Dear @SirSocks, and the EEA myths.

A brief history…

Once upon a time, there was a small group of maritime kingdoms, clinging to the cold, wet and unfashionable rocks off the northern coast of continental Europe.

Over many years of being invaded by any army that happened to be passing, and hacking bits off each other in between times, these small nations eventually learnt that by clinging together (initially for warmth) they could use trade to screw their neighbors for fun and profit, without all the messy bloodletting.

It was trade that united the kingdoms. And it was trade that took them out across the water, where -by the cunning expedient of lending their flag to anyone unfortunate enough not to have one of their own- they became -for both better and worse in pretty much equal measure- a global trading power.

Following a turbulent first half of the twentieth century, much of which -with hindsight- turned out to be pretty bloody awful, there were two prevailing visions of how such pan-European unpleasantness might in the future be avoided.

The first vision was to make a new country called Europe which would prevent future wars by ensuring all the combatants were on the same side. To camouflage what was, admittedly, not a very popular idea -and one that had recently been tried by force with disastrous consequences- this was entitled the “European Economic Community”. This Unionist movement formally came into being in 1957 with the Treaty of Rome.

The second vision -and the one which, perhaps unsurprisingly, had the initial backing of the trade minded British- was based on the notion that the peace could be best secured by independent states sharing vested interests in trade. This was called the “European Free Trade Association”. The Free Trade movement formally came into being with the Stockholm Convention of 1960, as a British-led trade bloc to compete with the Franco–German-led EEC.

Then in 1975, while remaining unconvinced by and largely unaware of the Federalist nature of the Unionists, the British became sold the idea that their trade interests could be better served by pretending to also be Unionists (while secretly trying to sabotage the process of actual Union by demanding all manner of vetos and special arrangements and utterly failing to become -in any meaningful way- European).

And given the devastation wrought by British Socialism in the 1970s, anything had to be worth a try, right? So the British left the Free Trade bloc they themselves had created, based on Heath’s assumption -the same assumption now made by Nick Clegg- that all the objectors would be dead long before anyone realised they’d been had, and joined the European Union.

However, by the 1980s it was becoming increasingly clear that the protectionist nature of “Common Market” meant it was a dead duck for trade. It was only a common market for the states that would one day become the country of Europe. The control that the Unionists demanded over their trading partners domestic policies was simply too great for it to be a vehicle for trade development with other nations — even with other European nations like the Free Traders.

In order to bridge this gap -and after some rather pointed interventions from Lady Thatcher on the subject- work began on what would come to be billed as the “Single Market” — a subset of very specifically trade laws, that could be applied equally to both EU members and non-members alike, for the facilitation and harmonisation of trade.

These are NOT EU laws.

They are shared trade laws that the EU ALSO follows.

Having completed the “European Economic Area” Treaty in 1992 -with the Unionists and the Free Traders as the two contracting parties- the “European Economic Community” promptly changed it’s name to the “European Union” (Maastricht Treaty, also 1992), dropping any pretence about the supranational nature of their ambitions (and presumably in the hope that the British would take the hint, get back in their own lane and stop standing in the way of Federalisation).

Unfortunately the hint was not taken, and by the time the treaty of Lisbon was forced through in 2007 -without the promised referendum- it was clear that the British pretense at being European Unionists was unsustainable and that a parting of ways was -sooner or later- inevitable.

And so to the present…

We are leaving the European Union. We agree that this should not be done in enmity with our European friends and allies, with whom we share vested interests in both trade and security.

But the obvious platform for a continued trade relationship with Europe from outside the EU -the minimum subset of trade rules devised for trade between EU and non-EU members, referred to as the “European Economic Area” or “Single Market”- was (rightly) seen as a serious threat to the Remain campaign, with the potential to split their vote.

Simply returning to the Free-Trade pillar of EEA -without significant economic changes- would have seriously derailed Remains predictions of economic doom. So the EEA option had to be so thoroughly discredited that many of the wild myths they created are still in circulation today.

During the referendum campaign George Osborne even conscripted German Finance Minister Schauble, to come to the UK to inform us that we could not be allowed in the EEA without EU membership.

The true extent of the mendacity of these comments are exposed by Barniers admission last week that, yes, the EU would -in fact- be happy to discuss basing our post Brexit trading arrangements on an EFTA/EEA position (or a Swiss position, or a Turkish position — any position that you didn’t make-up on the back of a fag packet on your way from the airport, in fact, David).

But what is immensely depressing is to hear these Remain myths now parroted back to us by people claiming to the Leavers — people that have come to believe that any trade arrangement or compromise on immigration is some sort of trick to keep us in the EU. In their failure to offer any reasonable compromise on trade the no-deal drones have actually succeeded in extending our full EU membership for a further 2 years.

Equally, Remainders, in their failure to offer any reasonable compromise on full EU membership will actually only succeed in causing us to crash out to WTO rules by accident. If talks fail that’s the default position now — not a return to the EU.

The irony of Leaver arguments keeping us in the EU, while Remainder arguments push us out of the EEA, would be exquisite, were it not for the economic disaster that awaits us ALL if we cannot be pragmatic or if we fail to accept compromises.

