For Britain, Quitting the E.U.’s Market May Be a Tough Sell
If it is possible to have a rational discussion about the British vote to quit the European Union, it is impossible to have one without discussing the “single market.”
But what is it? And why does it matter? Can Britain leave the European Union and still be a part of the single market, or just have “access” to it, and of what kind?
Simply put, the single market is the zone of free movement that the European Union created, where goods, services, capital and people can flow from place to place and nation to nation without impediment at internal borders. It began as a duty-free “common market,” but it has become much more.
The single market means that a citizen of any of the (still) 28 member states has the right to travel, live and work in any other member nation, and to buy, sell and invest there without paying any more taxes than the locals do. It encompasses some 500 million people and 21 million small- and medium-size enterprises, worth more than $11.5 trillion.
At least, that’s what it is in principle.
In fact, considerable barriers still exist that make it harder to take advantage of the single market than one might expect. For example, car prices are often fairly low in Slovakia compared with other European states, but local taxes of various kinds tend to make a car bought there no great bargain by the time you get it home.
The barriers can be particularly complicated in services, which make up 70 percent of Europe’s economy. The European Union has been working hard to minimize those barriers — for example, it has capped mobile-phone roaming charges and is on the way to abolishing them — but there is still much to do.
Creating a single digital market has proved particularly difficult. Take major televised sports events like Premier League or Bundesliga soccer matches. National networks pay big fees for the rights to broadcast them — and they don’t want their viewers to be able to see them more cheaply through a foreign subscription. In another example, Britons pay a license fee to support the BBC and watch it on any device, but they cannot connect outside Britain. Why not? And should non-Britons have to pay, too?
Even so, duty-free access to such a huge market is a boon, and it was a large part of why many big non-European companies like Nissan and J. P. Morgan chose to locate in Britain. Once Britain leaves the European Union, those companies’ British operations will probably lose that easy access.
People who favored Brexit insisted that Britain could continue to enjoy the single market’s free movement of goods, services and capital while restricting immigration and the free movement of people. But an à la carte membership like that appears to be very unlikely.
So some, like David Davis, the minister heading Britain’s new Department for Exiting the European Union (Dexeu), favor a “hard Brexit,” forgoing any effort to stay in the single market. Others, though, like the powerful chancellor of the Exchequer, Philip Hammond, still seek a “soft Brexit,” hoping to negotiate at least partial access to the single market — whatever its flaws.