I heard that, for whatever reasons, the EU wants its partners to agree (or not) to all four freedoms as one package (freedom of goods, services, capital, movement). So, for example, Norway agreed to open its borders for human traffic from the EU to get access to the single market.

But then was a deal with Canada, which, unless I'm mistaken, doesn't require that, and, finally, the Brexit deal. Both of these make movement of goods, services, capital or people more flexible across EU lines.

If such partial relaxations are possible, can they really be considered inseparable?

  • 2
    Can you say how the four freedoms are split specifically in any of these cases? For example, a recent EC press release states: "It safeguards the integrity of the Single Market and the indivisibility of the Four Freedoms (people, goods, services and capital)."
    – JJJ
    Dec 29 '20 at 5:45
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    Especially the subject line sounds like advocating a cause, not asking a question.
    – o.m.
    Dec 29 '20 at 6:37
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    "Why did the EU make an exception for the UK?" Did they?
    – Rekesoft
    Dec 29 '20 at 7:43
  • @JJJ But there will be no free movement between the parties after January 1 (if it's ratified), will it? Dec 29 '20 at 8:19
  • @SergeyZolotarev I don't think any of the four freedoms are part of the deal. Which part of the four freedoms do you think is included in the deal? I guess that would make for a clearer (new) question as well, something like: 'I noticed the Brexit deal contains X, but isn't that one of the four freedoms?'
    – JJJ
    Dec 29 '20 at 8:50

This question is way too broad, but address #1, i.e. why the EU regards those as inseparable if a single market is to be achieved, the answer is that workers are regarded as productions units so they need to be interchangeable / exchangeable across the market. (There's a quote from the EU founders on this, bear with me while I find it. I've answered this q at this level of precision, because it has several pending close votes [probably due to its polemic tone].)

Now the rest of your question(s) mostly confuse free-trade agreements with a single market, e.g. neither the EU nor Canada claim that they've achieved a EU-Canada single market. Keep in mind that although EU and Canada do have a FTA, Canadian trucks (or ships) don't simply roll in the EU with their merch without any border checks. Even on the level of trade in goods, there's no customs union between EU and Canada either. As a third party, you can't export something to the EU (or Canada) and have your merch then seamlessly move across the EU-Canada border in the aftermath (as it happens inside the EU single market).

And given your comment below Jontia's answer, you seem to assume that "freedom of goods" is the same as an FTA, but that's not how the EU sees it, nor did the ever see it just like that, but (at the very least) in the tighter sense of a customs union:

Originally, the free movement of goods was seen as part of a customs union between the Member States, involving the abolition of customs duties, quantitative restrictions on trade and equivalent measures, and the establishment of a common external tariff for the Union. Later on, the emphasis was placed on eliminating all remaining obstacles to the free movement of goods, with a view to creating the internal market.

The EU and UK won't have a customs union anymore, so the exception you posit at your #3 doesn't exist in that sense. A better question in this regard would honestly be Turkey, which does have customs union with EU on some level.

And as an EU document explains this in relation to the EU-UK negotiations:

There are also major differences between FTAs and the customs union and single market that an FTA could never match. Most notably, even though most, if not all, tariffs are reduced to zero, goods are still subject to border checks for customs verification. Among other things, exporters must demonstrate the origin of manufactured products that justifies the application of preferential tariffs. The exporter must also demonstrate that goods comply with EU standards, and goods are subject to verification by importing countries at the border.

If this sounds like small potatoes, it's not. It took the EU decades to achieve this level of goods-market integration just in terms of eliminating intra-EU border checks, despite this being a goal in the 1957 treaty. You can read (for instance) a 1985 EU document on the efforts to complete this by 1992, and ponder on the complexities that were involved... or what the EU-UK border might revert to. In that 1985 document, the EU Commission was estimating the that the frictions then caused by intra-EU checks were equivalent to a 5% tariff on all EU manufacturers.

As for the EEA/Norway approach, a 1998 EU parliament report says that

the EEA does not constitute a fully "frontier-free" market, nor a true customs union. Yet it provides for fundamentally improved free trade. [This despite the fact that] Over 80% of the Single Market legislation (some 1,500 directives, regulations, decisions at the time of signature of the Agreement) applies within the EEA.

I'm sure some would describe that as (virtually) being in the Single Market, but I though it's interesting to point out that some EU reports disagree with that unequivocal formulation.

We may be getting a bit far afield here, but on the level of theory of economic integration, the following categorization has been proposed:

three sets of policies are involved in the process of economic integration:

(i) the elimination of border measures applying to imports into one member country from another member country;

(ii) full National Treatment of beyond-the border measures applying to imports into one member country from another member country; and

(iii) harmonization of measures across member countries.

As discussed in that paper, more recent FTAs (e.g. NAFTA) actually cover (ii) fairly substantially, in fact even the WTO rules do it to a good extent. But FTAs generally do not extend National Treatment to labor markets, so in this regard they fail (ii).

