Brexit bat­tle looms over EU free­doms

Kuwait Times - - ANALYSIS -

Bri­tish busi­ness­man Si­mon Boyd re­calls win­ning a big con­tract to build an air­craft hangar in France - only to lose it be­cause he couldn’t se­cure the re­quired French in­sur­ance in time. “We tried very, very hard to sort it but it was un­sortable, be­cause we are not a French com­pany,” said Boyd, man­ag­ing di­rec­tor of Reid Steel which em­ploys 130 peo­ple and has ex­ported to around 140 coun­tries. At his of­fice in the south­ern English town of Christchurch, Boyd has a file 10 cm thick of cor­re­spon­dence he wrote to the Bri­tish gov­ern­ment, EU of­fi­cials and oth­ers to try to solve the prob­lem. “It’s eas­ier for us to ex­port to Mon­go­lia than to France,” he told Reuters.

The kind of frus­tra­tion he felt at los­ing the 1.5 mil­lion pound deal in 2009 - it would have been worth $1.85 mil­lion at to­day’s ex­change rate - is shared across the Eu­ro­pean Union. In prin­ci­ple the EU’s sin­gle mar­ket en­sures peo­ple based in one mem­ber state are free to do busi­ness in oth­ers with­out any bar­ri­ers. In prac­tice com­pa­nies, pro­fes­sion­als and traders com­plain of run­ning into prac­ti­cal prob­lems sim­i­lar to Boyd’s. The sin­gle mar­ket rules, they say, are ap­plied at best un­evenly.

As Bri­tain pre­pares to ne­go­ti­ate its de­par­ture from the EU, the bloc’s most pow­er­ful lead­ers say the sin­gle mar­ket is an in­di­vis­i­ble pack­age. Bri­tain must ac­cept and en­force all its rules to re­tain tar­iff-free ac­cess to a mar­ket of close to 500 mil­lion peo­ple, or lose all the rights that mem­bers en­joy. And yet the ex­pe­ri­ences of peo­ple try­ing to work across EU bor­ders sug­gests mem­ber states of­ten en­force sin­gle mar­ket prin­ci­ples se­lec­tively to suit their own in­ter­ests. If this is the case, why should the Bri­tish gov­ern­ment not ne­go­ti­ate a Brexit deal to in­clude the sin­gle mar­ket rules that it wants, such as on free trade, and ex­clude those that it does not, such as on im­mi­gra­tion from the EU?

Four Free­doms

The sin­gle mar­ket emerged from the 1992 Maas­tricht Treaty on Eu­ro­pean in­te­gra­tion. This en­shrines the EU’s “four free­doms” - of move­ment of goods, cap­i­tal, peo­ple, and ser­vices. Yet, 24 years later the bloc still has a patch­work of na­tional reg­u­la­tions that re­sult in an un­even play­ing field. The Eu­ro­pean Com­mis­sion said in July that the mar­ket “is not al­ways run­ning as smoothly as it should”.

For Bri­tain, this means ac­cess to the sin­gle mar­ket should not be a “take it or leave it” propo­si­tion af­ter Brexit. If the rules are ap­plied flex­i­bly within the EU, there is scope for flex­i­bilty in di­vorce ne­go­ti­a­tions too. “The free­doms are not switches which can only be off or on, but more like vol­ume con­trols with many in­ter­me­di­ate set­tings be­tween zero and max,” said one Bri­tish of­fi­cial, speak­ing on con­di­tion of anonymity. “Once the rhetoric calms, it is clear that the four free­doms have never been ab­so­lute.”

Such com­ments sig­nal Bri­tain’s push for a be­spoke deal with the EU. Prime Min­is­ter Theresa May has al­ready said the coun­try does not face a “bi­nary choice” be­tween curb­ing im­mi­gra­tion and get­ting a good trade agree­ment. May has promised to trig­ger di­vorce pro­ceed­ings with the EU by the end of March, and so far the bloc has por­trayed the sin­gle mar­ket as a set meal, rather than an ‡ la carte menu that Bri­tain can pick and choose from.

This week Ger­man Chan­cel­lor An­gela Merkel de­scribed the four free­doms as es­sen­tial for the EU. “That will be the ba­sis on which we lead the ne­go­ti­a­tions,” she said. Eu­ro­pean Com­mis­sion Jean-Claude Juncker has gone fur­ther, say­ing the EU must be “in­tran­si­gent” with Lon­don.

Fines Start Fly­ing

In France, other EU cit­i­zens can­not freely work in trades such as hair­dresser, baker and even black­smith. Un­der health and safety rules, they need diplo­mas that can take sev­eral years of study. The reg­u­la­tions also of­fer small traders pro­tec­tion from com­pe­ti­tion from big busi­nesses such as su­per­mar­kets. While for­eign qual­i­fi­ca­tions may be ac­cepted, they usu­ally have to be ap­proved by boards or cham­bers of com­merce. Like­wise, EU teach­ers must pass a test and be­come a French civil ser­vant to work in se­condary schools there.

In the Czech Repub­lic, dozens of re­moval com­pa­nies have stopped send­ing their trucks to France, where they are pe­nalised as their driv­ers earn less than the French min­i­mum wage. “When fines start fly­ing, the cus­tomers won’t pay for them,” said Vo­jtech Hromir, sec­re­tary gen­eral of the Czech as­so­ci­a­tion of road trans­port op­er­a­tors. While Merkel in­sists on the four free­doms, the Bri­tish of­fi­cial said Ger­many has been “ar­guably the main ob­sta­cle to the full im­ple­men­ta­tion of free move­ment of ser­vices”.

Ger­man mem­bers of the up­per house of par­lia­ment ob­jected last month to the im­ple­men­ta­tion of free move­ment in the le­gal ser­vices field. Lawyers ar­gue there are prac­ti­cal con­sid­er­a­tions. “The mere fact that you stud­ied, say, Ital­ian law, does not re­ally al­low you to ad­vise on Ger­man law,” said Kai Schaf­fel­hu­ber, part­ner at Allen & Overy law firm in Frank­furt. “It’s a con­sumer pro­tec­tion ra­tio­nale.”

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