01 March 2013

Financial World: Go, if you really must (Graham Bishop article)

Many eurosceptic commentators in the UK argue that it can withdraw from the EU but still enjoy free trade with the region. But the evolution of the single market demonstrates that it is very different from a simple free-trade area – a common market.

The term “free trade” is normally used to describe a flow of goods and services without the tariff barriers that protect business in the importing nation. The EU nominally achieved that customs union in 1968 but soon discovered that it was insufficient to allow unfettered flows of trade. It turned out that non-tariff barriers, such as product standards, were a big stumbling block. The attempt to remove these ran into the sand because each change required unanimous agreement.

Then came the deep recession of the early 1980s. This convinced European leaders that enhanced trade was vital, so Jacques Delors, the European Commission president, and Arthur Cockfield, the UK Conservative politician and internal market commissioner, proposed to complete the internal market with free movement of people, goods, services and capital – the last two of critical importance to the City. Their 1985 White Paper proposed nearly 300 directives. This was agreed as part of the Single European Act that introduced qualified majority voting to stop progress being blocked by vested interests and individual nations. Margaret Thatcher, then prime minister, was among the most ardent advocates of this process and played a key role in creating the modern single market.

Please click on the link below to read the full article.

© Graham Bishop