Standards are important because they level the European single market and enable individual companies to sell to 27 countries.
Governments develop standards
First of all, governments agree on fundamental standards and by doing so they set the playing field for companies to trade. Then businesses come in and develop their products based on these.
Governments do not actually do all the work in advance in isolation. They do this development work in partnership with companies.
Companies are involved in the development of standards from the beginning, indeed even suggest them. Governments then serve as coordinators and defenders of national interests through the European Committee for Standardisation.
Where a company wants to sell into Europe, it looks at the standards and then develops its products accordingingly. But what if the standards between the UK and the EU are different? Which standard would the company use to develop their product?
The single market
The single market is intended to be a level playing field, supported and shored up common standards. They are the basis of the single market because they make the playing field level for everybody.
The counterargument is that European standards don’t matter, that the British standard was sufficient. That might seem all right from Britain’s point of view but what happens if we have 27 different standards?
We would then call for some organisation to harmonise them. And that is just what the EU is – an organisation to harmonise standards. If we don’t have that harmonisation, then individual countries go off and develop products which are incompatible with one another.
Therefore the single market fails and what remains is just our domestic market.
Selling across 27 counties
You could say that the single market doesn’t matter. But then if a British company wants to sell a product, then it just looks at the standard and decides to which country it wants to sell. It applies the standard in that country.
But it’s much more efficient if it can develop a product which is then sellable across 27 countries then it only has to do the development once.
It knows that governments do the hard lifting work in advance and then it just has to apply one standard. If it applies a national standard or European standard, they are the same, and it immediately has a potential market of 350 million people instead of 60 million.