Monday, 17 October 2016

Will the UK remain in the EEA?


Thanks for reading. Byeee.

What? I need to explain myself? That's highly unusual in the current climate of bluster and falsehood but if you insist...

Let's look at the non-EU members of the single market - Iceland/Norway/Liechtenstein. Norway is a signatory to freedom of movement of people but does have the option of an emergency brake on inward EU migration. It has never used this option or even threatened to put it to use. To all intents and purposes it is a full signatory to the freedom of movement of people in the EU. Iceland is in rougly in the same positon. As with Norway it has a transitional agreement for nationals of Croatia, the most recent member of the EU. If you want to go to live and/or work in Iceland this is very much an option at your disposal but do pack as quickly as you can because time is running out. Liechtenstein is a special case because it is allowed to place a cap on inwards EU migration to the whopping value of 72. We need to remember that Liechtenstein is a micro-state with a population of less than 40000. Extrapolating from Liechtenstein to any other nation is almost pointless. 



What about Switzerland? Switzerland is an EFTA nation, outside the EEA and a signatory to the freedom of movement of people in the EU. How did it end up outside the EEA yet still signed up to its most controversial principle? Well, it signed 120+ bi-lateral treaties to gain tariff-free access to the market sectors it thinks are important to its economy. Switzerland is actually very closely integrated with the EU and the EEA, especially in the adoption of standards. Crucially, the only access Switzerland has to the EEA financial sector is life assurance. Swiss banking is rather different to what goes on in Frankfurt and Canary Wharf; an industry founded on discretion probably doesn't want to open itself up to nosy EU regulation. Even with limited access to EEA financial markets, Switzerland is still a signatory to the freedom of movement of people. They tried to change that recently but backed down to a compromise that offers negligible change. If you want to move to Switzerland to live and work this is very much an option. To all intents and purposes it is a full signatory to the freedom of movement of people and will remain that way for the foreseeable future. If it wasn't I would be writing this from the chilly autumnal fog of Zurich.

What have we learned? Full access to the single market requires the adoption of the freedom of movement of people in the EU. I think everyone knew that 10 minutes ago, except, of course, for leading members of the government. The bombshell is that even partial access to the single market still requires adoption of the freedom of movement of people.  Hmm, not really a bombshell but it might be if you are a member of UKIP or work in a senior political role.  Johnson/Fox/Davis/May have made it clear that the freedom of movement of people will soon end. Even if they changed their minds the press would throw a hissy fit and make sure they have another think about it. What kind of access to the EEA can the UK expect? Limited access. If the government puts its rhetoric into practice the UK will be trading with the EEA under WTO rules for a wide range of product and service categories. This is not good news but it does explain the collapse in the value of Sterling - confidence in the ability of the UK to trade with the outside world is waning fast. It is probably a good time to start a new business as a chimney sweep or a knocker-up.  Anything Victorian will see you right. 

Over and out,

Terry

2 comments:

  1. Not sure what it is that the British government is finding so difficult to understand about this. It has been evident to me from the get go.

    There seems to be an assumption amongst some Britnats that, becasue Britain is the greatest nation ever at any time in the whole universe, exceptions that wouldn't be made for the likes of Norway, Iceland, Switzerland and Liechtenstein, will be made for it.

    Whilst I don't know, and of course there are some important likely changes of government on the way in the EU, I'm finding it hard to imagine that all members will vote to allow special conditions for the UK which has gone out of its way to be awkward and difficult for the entire time it has been a member. And if they did, would not Iceland, Norway, etc not demand the same conditions?

    Slightly off topic, I know, but more trouble seems to be brewing in Ireland as they demand special consideration for NI, given that its economy is really more aligned to Dublin than London.

    Of course it is, and they have a very good point. But then so does Gibraltar and its very necessary ties to Spain. I'm not sure that they can give these two special status without doing it for Scotland.

    Oh what a mess you got us into, Mr Cameron, in an effort to safe your scrawny arse from UKIP.

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    Replies
    1. You're quite right - there is an assumption of specialness at the heart of Brexit. A dose of reality is required for all involved.

      The EU will likely see this as an existential threat. I really can't see any way for UK to remain in EEA, especially after what happened to Switzerland in their FoM discussions. The EU took a clear and consistent line throughout - no negotiations on FoM.

      Poland and Lithuania are perfectly happy with the current arrangement because it reduces their unemployment benefit bill. I think I posted a graph a while back showing a sudden dip in Polish unemployment immediately after EU accession. There is simply no way they are going to agree to bank passporting without continuing FoM. If we give up FoM we will have to pay somehow or other. My view is that constitutes a double loss because FoM was of real benefit to the UK economy.


      There has certainly been an outbreak of reports about special zones in the UK. It sounds like a logistical nightmare. It requires a legal measure of Scottishness and NIness. How would I prove to the Swiss authorities that, no, they can't kick me out because I am Scottish? Moreover, it would effectively bar Scots from the UK pensions system.

      There were even reports about an enterprise zone in Sunderland for tariff-free import and export. Historically, such zones have become human rights nightmares because they are not really part of any country. Truly terrifying proposal.

      What a mess.

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