EUROPE´S FOUR FREEDOMS ARE ITS VERY ESSENCE / THE FINANCIAL TIMES COMMENT & ANALYSIS

Europe’s four freedoms are its very essence

Political logic links EU citizens’ freedom of movement to goods, services and capital

Wolfgang Munchau


Freedom of movement for goods, services, capital and people is at the heart of the European Union © FT montage



What is the defining characteristic of the EU? Before we start discussing any schemes about its future, we need some clarity on the issue.

For me, the 1957 Treaty of Rome, which established the European Economic Community, answered the question conclusively. Article three says: “The activities of the Community shall include . . . the elimination, as between Member States, of customs duties and of quantitative restrictions on the import and export of goods . . .; the abolition, as between Member States, of obstacles to freedom of movement for persons, services and capital.”

In other words, the very essence of the EU are the four freedoms: of movement for goods, services, capital and people. The four freedoms are to the EU what golf is to a golf club. You can play golf, watch others play golf, talk about golf, or join me at the 19th hole. But you cannot turn the golf club into a bingo hall unless everybody else agrees with you.

The first freedom, relating to goods, was clearly the priority when the Treaty of Rome was signed. Subsequent EU treaties have strengthened the other freedoms; not all are equally developed. The free movement of goods is the most advanced; some military goods are still restricted; and free movement of services is the least developed category of the four. The freedom of movement for citizens is fundamental.

UK prime minister Theresa May’s infamous “citizens of nowhere” remark explained the Brexit mentality better than anything else, because in the EU you are always a citizen of your home state and of the union itself, no matter where you live. This is the very essence of Europeanness.

There is a political and an economic logic behind the unity of the four freedoms. They constitute the ultimate trade-off in EU politics. The EU’s strength is to mediate between conflicting interests — large countries versus small, producers versus consumers, employers versus employees. While the roots of the old EEC were economic, as the name implied, it required a political and social component to keep it going. As a club of producers the EU would not have survived for long. Freedom of movement provided workers who were mobile with the ability to raise their income in other parts of the union. It also acted in a small way as a macroeconomic stabiliser.

I have read a couple of economic reports recently arguing that freedom of movement for people is not strictly a requirement for a single market. But at the very least there is a compelling logic behind the link between the two. One can divide the four freedoms into two categories: economic outputs — goods and services; and economic inputs — labour and capital. Can we restrict one without the others? Of course one can. Goods and services are not treated equally today, so why should capital and labour? But the logic of the four freedoms is not based on economic but political reasoning.

The inability to understand, or the refusal to accept, the four freedoms constitutes the deep reason behind Brexit. David Cameron famously misjudged it. The former UK prime minister tried and failed to get the EU to agree to a relaxation of the principle of free movement. To this day, there are people, on both sides of the debate, who argue that the UK can remain a member of the single market while imposing restrictions on free movement.

If you want to think about various versions of the future of the EU, my advice would be to learn from Mr Cameron’s error. A Europe of “variable geometry” is certainly probable, indeed desirable, but it will not be one in which member states opt in and out of the four freedoms. Not everybody will end up in the eurozone, or the Schengen passport-free travel zone. The Eurocentric vision outlined by Jean-Claude Juncker, president of the European Commission, in his annual state of the union speech in September, is far too static. Not everybody in Europe will want the same degree of centralisation.

But all member states will need to accept the four freedoms. So will anyone who enters the EU in the future, or who re-enters after they have left. The freedoms come as a package.

Their indivisibility is the reason why I am more sceptical than others about a new type of EU-UK association agreement that would allow Britain to reconnect with the EU. Such an agreement would not look much different from the membership the UK is walking away from. If freedom of movement is your problem now, you will have exactly the same problem with a future association agreement because the four freedoms will always constitute the intersection of the EU’s growing number of concentric circles.

As the first chapters of the Treaty of Rome remind us, they always have.