*A* Labour Brexit policy – or *the* Labour Brexit policy? Comments on Jeremy Corbyn’s Brexit policy speech

Professor Steve Peers, University of Essex

Labour party leader Jeremy Corbyn sharply divides public opinion. For my part, I think he’s neither the Messiah nor a very naughty boy – simply a politician who should mainly be judged on the policies he’s advocating today, not by dubious claims (or libellous smears) about what he may have said or done decades ago.

In a speech today, he clarified some aspects of Labour’s Brexit policy, which had previously been rather vague on most points. Leaving aside his domestic policy arguments, and his critique of the government’s confusion on Brexit policy – which was accompanied by the sound of glass houses shattering – he made some key points.

First of all, the tone of his speech was important.  He began by condemning the scapegoating of migrants, setting of generations against each other and playing off the different nations of the UK – laying justified emphasis on preserving the Good Friday Agreement in Northern Ireland. And he ended by inverting the Prime Minister’s infamously narrow view of national identity in the modern world, declaring that “we can only fully achieve what we want to as citizens of Britain by also recognising we are “citizens of the world”.”

As for the content, the most significant point was support for a form of customs union with the EU after Brexit – or more precisely, after the post-Brexit transitional period, where the EU27 and the UK government have agreed that the customs union will continue (see my discussion of the competing proposed texts here). While the UK necessarily will leave the EU’s customs union on Brexit, Corbyn advocated that the UK should “seek to negotiate new comprehensive UK-EU customs union to ensure that there are no tariffs” with the EU, “and to help avoid any need for a hard border in Northern Ireland”. In other words, the UK would be leaving the customs union, but would still have a customs union with the EU.

A customs union means that goods circulate freely between the parties.* It’s linked to having a uniform policy on trade policy towards non-members of the customs union, although the EU/Turkey customs union does allow for separate deals (at the cost, however, of additional checks at the border) and customs unions do not cover services issues.

Corbyn went on to elaborate that the UK would have to have “a say” in future trade deals, not becoming a “passive recipient of rules decided elsewhere by others”. He did not explain further his view on two key issues: what if the EU were not willing to agree such an arrangement? And if it were agreed, what would happen if the EU was keen to negotiate a free trade deal with a certain country, and the UK was not – or vice versa?

On other issues, he said little explicitly about non-tariff barriers, although his anecdote about the process of building a Mini neatly demonstrated the importance of avoiding customs checks for the car industry’s just-in-time production process. He said little about services either, besides disdain for the UK’s financial services industry.

Corbyn did commit to “use funds returned from Brussels” on UK public services after Brexit – right after criticising people for “making up numbers and parading them on the side of a bus”. The problem with this promise is that the bus did not only mislead by misstating the amount of money actually sent to the EU – but also by suggesting there would be any “Brexit dividend” at all.  The government’s own forecasts (which Corbyn later refers to, when it suits him) suggest a reduction in economic growth, which would entail an inevitable downturn in public revenue.

Furthermore, Corbyn’s own plans for maintaining a future relationship would necessarily entail further costs. He expresses support for remaining in at least some EU agencies, bodies and programmes; there would be a contribution required for that. He also supports some form of close link with the broader single market, which implicitly falls short of full participation – given that he rules out the continuation of the free movement of people after the Brexit transition, and has a list of issues where he wants to “negotiate protections, clarifications or exemptions where necessary in relation to privatisation and public service competition directives, state aid and procurement rules and the posted workers directive.”

He briefly mentions continued defence cooperation, but does not refer to internal security issues. Finally, he places repeated emphasis on not lowering labour, environmental, consumer and food safety standards. There’s no specific mention of the EU’s Court of Justice.

Comments

Corbyn described a lot of things he supported about the EU, and also offered a shorter list of things he disliked. Let’s look at the latter first. Ian Dunt has discussed most of the arguments about privatisation et al here – pointing out, for instance, that countries with a bigger state role in the economy, like Scandinavian social democracies, also exist as EU members. As for the posted workers’ Directive, a revision which might address Corbyn’s concerns is well underway: the text of the Council’s position (now being negotiated with the European Parliament) on that revision is here. 

