Brexit means leaving the single market and the customs union.

Here’s
why Barry Gardiner.

The 52% who voted to leave the EU would consider it a con if Britain was out of
Europe but still subservient to its laws and institutions

Most trade agreements arise from a desire to liberalise trade – making it easier to sell
goods and services into one another’s markets. Brexit will not. Brexit arose from key
political, rather than trade, objectives: to have control over our borders, to have
sovereignty over our laws, not to submit to the European court of justice (ECJ), and
not to pay money into the European budget. When negotiations start it will be the
first time countries seek a trade agreement with the clear understanding that they
are increasing barriers between them.

I campaigned to stay in the EU, but as a democratic politician, I have to recognise

that these objectives provide the benchmarks by which leave voters will judge the
future trade relations we negotiate with the EU. Unless the new agreement delivers
these objectives in substantial measure, we will find it difficult to justify the final
result to the 52% who voted leave.

Of course we must try to retain the economic benefits of the single market when we
leave the EU: some argue this means we should negotiate to stay inside
the European Economic Area (EEA), which would retain the friction-free trade not
only in goods but also in services, upon which the bulk of our economy is based.

However, the political price to be paid for such access is correspondingly high, and
runs directly counter to the leavers’ four objectives. In the EEA, Britain would be
obliged to keep the four freedoms, including the free movement of people, so no
regaining control of our borders; align its regulatory regime with the EU’s – so no
regaining sovereignty (in fact we would no longer have a seat at the table so there
would actually be a reduction of sovereignty); follow ECJ rulings; and still pay into
the EU budget.

The UK would technically not be a member of the EU, but we would in effect
become a vassal state: obliged to pay into the union’s budget while having even less
sovereignty than we do now – no longer able to appoint commissioners, sit on the
EU council to have a say in how we determine our regulations and laws, or appoint
British judges to the ECJ to adjudicate disputes. The 52% would almost certainly
consider this a con.

Some have suggested we should retain membership of the customs union, the
benefits of which extend to goods rather than services, and establish common import
tariffs with respect to the rest of the world. But that is not possible. The only
members of this union are the member states of the EU, and they alone have
negotiating power.

Other countries such as Turkey have a separate customs union agreement with the
EU. If we were to have a similar agreement, several things would follow: the EU’s 27
members would set the common tariffs and Britain would have no say in how they
were set. We would be unable to enter into any separate bilateral free trade
agreement. We would be obliged to align our regulatory regime with the EU in all
areas covered by the union, without any say in the rules we had to adopt. And we
would be bound by the case law of the ECJ, even though we would have no power
to bring a case to the court.

As a transitional phase, a customs union agreement might be thought to have some

merit. However, as an end point it is deeply unattractive. It would preclude us from
making our own independent trade agreements with our five largest export markets
outside the EU (the US, China, Japan, Australia and the Gulf states).

More important, were, say, the EU to negotiate an agreement with the US that was in
the union’s best interests but against our own, our markets would be obliged to
accept American produce with no guarantee of reciprocal access for our own goods
into the US.

Turkey faces precisely such an asymmetry with Mexico, with which the EU
negotiated an agreement 20 years ago. Turkey still faces a 20% tariff on its clothing
goods exported to Mexico, while it imports Mexican cars on a tariff-free basis.

Labour has been right to say the government must focus on the outcomes rather
than the structures. The key is not to try to fit these political and economic
requirements into inappropriate existing bodies such as the EEA or the customs
union, but to develop a bespoke agreement based on what both sides need.

Labour must evince a positive vision for the future of our country outside the EU.
One that is consistent with the leave voters’ objectives, without sacrificing our rights
and protections, as the Conservatives threaten to do. That vision must also reassure
those who voted to remain that the friction-free access into the single market that
we have enjoyed for so long can in large part be maintained.

Discuss:

1. Define the terms in bold.

2. What from do most of trade agreements arise?
3. From what objectives did Brexit arise?
4. According to Gardner should Britain retain the benefits of the European
Single Market when they leave EU? Why?
5. What is the political price to be paid by Britain for being part of the single
market? Explain.