Why Britain could demand asymmetric labour access to the EU – and why it might be best for both sides

Freedom of movement

The disputes over Brexit negotiations have mostly been premised on the idea of reciprocity – or rather, retaliation. If we do not give them rights, they will not give them to us. This has been particularly true when discussion freedom of movement, possibly the single most important driver of Brexit voting in 2016. On the face of it, there seems to be logic in the EU demanding that EU nationals be allowed to freedom of movement into the UK if the UK wants the same thing in return. However this may belie the reality, which is that asymmetric access is perfectly viable and indeed valid.

To give one example of where this makes sense, let us examine Chinese policy with regards Hong Kong. Here, Hong Kong residents have an almost unhindered access to the Mainland and its economy, not only in terms of movement and residency, but also asset ownership including real estate and businesses. Chinese Mainlanders on the other hand face extremely stringent rules on coming to Hong Kong and particularly for settling here. Work visas are required almost exactly as they are of any foreigners. Yet this is essentially just one country with ultimately one government. And yet it suits both sides.

Why? Well there are two main reasons for allow one-way borders. The first is when one area needs skills the other has. This was historically true of Hong Kong and the services it provided to mainland China in terms of capital and skills, although today this is no longer so relevant. In the case of Britain and the EU, there are arguably skills which those across the channel, all things being equal, would prefer to have. Banking and finance might be part of this, but it seems unlikely. Much more relevant is that Britain is far more innovative than the rest of Europe and particularly so compared to the larger countries. In the European Commission’s innovation rankings for instance, Britain comes fifth but well ahead of Germany, as well as France, Italy and Spain. This is something the EU would surely rather not lose: startups and business ideas which could change the world but which need a large market to be tested and improved. For this reason, one-sided migration would be net positive.

European countries ranked by innovation

European innovation

Source: European Innovation Scoreboard 2018 (European Commission)

The second reason is the defensive one and relies on a resource Britain has an abundance of: parochialism. One of the reasons China has no particular fear of opening the border to Hong Kong is that there is very little chance that people will want to cross the border and stay there. Oddly enough, Britain is in the same boat, since Britons have historically been far less likely to move to another European country than many others, especially those of a working age. If we look at northern European migrants to other northern European destinations (in other words, intra-EU migration which strips out the retirement population) Britain figures as one of the least mobile populations behind even France. Only Germany is marginally behind and this is due to its outstanding export economy.

Total intra-Northern European emigrants as a percentage of total population

Intra-European migration

Source: People on the Move (Bruegel Jan 2018)

This reflects only “rich” Europe; if eastern and southern Europe were included the numbers would be even more stark. This peculiarly British parochialism can be seen in everything from the lack of language learning in British schools through to the reluctance of British footballers to move to European leagues which are better for their career. In other words, the British are much more disinclined to move and settle in the EU than the other way around, so that offering asymmetric access will only help business without causing any employment displacement.

This is a classic and enjoyable case of hidden asymmetry, the defining theme of this blog. The simple fact is that just because access is unequal does not mean that it is imbalanced or not beneficial to both sides. Reciprocity may seem “fair” on the face of it but may not actually be relevant – when there are cultural asymmetries as in this case, there is a good case to argue that reciprocity is not needed. Unless indeed retaliation is the core objective.

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