And after 15 months of looking for “creative and imaginative” solutions, the fact that we’re still looking for “creative and imaginative” solutions should suggest to us that it’s time to reconsider the options that are actually on the table on the basis of the actual facts, rather than on basis of the myths that have become attached to them.

The Single Market Myths:

“Being in the Single Market means remaining in the EU.”

It really doesn’t. Many non-EU countries from the EFTA Free Trade bloc participate in the EEA trade agreement WITHOUT being a member of the EU.


“Being in the Single Market means continued payments to the EU.”

It really doesn’t. EFTA/EEA countries DO NOT pay into the EU budget.

Contributions to the EU are documented here:
http://www.europarl.europa.eu/external/html/budgetataglance/default_en.html

As an example, look for Norway (one of the non-EU members of the Single Market). But don’t spend too long looking — as they aren’t there.

Non-EU countries contribute to economic development with direct grants, similar to the way we currently use our foreign aid budget to promote economic development in counties into whose economies we wish to sell. But unlike EU countries that simply pay fixed sums into the EU, these grants are of fixed term, and there is control over which programmes, foundations and projects to which they contribute.

And it should not need emphasising that the use of grants to develop the economies of new EU members to the East provides both new markets for us to sell into and local jobs to those that might otherwise have sought employment further west.

“Being in the Single Market means being subject to the ECJ.”

It really doesn’t. While the trade laws of the Single Market are indeed arbitrated by the ECJ for Unionist countries, that mechanism would be entirely inappropriate for non-EU members, who are only obligated to follow the trade rules (~21% of the total Acquis). These laws predominately relate (60%+) to technical regulations and safety standards.

Consequently, non-EU members of the Single Market have their own court of arbitration, the EFTA Court, and their own surveillance mechanism to police compliance.

Because the ECJ and EFTA courts both adjudicate on the same EEA laws, it should come as no surprise that they would take each others decisions on that shared law into account.

But the very fact that a separate court exists for non-EU members suggests that there is scope for enough divergence to warrant the cost of a separate court, independent of the ECJ.

“Being in the Single Market means we cannot make our own trade deals.”

It really doesn’t. EU countries are obliged to follow the EU Common commercial policy which means the European Commissioner for Trade negotiates on behalf of all member states in matters of trade.

Non-EU members of the Single Market are not obliged to follow the EU Common commercial policy, because they are NOT in the EU.

“Being in the Single Market means having no say over trade regulations.”

It really doesn’t. Freedom from the Common Commercial Policy actually means we regain our own individual vote at the WTO working groups, like OECD, ISO, Codex etc, which draft many of the standards which are later adopted by regional trade groupings like the EU.

Clearly regional trade groupings like the EU do add whistles and bells to these international standards, but it would be wrong to suggest there is any possibility that the EU -or EFTA for that matter- would allow us to sell them goods that do not meet their technical and safety standards.

And this is true of all nations — Any nation that wishes to sell into the Single Market is obligated to prove conformity to Single Market technical and safety standards that apply to their products, either by being a member of the Single Market, or by an expensive and time consuming process of proving conformity for each product that they wish to sell.

“Being in the Single Market means accepting CAP/CFP.”

It really doesn’t. Non-EU states participate in neither the Common Agricultural Policy nor the Common Fisheries Policy.

“Being in the Single Market means accepting open borders.”

It really doesn’t. Free movement of workers is neither open borders, nor a open invitation to illegal immigration, but the economic principle of allowing businesses incorporated in the EEA to hire workers from the EEA (see 3a).

This principle is of critical importance to us, because the ability to send British workers abroad -to deliver the services that relate to ~90% of our exports- depends on this freedom, and whatever our ultimate position on worker movement is, we should fully expect it to be reciprocated by our European colleagues.

And given that most people would agree that anyone who wants to come, work, pay taxes and raise kids are not only welcome, but contribute greatly to our society, I’m not sure that a national debate on worker movement and the issues surrounding it -one that we are clearly incapable of having without descending into accusations of racism- would -in fact- make consequential changes to the principles of movement that European workers currently enjoy.

Because, by and large, the principles are not the issue here. What is at issue is our failure to fund enforcement of the existing rules. There are several existing constraints (available to EU members too) that we have never taken advantage of. Maybe first amongst these is our status as the only European country that has failed to implement an ID card system. It should come as no surprise therefore that easy access to our labour market should act as a pull factor.

We might also note that 28,A constrains worker movement with limitations on the grounds of public security. Many may be sympathetic towards the view that the interests of public safety are not best served by the admission of workers who have convictions for violent, organised or sexual crime. But anyone advocating that position should also be prepared to also identify the costs of doing so, because we have entirely failed to fund such a process to date.

Most tellingly, the single placatory gesture of the Florentine fiasco toward the anti-immigration lobby -to actually start recording who enters the UK- could have been implemented under existing EU law, but we simply failed to fund enforcement.

Equally, existing laws allow us to deny entry to to “workers” who have no realistic expectation of gaining employment in a three month time-frame.

Got myth?

EEA myths have been the subject of much widely un-publicised debunking, both before and after the referendum. If you’re interested in hearing more of them you could do worse than catching up with the writings of the @leavehq.

If you’ve got a favorite EEA myth that I missed off, feel free to let me know. I’m @_SimonBarnett.

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