UK sends EU mixed single-market messages over services

18 July 2018 2:41pm

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12 July 2018. By Matthew Holehouse.

UK prime minister Theresa May has insisted she’s implacably opposed to the UK remaining in the single market after Brexit.

The plan revealed today is billed as seeking a “common rulebook” — or de facto single market — for goods, while allowing the UK to diverge on services. Indeed, the UK’s ask on services, UK officials said today, does not go much beyond conventional trade agreements.

If this were the position, it would risk flying in the face of the EU’s plea not to try to split the bloc’s internal market. But the detail of today’s white paper, and recent presentations by British negotiators to the EU, suggests a wish for a much deeper relationship than ministers are willing to advertise.

After all, in multiple areas — such as aviation, energy, data and haulage — the UK is attempting to replicate market access that only exists within the single market.

May has warned EU negotiators not to push her into a permanent Norway-style settlement. But what else are they meant to conclude?

— Shopping list —

In aviation, the UK has asked to keep the right to fly any route within Europe, including between airports in individual states — the full range of the so-called nine freedoms of the air. It also asks to avoid introducing new barriers to ownership and control. This appears to be a reference to the fact that outside the single market, UK-owned airlines will need to become EU-based and owned in order to enjoy those freedoms, normally associated with being an EU “community carrier.”

Similarly, in haulage, the UK has asked for the current rights for UK-owned truckers to serve routes within and between individual EU states — known as cabotage and cross-trade — supported by a mutual recognition of licenses and no need for additional permits. Again, these are distinct features of the single market.

In professional services, the UK has called for the maintenance of sweeping and binding rights to work “covering the same range of professions as the Mutual Recognition of Qualifications Directive.” This would cover workers “operating either on a permanent or temporary basis across borders”.

The UK also wishes to see provisions to permit “joint practice” between UK and EU lawyers, and for joint UK-EU ownership of accountancy firms — something currently unavailable to the UK.

It goes on. Today's policy paper proposes that the UK remains a participant in the bloc’s internal energy market; retains its position under the EU data regime’s “one-stop shop” mechanism; stays in the bloc’s unitary patent; and replicates provisions for the recognition of court judgments that underpin the UK as a center for dispute resolution.

— In chaos, an invitation —

The picture is incomplete. Most obviously, the UK has accepted it will lose the EU passport in financial services and must fall back on an enhanced equivalence regime. The UK accepts, too, that broadcasters licensed by UK regulators will no longer be able to broadcast to other states, and that it will seek the “best possible arrangements” for the sector.

But taken together, what should EU negotiators conclude of the UK’s desired end-state?

The pessimistic may see a British state deaf to the warnings that the single market cannot be cherry-picked, and regard the paper as a hopeless plea to rewrite the bloc’s rulebook on the way out the door. As the EU chief negotiator Michel Barnier often observes, after working for decades to build the single market, the UK seems to have forgetten its basic principles.

But those who regard the ideal landing zone as “Norway plus Turkey” — a UK retaining the customs union and single market, and losing only its vote — may draw other conclusions. Already, the UK has accepted the principle of respecting EU Court of Justice jurisprudence, and of the UK Parliament implementing EU-drawn legislation.  

Those who see the UK as amenable to being driven, step by step, towards a permanent Norway settlement may regard the services wishlist as an invitation to push a little harder.

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