Freedom of movement for goods, services, capital and people is enshrined in the Treaty of Rome. It’s a founding principle yet most of these freedoms are “more honour’d in the breach than the observance” (to misrepresent Hamlet’s meaning). The exception is free movement of (EU) people. Why and how has this occurred?
Freedom Movement of Services
You cannot buy a gîte in France without employing a notaire.
The same is true for many professionals across the continent, where a qualification in their home country is not recognised in another. Although sometimes disparaged by commentators, a modern, developed economy relies on an efficient services sector to support industry through finance, logistics and communications. Services (including much of the digital sector) represent about 70% of the EU’s employment and GDP (80% in Britain’s economy) yet only 22% of intra-EU trade. Free trade in services would greatly increase wealth and employment across the Union but protectionists have stymied it. The Services Directive (2006) was intended to remove the barriers but was destroyed by France and Germany protecting their guilds. The Directive did not even attempt to cover healthcare, transport, tax experts and other areas. The rest of the world recognises the UK’s expertise in many of these professions so we have a surplus balance of trade for them, outside the EU. The BBC provided a helpful commentary on the proposed Services Directive before it failed:
Free Movement of Capital
The EU’s Takeover Directive was an attempt to harmonise the rules based on the UK Takeover Code but nothing similar has been agreed 25 years after work began on trying to remove Continental barriers. Whilst the UK is the most open to cross-border takeovers, from a cultural and regulatory standpoint, French and German takeover codes allow management much scope for frustrating unsolicited bids. French firms now own many of the UK’s utility companies but these part-state-owned megaliths are shielded in the reverse direction. Vodafone’s hostile bid for Mannesmann was a rare success in Germany but triggered alarm there and more defences were created.
Free Movement of Goods
Whilst the Single Market does enable tariff-free trade in manufactured goods, subject to common regulations, these are often twisted by powerful lobbyists to tilt the scales in their favour. Examples include higher-powered kettles and vacuum cleaners where restrictions masquerade as environmental protections (see our Regulation, Regulation, Regulation). James Dyson complains that the wattage limits on vacuums are an anti-competitive tactic by German makers and the efficiency tests on machines with dust bags are a farce since they are done before the bags get dust-clogged, as they would be in household use (Volkswagen and diesel spring to mind).
Free Movement of People
Whether by conquest or the marriage of princes, European governments have waxed (and then waned) in their control over “united” nations. Various techniques have been tried to hold these aggregate superstates together, especially by offering patronage to the elites of the subsidiaries, as recommended by Machiavelli and perfected by the EU.
Another idea was to reduce nationalist tensions by mixing populations. During Cromwell’s Commonwealth the Surveyor-General of Ireland, Sir William Petty, proposed a mass exchange of populations to make Ireland more governable. A similar suggestion was made in the 14th century to Leopold I of Austria – to dilute the Hungarian Magyar population with German speakers. In neither case was the advice acted on (and the unions eventually failed). Has it been tried anywhere else and if so has it worked? It may be another of the EU’s unproven theories.
Circumstances have changed since the accession of poorer nations in the East, whose countries are denuded when productive workers leave in search of higher rewards but these unsettle established populations elsewhere. The British Government is determined to regain control of EU immigration but the Commission and most Council members say they won’t allow it without extracting maximum penalties, with respect to the Single Market in particular. Aside from wanting any excuse to punish our disloyalty, why is this the only inviolate freedom?