Overman (2017, pp.2).
What is the Single Market?
The ‘Single Market’ refers to the EU as one territory without any internal borders or other regulatory obstacles to the free movement of goods and services. The concept was central to the founding Treaty of Rome in 1957 (Emmerson et al, 2016, pg. 1). Currently, for a country to gain full access to the Single Market they must be a member of the European Union. The four members of the European Free Trade Association (EFTA) – Norway, Iceland, Switzerland, and Liechtenstein participate in the single market to various degrees (Chan, 2017). A drawback to joining the European Economic Area (EEA), the area comprising of all EU member states, Norway, Iceland and Liechtenstein (Gov.UK, 2017), is that whilst it may reduce tariffs, it would oblige the UK to make yearly financial contributions and accept the free movement of people (Emmerson et al, 2016). With Britain set to exit the EU, continued membership of the Single Market is reliant on UK-EU negotiations. Theresa May is the position that the UK must leave the Single Market, as staying in would mean ‘not leaving the EU at all’ (BBC, 2017).
The UK is technically part of the EEA, having signed the 1994 EEA agreement. There was a disagreement over whether the UK needed to trigger article 127 to leave the EEA (Institute for Government, 2017). The issue hasn’t been completely resolved but Jean Claude Piris, former head of the European Commission, has said ‘the UK’s withdrawal from the EU will mean an automatic cessation of its membership of the EEA’ (Institute for Government, 2017). When questioned as to whether it was an option for the UK to remain part of the Single Market at least during the transitionary period. Theresa May shut down this suggestion reiterating that Single Market membership was not an option and that a trade deal has to be negotiated (Nair, 2017). Jean-Claude Juncker, the President of the European Commission has made Single Market participation conditional. The UK must accept the free movement of people if it seeks to access the single market (Day & Foster, 2016). With senior officials in the UK and the EU of the position that Single Market participation will not continue. Businesses, policymakers, and governments must prepare for when the UK is potentially set to exit the Single Market. With this in mind attaining some grasp over the benefits and pitfalls of Single Market membership is vital to grasp whether Brexit is good or bad. These explanations will take into consideration that the single market, however, isn’t fully complete, with some areas such as services currently underdeveloped (Cebr, 2017, p. 9).
By Shaneka Knight
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Cebr, 2017. The economic impact on services from the UK losing Single Market access. [pdf]. London: Centre for Economics and Business Research. Available at: <https://www.cebr.com/wp/wp-content/uploads/2017/05/Open-Britain_services-report.pdf> [Accessed 1 September. 2017].
Chan, P. S, 2017. What is the EU Single Market? The Telegraph [online] 9 June. Available at: <http://www.telegraph.co.uk/business/0/what-is-the-eu-single-market/> [Accessed 21 August. 2017].
Clayton, N. and Overman, G. H, 2017. Brexit, trade and economic impacts on UK cities. [pdf]. London: Centre for Cities. Available at: <http://www.centreforcities.org/wp-content/uploads/2017/07/17-07-26-Brexit-trade-and-the-economic-impacts-on-UK-cities.pdf> [Accessed 13 August. 2017].
Day, M., and Foster, P, 2016. ‘You can’t have one foot in and one foot out’: Juncker says EU must be firm over UK’s Brexit Manoeuvring, The Telegraph [online] 7 October. Available at: <http://www.telegraph.co.uk/news/2016/10/07/juncker-says-eu-must-be-firm-over-uks-brexit-manoeuvring/> [Accessed 22 August. 2017].
Emmerson, C., Johnson, P., & Mitchell, I. (2016). The EU Single Market: The Value of Membership versus Access to the UK. [pdf]. London: The Institute for Fiscal Research. Available at: <https://www.ifs.org.uk/uploads/publications/comms/R119%20-%20The%20EU%20Single%20market%20-%20Final.pdf> [Accessed 21 August. 2017].
Institute for Government. (2017). Article 127 and the Single Market. [online]. Institute for Government. Available at: <https://www.instituteforgovernment.org.uk/explainers/article-127-and-single-market> [Accessed 27 August. 2017].
Nair, A, 2017. ‘We WILL be leaving!’ Theresa May slaps down Sky reporter over single market membership. Sunday Express [online] 30 August. Available at: <http://www.express.co.uk/news/uk/847589/brexit-Theresa-May-japan-slaps-down-sky-reporter-single-market-membership-labour-video> [Accessed 30 August. 2017].