Thursday, October 13, 2016

E.U. Free-Trade After Brexit: Applying Domestic Requirements to International Trade

With Britain set to secede from the European Union, one major question was whether British businesses would continue to get unfettered access to the E.U.’s domestic market. I submit that subjecting free-trade negotiations to stipulations that are oriented to states rather than trading partners is unfair to Britain. Given the extraordinary influence of E.U. state officials at the federal level, this is a case in which the political influence of British business would be constructive rather than subversive of the public domain to private interests.

Speaking in October, 2016, Germany’s Chancellor, Angela Merkel, “stressed . . . that the U.K. wouldn’t get full access to the European Union’s single market without fully accepting the four basic principles . . . freedom of goods, services, capital and people.”[1] I submit that these principles pertain domestically within a country—whether a single sovereign state or a union of states—rather than to a trade treaty. That is, the four freedoms are typically established within a country rather than between trading partners (i.e., international trade). Free trade need not be justified by the free movement of people; it is sufficient to allow for the exchange of goods and services, and of course money.

The U.S. and Mexico, for example, have a free-trade treaty without the free movement of people. So too, a free-trade treaty between the E.U. and Britain need not include the free movement of people. In short, Merkel failed to distinguish the E.U. itself, internally, from it being one of two trading partners; she was applying a domestic trait to international trade. By implication, she failed to distinguish the E.U. from a free-trade treaty. Subjecting a sovereign U.K. to what E.U. States must accept fails to recognize the real change that is secession.

Whereas Merkel voiced concern that E.U. and state officials would not “be put under pressure constantly via European industry associations to, in the end, allow full access to the internal market even if all freedoms aren’t respected,” I submit that Merkel’s own interests in favor of businesses in her state render her involvement in E.U. policy-making on the secession of Britain suspect. That is to say, she may have been exploiting a conflict of interest in which German businesses would gain from subjecting the continuing free trade of British businesses to freedoms that pertain to E.U. states rather than foreign states trading with the E.U.

[1] Ruth Bender and Andrea Thomas, “Germany Pushes for Hard Line on Brexit,” The Wall Street Journal, October 7, 2016.