His statement in the Commons this week was lacklustreby Simon Tilford / September 6, 2016 / Leave a comment
David Davis, the Secretary of State for Exiting the European Union, gave little away yesterday in his first statement to the House of Commons on the process for Brexit. But he did say, “Access to the Single Market is not really up for grabs. It is there for everybody. There are many, many countries, many countries outside the European Union that do a better job, frankly, of exporting to the single market than we do, even without a trade arrangement. So of course we want to have access to the Single Market. We don’t need to be a member of it to do it.” His remarks betray his failure to grasp the nature of the Single Market and his failure to acknowledge the Single Market’s role in boosting trade in goods and services among its member-states.
Of course, non-EU member-states are free to export to the EU, but they have to contend with EU tariffs on goods and non-tariff barriers that make it hard to export services into the EU market. A Japanese car manufacturer exporting to the EU faces tariffs, which explains why Japanese car firms, such as Nissan and Toyota, (and their US competitors, Ford and General Motors) produce cars in the single market to circumvent these costs. Even if the UK succeeded in negotiating tariff-free access to the EU market (a big if, given that the EU demands Switzerland abide by freedom of movement rules in return for tariff-free access), exporters from the UK into the single market would still face rules of origin: the non-EU content of the goods would be subject to tariffs.
More crucially, the UK would lose access to much of the EU’s services market. The EU has been gradually reducing non-tariff barriers to services among its member-states by agreeing common regulatory standards or mutual recognition of standards. The UK has been perhaps the principal beneficiary of this; in 2015, 45 per cent of UK exports comprised of services and the EU is easily the most important market for them. A graphic case in point is financial services: London is the Single Market’s financial…