Single Market Access From Outside the EU: Three Key Prerequisites

Written by | Tuesday, September 20th, 2016
European Values

Zsolt Darvas (Bruegel)

After the majority of the British electorate had voted in favor of the UK leaving the European Union, it is now up to the political leadership of the country to negotiate the terms for Britain‘s new relationship with the EU. Although the British government has not yet introduced its plans in this regard, it is clear that Britain’s access to the EU internal market will be a fundamental point in any negotiations. Access to the EU single market is, however, possible only under certain conditions. But which are the essential ones?

The first condition is the obligation of the country to send financial contributions to the EU budget. In the case of the four non-EU countries that have access to the internal market, namely Iceland, Norway, Liechtenstein and Switzerland, only the first-mentioned is a net recipient. It should be stressed though that Iceland’s net position with the EU budget is not really significant. Other two non-EU countries participating in the internal market – Switzerland and Liechtenstein – are already net payers, though their contribution is virtually negligible relative to their GDP. The same can’t be said about Norway, whose contribution is – when expressed either as a percentage of GDP or amount paid per capita – similar to the contribution paid by the United Kingdom.

Another key condition of access to the EU internal market is ensuring the free movement of workers. This condition is mentioned both in the Agreement on the European Economic Area and in the bilateral agreements between Switzerland and the EU. For example, in 2013 and 2014, four non-Member States with access to the Union’s internal market accepted about twice as many migrants – expressed relative to the total population of the given countries – from other EU countries than the United Kingdom still being an EU member.

Last, but not the least, the access to the internal market is conditional upon the adoption of EU legislation concerning the internal market. However, unlike the EU Member States, the non-EU countries do not have the possibility to influence the legislation. Thus, if Britain wants to retain its access to the EU internal market, it will have to adhere to all of the above-mentioned conditions. The problem is, however, that none of them sounds very appealing to the supporters of Brexit.

(The study can be downloaded here:http://bruegel.org/2016/07/single-market-access-from-outside-the-eu-three-key-prerequisites/)

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