The Schengen Agreement, which came into effect in 1995, is a treaty which led to the creation of Europe’s borderless Schengen Area – it currently consists of 26 European countries. Open borders ease the flow of exports as well as individuals.
Approximately 1.3 billion borders crossings of the EU’s internal borders are made each year. This is accompanied by 57 million trucks carrying €2.8 million goods. As well as the ease of goods borderless travel allows hotels in the east of Germany to have their sheets cleaned in Poland, where wages are lower, and workers in Italy commute to Switzerland where wages are higher. However where the trucks and goods travel so do refugees and to stem the flow Austria, Denmark, France, Germany, Norway and Sweden have temporarily reintroduced border controls and spot checks.
The Costs of border checks:
- Border checks in France would cost France €1 billion – 2 billion a year by disrupting tourism, cross-border workers and trade.
- It is estimated that by preventing the free movement of goods would amount to a 3% tax on trade within the Schengen area.
- It could deter cross-border employment, reducing job opportunities and the pool of labour employers can draw upon.
- It now takes about 3 hours for traffic to get through to Germany from Austria and the German association of shippers puts the cost at €3 billion a year for the EU as a whole based on a one-hour delay for every lorry.
- Business most at risk are those that export perishable goods such as fruit, vegetables and fish.
- Companies will have to store extra inventory across the continent ensure customers get deliveries. Extra costs for Germany alone could run to €10 billion per year.
European integration could go into reverse with the permanent reintroduction of border controls.
Source: The Economist: 6th February 2016