Politics

Labour and the single market: baby steps, new ambiguities

Transitional deals have at this point become a glaring distraction

August 29, 2017
Shadow Brexit Secretary Keir Starmer. Photo:  Stefan Rousseau/PA Wire/PA Images
Shadow Brexit Secretary Keir Starmer. Photo: Stefan Rousseau/PA Wire/PA Images

Attempts to divine Labour's policy on the single market have, over the last year, more closely resembled repeated visits to a fickle or forgetful Greek oracle. Direct questions about the UK's membership after Brexit—which as any Norwegian will point out, does not require membership of the EU—have elicited cryptic vagueness and continual contradiction. Responses have ranged from holding the door open to bolting it shut, or from prioritising jobs and the economy (which requires us to stay) to promising the termination of EU citizens' free movement (which requires us to leave). Given the single market's critical importance for ensuring people's future jobs and livelihoods, and indeed Britain's entire economic and commercial ecosystem, Labour's stance, while perhaps politically canny, proved in every other way unhelpful and undesirable.

We therefore have much to celebrate in shadow Brexit secretary Keir Starmer's new-found clarity over the weekend. Unlike the Tories, whose plan is to remain in a temporary customs union on Brexit day but leave the single market, Labour has now committed to remaining in the single market for an unspecified transition period—and potentially as a permanent solution afterwards. In concrete terms, it ensures that there will be no cliff-edge for the economy when we leave the EU in just 19 months. From a political perspective, meanwhile, Labour has finally opened a stretch of clear blue water from the government, and given cover for hitherto demoralised Tory rebels to dive into it.

And yet. While Labour's policy change is extremely welcome, it also poses a number of serious questions. If we are to consider this announcement as more than spin or playing for time, Labour must quickly answer them.

First, the party must clarify its proposed legislative route for remaining in the single market. The government's Withdrawal Bill will shortly be debated in the House of Commons. It provides for the amending of the European Economic Area (EEA) Act 1993, so that the EEA—which gives us membership of the single market beyond the framework of the EU—will no longer apply in domestic UK law. If Labour votes with the government, the single market will no longer extend to Britain on Brexit day, even in transitional form. Given that the Labour leadership just two months ago opposed a Queen's Speech amendment which called for single market membership, this will represent a crucial test.

Labour must then decide its approach for negotiating our single market status with the EU. Brussels will not offer us a bespoke single market arrangement—particularly not with such limited time—and so Britain will have to pursue one of two options. Either we decline to trigger the EEA's departure mechanism, Article 127, and thus remain in the single market independently—which would be subject to fierce political and legal dispute in the EU—or we apply to join the European Free Trade Association (EFTA), and use that vehicle to re-join the EEA on Brexit day. The four EFTA states of Norway, Switzerland, Iceland and Liechtenstein want to preserve their free trade with Britain and would be most unlikely to veto such a request, but they may baulk at any proposal to join just for a few years and then leave after the transition. Moreover, the EFTA Convention currently requires all acceding member states to apply to join EFTA's free trade deals—which could scupper Liam Fox's plans to negotiate many of his own.

"We have no time not to know what we want"
Assuming that Labour resolves these questions, it must then confront what remains effectively the only barrier to our permanent single market membership: the issue of free movement of people. The government's only reason to leave the single market is to end open immigration from the EU. While Labour is now committing to retain free movement for the transition period, its stance beyond that remains opaque. In his Observer article, Starmer declared that retaining the single market's benefits was paramount, while also citing the "need for more effective management of migration" after the transition. On the surface, this appears to be more of the same cherry-picking cake that has already ruined the government's diet: we cannot end free movement while retaining everything else. But, like a wise oracle, Starmer may in fact be saying something other than what appears. As pro-European groups have pointed out for many months, the EU and EEA do offer ways to regulate immigration that the UK has never exercised. Switzerland, too, has just negotiated limited but clear concessions with the EU. If this is the route Starmer has in mind, it could enable a compromise that might not delight everyone, but would ensure our single market membership and continued prosperity.

A middle of a story requires an end, and Labour has substituted new ambiguity for old. All sides have been clear that Britain must transition not into limbo but to an identifiable destination. Starmer determined that this end-point must either be single market membership or a trade deal to replace it, and that the question must be resolved in the negotiations. He also declared, however, that Labour was “flexible” on the matter. Given his acknowledgement that the issue is both central and immediate, flexibility is an unavailable luxury. We needed to know months ago how we envisaged the final settlement, and if we are still negotiating with ourselves, we cannot negotiate with the EU. We have no time not to know what we want.

If we try to separate the transition from the destination, we are effectively asking the EU to negotiate Brexit twice. Starmer, in his article, duly noted that the transition cannot involve a bespoke deal when we need “certainty and clarity.” Consequently, a glaring question emerges: if we are essentially asking for everything to stay the same while we negotiate the final settlement, why not actually prolong our membership until we are ready to leave? It would not require revoking Article 50, but merely extending it. This would not only avoid unintended and unforeseen problems from being outside the treaties and key instruments before we have managed to replace them, but would also ensure a seat for Britain at the table while we continue to negotiate our departure. For the EU, it would mean full budget contributions and a guarantee of ongoing stability, frictionless trade and a soft Irish border. Both sides would have to overcome difficulties to agree, but these would be largely political. It is in nobody's interests for Britain to leave before it is ready, and such a solution would provide maximum certainty and clarity for all.

The transition at this point has become a glaring distraction—akin to starting the Paris-Dakar rally with an argument about which CDs to play in the car. Labour, like the government, needs to know where it is going and how it plans to get there. The oracle has answered one important question definitively. Many more remain.