As [fairly trivial] example (given in the paper), a national standard that requires things to be measured in inch satisfies (ii) but not (iii), and so it's still a [non-tariff] trade barrier to manufacturers from countries that use a metric system. The Treaty of Rome didn't actually cover (iii) too well, this actually being a major reason for the (1992) Single European Act.

As far as economic theory goes, a single market is fairly easy to define:

To give precision to the concept of a single regional market, economists have defined a single market as one in which the Law of One Price must hold in all goods, services and factor markets; see, for example, Lloyd (1991) and Flam (1992). That is, there should be a single price in the regionwide market for every tradable commodity and factor, expressing all prices in a common currency and adjusting for the real costs of moving goods or factors between locations. This definition allows for the real costs of moving goods or factors from one location to another.

This definition of a single market can be applied to any set of countries. This may be a region comprising several countries as above or just one establishment of a single market, therefore, is much more demanding than the establishment of a common market.

However, when defined in this sense (no spatial arbitrage), the notion of a single market is much more strict than even what the EU has (actually) achieved. Such a definition even makes some federal countries fail the test, because e.g. of differential regional taxation:

Some countries with a federal structure would not be regarded as a single market in this sense because state or provincial laws, regulations, taxes and charges create price differences among the states or provinces.

Nevertheless, one can see why various transnational measures may be needed to progress towards that ideal e.g.

A single market crossing national borders requires the removal of all border restrictions and full National Treatment with respect to taxes and other state charges and regulations. These steps may need to be supplemented by the har monization across national borders of laws and regulations which otherwise prevent a single price from ruling among the countries. In goods markets, these standards include industrial products, health and safety of persons, and the environment, policies relating to particular sectors such as industry or transport. The laws include business laws that differentiate between foreign and domestic supplies. In labour markets, full National Treatment requires measures such as the recognition of foreign labour market qualifications. In capital markets, it requires full national treatment with respect to taxes and business laws and regulations. It implies the absence of such measures as performance requirements that apply to foreign-owned enterprises but not like domestic enterprises.

The paper then discusses how even allowing for different currencies may actually break a single market (in the strictest sense) because the behavior of risk-averse agents implies incomplete pass-through of foreign prices to domestic markets when multiple currencies are in use.

But the paper grants that despite failing the theoretical ideal

the EU is clearly the RTA that has progressed the furthest towards complete integration

  • As adding all that would make this answer much longer: CETA vs EEA (Norway): fullfact.org/europe/brexit-trade-deals-norway-canada-options
    – Fizz
    Dec 29 '20 at 17:29
  • Also here why "CETA+" or "EEA-" were unlikely to be accepted by the EU.
    – Fizz
    Dec 29 '20 at 17:35
  • But Johnson said the UK is no longer bound by EU rules. Did he lie (a shocker), or have I misunderstood? Dec 29 '20 at 21:18
  • A great answer, by the way, thanks Dec 29 '20 at 21:20
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    @SergeyZolotarev What makes you think Norway was forced to agree to it? Norway was keen on it, that's why when EU membership turned out to be impossible for domestic political reason, they sought some ad hoc arrangement and sacrificed a lot (legislative autonomy, Norway grants…) to get it. As far as borders are concerned, Norway already had mostly open borders with Nordic countries before (and in fact needed to find a backdoor into Schengen to preserve that and avoid additional checks). Switzerland is a similar story (with additional quirks and unfinished business).
    – Relaxed
    Jan 1 '21 at 18:04

From January 1st 2021 , Great Britain will no longer be part of the freedom of goods, or any of the four freedoms of the EU.

For just some of the currently known impacts, please see the UK government website.

The GB exporter must complete the UK export procedures comprising, at minimum, a combined customs and safety and security EXS declaration. The driver will need to be told if the goods need to be presented to a UK customs office. Once this has been done, the exporter will be given permission to progress (P2P)

To provide a concrete example, GB businesses will no longer be allowed to export fresh raw sausages or minced meat to the EU from 1st Jan 2021.

New EU rules on exports dictate that from 1 January, the following animal products cannot be exported into the EU:

  • Chilled minced red mea
  • Chilled meat preparations
  • Minced meat (poultry)
  • Poultry and ratite or game bird mechanically-separated meat
  • Ungraded eggs
  • Composite products containing dairy products made from unpasteurised milk (for example, a ready meal topped with unpasteurised cheese)
  • But there won't be any tariffs or quotas, will they? Isn't it the freedom of goods? Dec 29 '20 at 8:21
  • @SergeyZolotarev: no, that's not what it means. See my answer.
    – Fizz
    Dec 29 '20 at 9:21
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    To paraphrase. Quotas and Tariffs are the beginning of freedom of goods, not the end.
    – Jontia
    Dec 29 '20 at 10:08

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