4 - Trade and the European single market

Summary

From its entry to the EEC in 1973 to its formal exit from the EU in 2020, the UK's commercial and trade policies were governed by a diverse and changing set of supranational rules and institutions. When the country joined the EEC it also joined a European customs union and Common Commercial Policy (CCP), removing tariffs on goods traded within Europe and adopting a common external tariff in relation to imports from outside Europe. When the EEC became the EU in 1992, and the single market became a reality, EU policy focused on removing “non-tariff barriers’ (NTBs): both within EU member states and in external FTAs with individual countries and trading blocs. This move reflects how the concept of “free trade” has shifted from a focus on eliminating tariffs on goods to harmonizing behind-the-border regulation of goods and services where “any divergence in regulatory practice” is increasingly viewed as “a trade irritant to be eliminated” (De Ville & Siles-Brugge 2018: 243). Tariffs have thus decreased while highly technical and complex regulatory concepts and processes continue to multiply. The single market, enshrining the free movement of goods as well as services, capital and people – the so-called four freedoms – at its core and setting its sights on NTBs, makes Europe the quintessential twenty-first-century liberal trade power.

In the wake of the 2016 EU referendum, the British Conservative Party under Theresa May chose to pursue a “hard” form of Brexit: fully exiting all EU economic institutions, from the customs union to the single market. The subsequent 2020 TCA, which, despite the rhetoric of the Johnson government, strongly reflected the outline deal negotiated by May before she was deposed, was remarkable in that, for the first time in modern trading history, two deeply integrated and highly proximate advanced economies signed an FTA that made commercial relations between them less free. The UK thereafter faced the painful task of reconstituting its trade panorama from a position that seriously disadvantaged its exporters. Moreover, it had to do so immediately, since, as noted in the book's Introduction, the TCA came into force essentially overnight.