The Labour party must be in the vanguard of the struggle to keep the United Kingdom in the single market, argues former cabinet minister Peter Hain
As Jeremy Corbyn has argued, Labour must prioritise jobs and the economy over Brexit – which, for those Labour parliamentarians who have signed a new statement, means staying in the single market.
It is the largest, richest in the world with over 500 million people, worth £11 trillion – fully a quarter of global GDP. Half our trade is with it including a United Kingdom trade surplus in services of £17bn.
Over the ten or so years that it will take to adjust to the shock of exiting the European Union, including its single market, the economy will end up six per cent smaller in 2030 than it would be if we had stayed according to the Treasury – a massive hit on jobs and prosperity.
When the country by a narrow margin voted to leave the EU, the single market was not on the ballot paper. It almost never came up on the doorstep.
Leaving would need to be followed by subsequent trade agreements – and not only with the remaining 30 EU and European Economic Area member states, but also new agreements under World Trade Organisation rules with around 52 ‘third countries’ outside the EU with whom we have existing trade deals at present through the EU.
These will take many years to negotiate. Canada’s with the EU took seven years – and covered only manufactured goods. But the UK is an 80 per cent service economy.
Free trade agreements do not normally cover many services, because of the complexity involved. Existing single market legislation on services covers: authorisation mechanisms and systems for granting licences to provide services; systems of mutual recognition of licensing requirements; commitment to common monitoring for observing standards; and a dispute resolution mechanism.
Any UK agreement with the EU will have to be ratified by all 27 member states, and this could mean by more than 35 parliaments, including regional ones like that of Wallonia in Belgium, which tried to hold up the ratification of the Canadian deal.
The removal of non-tariff barriers with the EU (especially standards for goods and services) would be tough to negotiate, because they are numerous, complex and subject to frequent updating through amendments. EU standards for cars alone cover thousands of pages of EU legislation.
This interim between leaving and finalising free trade deals could take years, with UK companies then facing trade barriers which could include: customs duties; customs procedures such as country of origin checks at borders; quotas and other quantitative restrictions; and other non-tariff barriers, including standards for goods and services.
The EU ‘passport’ of regulatory equivalency which EU institutions currently grant to banks and other financial institutions to operate under UK financial rules, will no longer apply when the UK leaves the single market: a huge threat to a sector estimated to provide 11 percent of Treasury revenues and 10 percent of GDP. Already leading banks plan to move jobs to rival financial centres such as Frankfurt, Dublin, Amsterdam, Paris or New York.
Furthermore single market rules are not simply economic. They come with the social, environmental, health and safety standards and workers’ and consumers’ rights which we all take for granted. Hard-right Brexiteers see an opportunity to water down this ‘red tape’ they find an anathema.
Some Labour members of parliament have argued that the single market means uncontrolled EU migration. But the right to free movement has never been unconditional; Belgium, for example, imposes restrictions by returning to their EU country of origin each year thousands of migrants who do not have jobs.
In line with our September 2016 annual conference policy, Labour should lead the drive to remain in the single market, for which there is probably now a cross-party parliamentary majority.
Peter Hain is a former cabinet minister and author of Back to the Future of Socialism
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