In an interconnected world it remains hard to make borders go away

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It is 40 years since Edward Fox, the villainous hero of the movie The Day of the Jackal, smuggled his gun across the Italian-French border at Ventimiglia on his way to assassinate General de Gaulle. As the relieved Fox manoeuvred his convertible round the turns of the Riviera Corniche, I resolved that one day, without gun or murderous intent, I would do that myself. Now, with a house in Menton on the French side of the border, I can.

In 1992, the border post became an empty shell. Customs formalities between EU states were eliminated and passport checks between France and Italy ended. For more than 10 years there has been no need to fill a wallet with lire before crossing the frontier. And yet while much appears to have changed, more has remained the same. Local French buses run to the border, and come back. And so do local Italian buses. Regional French trains stop at Ventimiglia, and so do Italian ones. A large store a few metres from the border sells spirits and tobacco more or less exclusively to French customers at the lower rates of duty applicable in Italy.

More significant, however, is that the Italian store clears its credit cards through an Italian bank rather than a French one, which would probably offer lower rates. So does the nearby Italian restaurant although it is closer to French Menton than to any Italian town. The supply chains of retailers in Menton are mostly routed through France, while those of retailers in Ventimiglia operate through Italy. When French tanker drivers went on strike, we discovered that French petrol pumps filled from Marseille, were empty: those across the border were fully supplied from Genoa. When Europe’s electricity network was disrupted, ironically by an incident in France, the Italian grid collapsed but French supplies were maintained. On an evening flight, the contrast of dark and light defined the border as precisely as any map.

A famous 1995 study by John McCallum showed that Canadian provinces traded 10 times as much with each other, and only half as much with the US, as would have been the case if trade flows had been governed by distance alone. A Canadian is much more likely to buy from, or sell to, another Canadian than an American trader located closer to him. And that discrimination is found in trade between members of a free trade area with small linguistic, cultural, fiscal or regulatory differences between the countries.

We know Cornwall is integrated into the UK economy because such a high proportion of its economic activity is exported to the rest of the UK, and such a high proportion of its consumption is imported from the rest of the UK. “Exports and imports” are not just goods loaded on ships. Cornish residents import retail services when they shop in Plymouth, the largest town in the region but located in neighbouring Devon. When they are treated in a Plymouth hospital, Devon acts as exporter of medical treatment. And when the same people buy Italian peaches from Tesco in Newquay, which is in Cornwall, most of the cost of the peach reflects the cost of the Tesco distribution chain, an activity mostly located in other parts of the UK.

When the skies darken, even lapsed borders can become obstacles again as quickly as a mountain stream. Twenty years after the creation of the single European market and the Schengen common travel area you will again see French police at the border post and the péages (the toll booths) — where the autostrada becomes the autoroute. If you are of swarthy complexion, make sure you have identity papers if you board a French train at Ventimiglia, or you may face a lengthy debate with a gendarme. Menton is on the frontier between the illegal landing points in Italy and the rest of the EU. In an interconnected world, it remains hard to make borders go away.

 

This article was first published in the Financial Times on June 10th, 2015.

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