But that is inevitably linked to the things that Corbyn liked about the EU. The key question here is: in legal terms, what exactly (besides a customs union) would the EU/UK relationship look like? Presumably some form of ad hoc relationship to the single market. This sounds a lot like what the government is aiming for, except that the Conservatives are troubled by the thought of making many commitments on issues which Corbyn is keen about (regulation of product standards, labour and environmental law, tax avoidance), and conversely relaxed about the issues that Corbyn would want exemptions from (competition and state aid). But as long as the EU side regards such suggestions as “cherry-picking”, there’s no reason to assume that a red unicorn is any more politically feasible than a blue unicorn.

Now for the most concrete part of the Corbyn speech: the customs union commitment. This might be simply a tactical move designed to make life difficult for the government, since some Conservative MPs also support the idea. But it’s not surprising that politicians play politics.

As for the broader political impact of the move, an interesting article by Duncan Robinson provides evidence that there is not a huge public demand for more free trade deals, especially among Leave voters, and that trade policy was not a major factor in the Leave vote. It’s possible that enthusiasm for free trade deals is even less among Labour Leave voters – leaving Corbyn freer to placate Labour Remain supporters by endorsing a link to the EU on this issue, without irritating Labour Leave voters unduly. Indeed, Corbyn’s speech was critical of the prospects of trade deals with the US and China, from a Labour perspective.

In fact there is also support for Labour’s customs union position from a business perspective – suggesting there is not a vast business demand to exit some form of customs union. The Confederation of British Industry backed the customs union aspects of the Corbyn speech, and the Institute of Directors earlier proposed a more detailed (but probably more limited) form of customs union themselves. Corbyn himself noted that the government’s economic assessments suggest that future free trade deals would only have a modest economic benefit.

What about the counter-arguments against staying in a form of customs union? The “Labour Leave” organisation may well call it a “betrayal” of the Brexit vote, although it’s striking to note that this “Labour” body has received major amounts of funding from Conservatives. Some non-EU countries do have a customs union with the EU, as noted above, and there was no “customs union” box on the referendum ballot paper.

Some call a customs union a “protectionist racket”. But most countries have some form of trade protection against foreign goods; a customs union is merely a mechanism of agreeing such rules by a group of countries collectively. Along the same lines, it’s suggested that a customs union prevents its parties “trading with the world”, but many EU countries (including the UK) have a significant trade with non-EU countries, and the EU has a number of free trade deals in force or under negotiation, as detailed here. As for “starving the poor”, the impact of EU trade policies on developing countries is often exaggerated – given that the EU has a number of free trade deals with and unilateral tariff preferences for developing countries, especially for the very poorest, as discussed here.

Some would prefer to abolish all tariffs, but there’s no mandate from the referendum or the last election for that policy, which would leave the UK with little or no negotiating capital in talks with the EU or anyone else. And since that policy’s chief proponent, Professor Patrick Minford, accepts (indeed advocates) that it would “mostly eliminate manufacturing” in the UK, it’s not surprising that this policy has no appeal to the Labour party.

Time will tell whether today’s speech simply set out a Labour Brexit policy, designed as a short-term tactical shot across the bows of the Conservative party to be developed further later; or the Labour Brexit policy, left deliberately vague on many points to continue to serve as a compromise position designed to appeal to significant numbers of both Leave and Remain supporters. In any event, its political significance is that it creates a clear distinction between the Brexit policies of the two largest parties.  

*clarification added 27 Feb 2018: I'm referring to free circulation of goods within the definition of the EU's customs union set out in Article 29 TFEU. That doesn't mean the same thing as "no border checks"; as the Corbyn speech recognises, a customs union agreement would only "*help* to avoid any need for a hard border in Northern Ireland". 

Barnard & Peers: chapter 27

Photo credit: Grimsby Telegraph