Off the market: UK’s plan to leave Single Market a mistake

After months of innuendo, the announcement by Prime Minister Theresa May that the United Kingdom was going to leave the EU’s Single Market as part of the Brexit negotiations is hardly a surprise.

However, her plan suffers from substantive, tactical, and strategic flaws.

{mosads}First, a bit of history: the EU’s Single Market was the brainchild of former Prime Minister Margaret Thatcher.

Members of the Single Market trade without regulatory hurdles to the free movement of goods and services. 

Thanks to British leadership, it is the most successful example of trade and economic liberalization in history, resulting in the largest integrated marketplace in the world.

The vote to leave the EU was not a vote to leave that marketplace.

While the proponents of Brexit were oftentimes deliberately ambiguous about the future economic arrangements between the U.K. and the EU, many were vehement in saying that the Single Market was safe.

“Absolutely no one [was] talking about threatening our place in the Single Market,” Member of the European Parliament Dan Hannan, a prominent face of the Leave campaign, said. 

Leaving is going to be costly. Over 40 percent of British exports go through the EU’s Single Market.

True, the U.K.’s government will seek to negotiate a free-trade agreement (FTA) with the EU.

However, in order for that FTA to be meaningful and provide a degree of access comparable to membership in the Single Market, it will necessarily take a long time to negotiate — well beyond the 2-year timeframe of Brexit negotiations.

May has described Brexit as an instance of the U.K.’s “going global,” rather than turning inward.

Yet, the U.K. starts its global journey by foregoing the possibility of grandfathering in the type of free-trade agreement that the EU has in place with over 50 countries around the world.

Second, the announcement that the U.K. would be withdrawing from the Single Market seems like a blatant tactical mistake.

In principle, Brexit gives the U.K. a spectrum of options for its market access and its openness to European immigration, which could have been discussed during the negotiations.

Since Brexit talks have not started yet, what sense is there in drawing red lines?

Of course, May is not naïve. The simplest explanation for her move is that the her hard-line stance enables her to keep her party united — even at the cost of weakening the U.K.’s own negotiating position.

Ultimately, the fact that she can do that without prompting a pushback is not so much a personal flaw of putting party politics over statecraft, but a reflection of the shambolic state of the parliamentary opposition under Jeremy Corbyn’s leadership of the Labour Party. 

The rush to hard Brexit is also a strategic mistake. The rest of the EU will be aggravated at some of the threats issued by the U.K.’s government, such as the idea of turning the U.K. into a tax haven after leaving the union.

At the same time, such threats are not credible in the light of Ms. May’s own political platform, which includes a commitment to a large welfare state and a return to old-school industrial policy.

While the prime minister emphasized in her speech that the U.K. was “leaving the European Union, but […] not leaving Europe,” the U.K. has already succeeded in antagonizing many of its European partners, without getting anything in return. 

More importantly, the U.K. and Europe find themselves in a precarious geopolitical position.

They face an unprecedented threat from the east, with Russia actively trying to undermine the sanctions and ultimately destroy the alliances that keep the Kremlin from reclaiming Eastern and Central Europe as its own sphere of influence.

Both the British and the Europeans have to be concerned about a possible weakening of NATO under the presidency of Donald Trump, who has called the alliance obsolete.

In short, this is a time for responsible Western leaders to stick together, rather than to gratuitously erode what remains of the trust between them. 

The U.K.’s drift away from the continent matters for America as well. The Brits and the Europeans are among the closest friends that the United States has in the world.

Their messy divorce, with the potential for economic turmoil, will make life for the next administration more — not less — difficult.

Dalibor Rohac is a research fellow at the American Enterprise Institute in Washington, D.C. where he specializes in European political and economic trends. You can follow him on Twitter @DaliborRohac.

The views expressed by contributors are their own and not the views of The Hill.