The single market’s main aim is to simplify trade within the European Union. Since the inauguration in 1993 it has been the backbone of the European economy and has served in many ways, but with recent reports of Theresa May looking to leave the single market, people wonder what does this mean for Britain?. The main rule is the free movement from one EU member country to another of goods, people, services and capital - in other words is known ‘four freedoms’. In addition, it also eliminates tariffs or taxes on trade. The EU creates minimum regulatory standards, and then requires all members to comply with them. If Britain does leave the single market, exporters would no longer be required to make 28 variants of their products to comply with national rules.
In recent years we see that Britain’s trade with countries outside the EU is growing. Trade with the EU has been decreasing. Trade connections between non-EU and the emerging economies have been rising steadily - however the EU remains the UK’s largest trading partner. It is said that ‘The UK will not be able to dictate exit terms to the EU because it is running a trade deficit’.If there were trade barriers between Britain and the EU put in place, the EU would lose more export earnings from Britain, than vice versa. Another advantage would be that the UK would not have to follow the rules and regulation put in place, and be able to boost trade with faster growing parts of the world. Moreover, the UK’s access to non-EU markets is to a great degree determined by its membership of the EU. The UK on its own, would have much less bargaining power than the EU.
There are alternative arrangements that can be arranged to replace the departure of the single market. If Britain withdrew from full membership of the EU, it would open up many doors in terms of trading relationship. These include membership of the EEA - if Britain joined, they would have unlimited access to the single market however Britain would have no say over EU trade policy. Another alternative would be the custom union - similar to the one Turkey has with the EU. This type of arrangement eliminates internal tariff, but requires the EU to agree common tariffs with countries outside. Another possible way is the so called ‘Swiss-style’ relationship. This is based on bilateral negotiations and agreements. A free trade agreement (FTA) could also be put in play if the UK decides to leave the single market. This would mean that trade with the EU would be tariff-free and also Britain could set its own trade policies with non-European countries. The final option would be to trade under the WTO rules. Therefore means the UK would not comply with EU regulations, but with the CET.
To conclude arrangements such as EEA, ‘Swiss-style’ relationship or a custom union would be pointless as the UK would still have to comply with the EU regulations. So if the UK was to leave the EU than the best possible option is the FTA. Whilst the exit of the UK from the single market, could trigger a second referendum for Scotland, as well as one for Northern Ireland, the economy will no doubt be harmed. Angela Merkel has also emphasised that there will be no single market for the UK if it does not allow free movement, an issue many “brexiters” thought needed attention. Britain is anxiously awaiting the president-elect Trump to sort out the US trade deal, but at the moment Theresa May seemingly attempting to create a dispute that will be of no benefit for anyone.