THE BLOG

The Single Market - EU Smoke And Mirrors!

16/01/2017 17:39

It is a preposterous suggestion to say that the European Union is a single market.

It is NOT, NEVER has been, and NEVER will be.

To be a true single market, all the member states would enjoy, facilitate and action a free movement of goods and services. They do not. For the goods and services to be considered 'freely moving' then what was made in, say, Slovenia would be perfectly acceptable in, say, France given the sign-up by member states to a mutually agreed set of standards.

Neatly bending though to national vested interests, the EU offered "Protected Designation of Origin," "Protected Geographical Indications," and "Traditional Specialities Guarantees." All of this so that Champagne can only come from the Champagne region, and no interloper can lay claim to producing a Melton Mowbray Pork Pie unless they make them in the relevant UK village.

You might consider this to be fair and reasonable. I happen to do so.

Yet, within the EU regulations are the real reasons behind such designations:

• the promotion of products with specific characteristics, particularly those coming from less-favoured or rural areas;
• the improvement of the income of farmers, in return for a "genuine effort to improve quality";
• the retention of population in rural areas

So the reasoning behind the designations is not so that the consumer gets to make an informed choice, but rather the producer gets protection in the market, can charge a premium for their goods, plus they get a ramp up in the value of the land in the region of designation.
These are examples of Non-Tariff Barriers (NTBs)

The United Kingdom operates some of the world's strictest NTBs. Our cars must have right-hand drive and a speedometer denoted in miles per hour. Other NTBs like pints and pounds (weight) are in decline, but still exist to a point in labeling.

But many more NTBs exist, and they are not as obvious as pork pies or Parma Ham, they exist in the service sector.

The European Commission has recently pointed out that more than 5,000 regulated professions across Europe represent an obstacle to the free transfer of services, and with an estimated 90% of new jobs being created in this sector, this is an enormous number of NTBs. These barriers come in a variety of shapes and form, often in the form of licencing, training, and local regulations. The Commission listed as protected professions within Europe architects, engineers, lawyers, accountants, patent agents, real estate agents and tourist guides amongst others.

NTBs, also called Technical Barriers to Trade, are outlawed as measures that result in discrimination or arbitrary restrictions on international trade by the World Trade Organisation, but as usual and true to form the EU is refusing to tackle the problem head on.

The Commission can only provide guidance on how to prevent such protectionism.

"We are not telling any member state how to regulate professions," said Jyrki Katainen, Commission Vice-President for Jobs, Growth and Investment.
An admission that the barriers were simply too well entrenched in services and that, for once, the EU was powerless to act.

The World Bank estimates that the internal EU NTBs cost as much annually as the external tariff does. But unlike an external tariff they are impossible to stamp out, as, a bit like Hydra, if you take one out another will appear.

All these NTBs however pale into insignificance compared to the real Beast on the Block. It is all very well for the Commission to rail against architects, lawyers, and local favouritism, but they are small fry compared to the volumes upon volumes of European legislation. Like a battery farm for red tape Brussels spews out rules and regulation with no end ever in sight. It is a relentless creature whose raison d'etre is to create more rules. There are a total (as of May 2015) 134,500 EU legislative acts that must be complied with on the UK statute books.

Each piece of EU legislation acts as a NTB for companies, slowing down the transaction rate and increasing the cost of bureaucracy, as well as upping the tax rates to pay for implementation thus reducing competitive advantage. For the vast amount of UK companies the EU NTB of regulation grinds down business hitting the Small to Medium business sector and start-ups particularly badly. For those lucky few giant corporations who can afford the legions of lawyers and lobbying resources required, it is an irritation and helpfull yrestricts competitive new entrants so of less consequence.

As a Brexit supporting UK MEP my point is that some protection is acceptable to guarantee standards and provenance. Some levels of protection are culturally embedded and have to be accepted. However crushing levels of regulation designed to stamp out smaller fry competition is not acceptable. And here is the opportunity for the UK.

Post-Brexit, free of Brussels and its protectionist agenda, the UK can choose to trademark the pork pies, and drive on the wrong side of the road. The UK can also choose to rid itself of the world's largest barrier to trade namely European regulations. That really is an opportunity.

So in summary it is a nonsense to describe the EU as a single market. What purports to be a Single Market actually has millions of distinct and culturally individual nuances complete with costs. These will never be stamped out, as the EU itself admits. But, these are small fry compared to the biggest impediment to Free Trade of all, the EU itself.

Roll on Brexit

Comments

CONVERSATIONS