The Elephant in the Room: The Free Movement of Services and Brexit

To date, the debate around the economic implications of Brexit has focused largely on the free movement of goods and the potential for regulatory and physical barriers to trade between the UK and EU, and between Ireland and Northern Ireland.

There has been comparatively little focus on the issue of services, which make up about three quarters of the UK’s economic output, and about 70% of the EU’s economic activity. How might Brexit impact on this vitally important, and growing, sector?

This IIEA paper, by Gavin Barrett, Professor of Law at the Sutherland School of Law, University College Dublin, aims to address this question, and to focus attention on an issue that is, and will continue to be, of key importance in the years and decades after Brexit has taken place.

Key takeaways

In light of the size and importance of the services industry in the UK and the EU, the issue of services will be a focus of particular concern in the negotiations between the United Kingdom and the European Union concerning their future economic relationship.

Services, however, are far more complex andvaried than goods in nature, and it follows that the trade in services is significantly more difficult to regulate than trade in goods.

The free movement of services and the free movement of people cannot be easily separated, practically or politically. If the UK leaves the Single Market because it cannot accept the free movement of EU citizens on its territory, then it must accept that the free movement of services to and from the EU will also end.

Most free trade agreements do not extend to services, and those that do offer only partial coverage. In order to protect the UK’s status as a global leader in trading services, any EU-UK free trade agreement would need to be both radical and broader than anything seen before.