Response to Government leaflet, part 4: ‘[no] significant access to the Single Market’

In its leaflet, on page 8 of the pdf, the Government claims that no country has so far:

managed to secure significant access to the Single Market, without having to:

• follow EU rules over which they have no real say

• pay into the EU

• accept EU citizens living and working in their country

 

significant access 2

It is clear that the four EFTA nations are being referred to here. Norway, Iceland and Liechtenstein are definitely in the Single Market by dint of being in the European Economic Area, and Switzerland is generally counted (for example in Wikipedia) as being in the Single Market through its replication of most of the Single Market acquis by means of a series of bilateral agreements with the EU.

So one can agree that to be in the Single Market, or part of the Single Market, one has to accept the three conditions listed as the bullet points above. But is it the case that one cannot have ‘significant access’ to the Single Market unless one is a part of it?

It seems to me, if words mean anything, that ‘to have access to’ a market means to be able to sell goods and services in that market. This is, after all, what everybody is concerned about. If we left the EU and the Single Market, would we still be able to export our goods and services to the nations that compose it? Or would those exports be reduced to an ‘insignificant’ level? The following table (DG Trade Statistical Guide 2016, p. 55) gives the answer with regard to goods:

trade in goods heading

trade in goods table

China is not in the Single Market. It does not have to adopt EU legislation; it does not pay into the EU; and it does not have to accept EU migrants. But in 2014, it sold €302 bn worth of goods to the EU. I would call that ‘significant access’ to the EU market. The same goes for the USA and Russia, second and third on the list.

Having said that, it looks quite impressive that Switzerland and Norway, both in the Single Market, come third and fourth on the list, despite being relatively small countries. Is it their membership of the Single Market that is enabling them to export so much to the EU? To see how big the difference is in relative terms I have taken figures from the World Bank for GDP for 2014, and then calculated exports in goods to the EU as a proportion of GDP for each of these first five countries:

exports gdp

Clearly, Switzerland and Norway are exporting a lot more in relative terms than are China and the USA, but it strikes me as quite interesting that the Russian percentage is also quite high. Admittedly, this may be because their exports consist largely of natural resources, which the EU in general does not have so much of, but then the same may be true of Norway too. Switzerland, meanwhile, is surrounded by EU countries, which no doubt has much to do with the high proportion of their exports going to those countries.

This is not to doubt that membership of the Single Market has boosted Norway and Switzerland’s exports to the EU to some degree. My main purpose is simply to demonstrate what is in any case rather obvious when one thinks about it, that many countries outside the Single Market do have ‘significant access’ to that market.

But what about services? Much of the concern about the UK’s access to the EU market in the event of a Brexit focuses on services, since they make up a substantial proportion (about €101 bn in 2014, compared to €184 bn for products, see OECD and Eurostat tables) of UK exports to the EU, and because they may be especially vulnerable to non-tariff barriers.

The following table (DG Trade Statistical Guide 2016, p. 56) gives EU imports of services from leading trade partners in 2014:

trade services

trade services table

For services, the United States is the top supplier to the EU, to the value of €190 bn, which is hardly an ‘insignificant’ amount. Again, for interest, I have calculated these exports of services as a proportion of GDP, this time for the top ten countries:

exports of services 5 countries

Clearly, there is some sort of anomaly with Bermuda. According to another EU source, Bermuda’s total exports in services were about €1 bn in 2014, so I don’t understand how DG Trade can give the EU’s imports from services from Bermuda as €21.7 bn. If a reader can enlighten me, I would be grateful. I guess that it has something to do with its role as an offshore financial centre. At any rate, one gets the impression that it is not being hampered too badly by being outside the Single Market. Perhaps more signficantly, Singapore and also Turkey have exports of more than €15 bn despite being outside the Single Market.

Conclusion

I conclude that the Government statement that, in effect, no country outside the Single Market has ‘significant access’ to that market, is not true. Someone may object that of course the Government does not mean that no country outside the Single Market is able to export to the EU in significant quantities. I agree that they can’t mean that. But then what do they mean? And what is the effect of their statement on the millions who read the leaflet without a very clear conception of what the Single Market is? It seems to me that, unless corrected, it will make people feel that it is something very hard to get ‘access’ to, so that if we leave the EU, there will be a devastating impact on our exports to the EU market. So I think it is helpful to point out that all countries can export to the EU, and some do so, from outside the Single Market, on a very large scale.

Andrew

 

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