The So-Called Single Market

Right, let's be clear. There's no such thing as The Single Market. The other EU members call it The Internal Market.

Now if you're no longer a member of the EU you are, by definition, no longer internal. Therefore you cannot be a member of The Single Market.

Scotland cannot remain in the EU because Scotland, as such, is not a member at present. Scotland cannot therefore remain in The Single Market when the UK leaves.

What matters, to both the UK and to Scotland, is not membership but free trade. The UK has offered continuing free trade to the EU. This means the UK has offered the EU exactly what Scotland has asked for.

It is nonsensical doublespeak to suggest that Scotland's voice is being disregarded.

Moreover, since we already enjoy free trade with the EU and have offered to continue it, it is up to the EU, if it is determined to act against its own interests, to erect the first tariff barrier. No-one is suggesting that the UK, or Scotland, should make the first move.

Meanwhile several powers currently held by the EU will revert to the UK and it will make sense for some of these to be further devolved to Scotland. Fisheries is an obvious case in point.

In the worst case scenario, the EU may choose to raise tariffs against the 15% of Scotland's trade that is conducted with it.

How by any stretch of economic logic does it make sense for Scotland to respond to such a piece of stupidity by leaving the UK Single Market which is responsible for over 60% of our trade?

The oil price has already halved. How poor are we determined to be?

So what's a Customs Union when it's at home, eh?

Journalists who have suddenly discovered the term customs union and who seem to think it differs from the single market have taken to asking politicians whether we can remain in one but not the other.

For those who may be confused:

(1) A Free Trade Area is a number of countries which sell each other goods without imposing tariffs, quotas or other restrictions on such transactions.

(2) A Customs Union combines a Free Trade Area with a Common External Tariff, effectively discriminating in favour of other members and against non-members.

(3) The EU Single Market combines both of the above with a common regulatory and standards regime enforced by the European Court of Justice.

Not only is there no advantage to system (2) over system (1), it is disadvantageous because it prevents members doing separate, advantageous deals with non-members.

The reason for having (2) tends to be the price you have to pay to get (1), since various individual members may want protection against specific non-members or their products. Rather than a complicated mishmash of bilateral deals you end up with the same external tariff against all outsiders.

Therefore the question at issue is not 'Can we manage to stay in the Customs Union?' but 'Might we be forced to stay in the Customs Union as the price of keeping free trade with The EU?'

True, The EU is at present our largest trading partner, but it is also a sclerotic low-growth market with a moribund single currency permanently on the point of collapse, to which threat the only reply to date has been more and more debilitating austerity.

On top of this the single market regulations stifle innovation and investment in cutting-edge technologies which is the true remedy to stagnation.

The only thing we should want from The EU is free trade (in services as well as goods.) Having the government pay to get this (out of taxpayers' money) is futile; you might as well let the taxpayers pay tariffs directly.

Being cut off from the ability to strike deals with non-members defeats the whole objective of leaving the EU. It guarantees a worse position than we had before Brexit.

But as I've pointed out before, we already have free trade with the EU. We are not going to start a tariff war, since it's not in our interest. It's not in their interest either but they might still do it out of pique. Nobody would accuse the Present EU administration of acting sensibly. If and when they do raise tariffs, we decide how to respond.

Note to all those demanding a plan - You just read the only sensible plan. Until the EU decides what, if any, tariffs it will impose, NOTHING WHATSOEVER needs to be done or indeed can be done in response.

Still Remoaning

I wish some of those anxious to remain within the EU Single Market would explain carefully how we are going to lose exports if we leave.

First of all, since we are already within the Single Market the EU 27 will need to take an active decision to raise tariffs against our goods rather than just let things go on as they are. They must do this in the context of full public awareness in their own countries that the UK has a large trade deficit with them and that the damage suffered by the EU if reciprocal tariffs are applied will inevitably be greater than the damage inflicted.

The only possible justification for such behaviour is that the political ideals of the EU are more important than the jobs of EU citizens. For all the sabre rattling coming out of Brussels and other EU capitals this will still be a 'courageous policy' (as Sir Humphrey Appleby would put it) to take before their own electorates in the next polls.

Secondly, the depreciation of the pound sterling since June 23^rd is already greater than the average tariff that would be justified under WTO rules, hence the overall result, even after a tariff war, would be cheaper UK goods in EU markets.

Once again, consumers have to be pretty determined to punish the withdrawing member if they are willing to boycott cheaper products.

Anyway, what does it say about the merits of belonging to an organisation that it must punish a member who leaves in order to encourage the others to remain?

Thirdly, while the UK prices of imported EU produce will rise as a result of sterling's depreciation, there is no obvious reason for the UK to initiate tariffs against other countries. Once again, as an EU member the UK already has numerous trade agreements with third countries. The EU will have sovereignty over neither party to future bilateral trade arrangements and it will be a remarkably impressive, not to mention vindictive, achievement if it is able to force them to impose tariffs on each other.

If President Obama had not already told us that the UK was going to the back of the queue, one might be forgiven for suggesting the revival of the North Atlantic Free Trade Area scheme.