Labour’s new EU policy

By Jude Woodward

Labour’s announcement of its new policy for the Brexit negotiations – that the UK should stay within the Single Market and the customs union for a prolonged ‘transition period’ after formally leaving the EU – is both necessary and welcome. This approach puts the preservation of jobs and living standards rather than the anti-EU ideological shibboleths of the Tory right at the centre of the Brexit discussion.

Of course this policy does not entirely solve the issues raised by Brexit for Corbyn and Labour, because the final goal for the Brexit process remains unsettled. But this commitment to easing out of the EU – meaning continuing to accept EU law, including freedom of movement, for a transition period – rather than dropping out of it, as the Tory right proposes, is an important step in the right direction.

On the one hand it buys time and on the other begins to claw back political ground from the ‘hard Brexiters’ who try to claim that the referendum settled the questions of not just the EU itself, but the UK’s entire relationship to the Single Market and its rules – despite the fact that the market was not on the ballot paper last June.

But even if this new Labour policy were pursued in the negotiations, this is not enough on its own to re-establish business confidence and boost investment in the UK economy. In fact investment has already started to decline; to even maintain it at its previous low level requires clarity about the intended final outcome of the negotiations.

International companies are having to consider relocating some of their work out of the UK or even leaving altogether, and both they and domestic industries are holding off from investing here until they feel confident that their continent-wide supply chains and free trade relationships will be preserved in the eventual deal with the EU.

In the final analysis that will almost certainly require a commitment to remain in the Single Market. Suggestions that the EU will agree to a ‘customised’ agreement with the UK that allows it to cherry-pick opt-outs from key rules of the Single Market are already being revealed as pie in the sky. To stay in the Single Market, whether de jure or de facto, requires abiding by the same rules as the other members of the market and that means accepting the EU’s right to set those rules – and these inevitably include free movement and arbitration on trade disputes overseen by the European Court of Justice. The idea that one can leave a members club and continue to enjoy the benefits of being a member is not realistic.

In the end the debate on the Single Market will come down to a choice between defending jobs and living standards by staying in, or prioritising anti-immigration backwardness and nationalistic rhetoric and therefore insisting that Britain must opt out. The latter will lead to further declines in investment and the UK currency. These factors, alongside the contraction in trade, will reduce jobs and real incomes, which will seriously undermine the relationship of forces for the working class in Britain, facing a ruling class determined on continuing to pursue austerity, including if Jeremy Corbyn wins the next election.

Quite aside from whether the Labour leadership has yet arrived at a definite view on whether it is in the best interests of British workers to stay in the Single Market or not, there are undoubtedly other pressures leading to caution. There are clearly fears that if Labour adopted a policy of straightforwardly staying in the Single Market and abiding by its rules, then the ‘hard Brexiters’ would attempt to create a damaging electoral backlash against Labour for allegedly ignoring the outcome of the referendum (even though it said nothing about the Single Market – the question on the ballot paper was solely about membership of the EU).

But this issue will eventually have to be grasped, but for the moment it is a significant positive development that Labour is shifting the agenda against the hard Brexiters, de-toxifying the discussion on keeping freedom of movement and accepting EU rules, even if only for a transition period.

Meanwhile the Tories have been drifting into deeper confusion on Brexit – and they are in charge of the negotiations! The summer has seen a ‘push-me-pull-you’ struggle between the Hammondite ‘soft Brexiters’ and Davis, Fox and May’s ‘hard Brexit’ supporters in the Cabinet, with first one side then the other appearing to have the upper hand. What the Tories are actually proposing still remains dangerous shifting sands, with the hard Brexiters still in command.

However what has also become clear in the last days of August is that there are no ‘quick fix’ bilateral trade deals on the table to fill the gap if the terms of EU exit lead to a sharp contraction of Britain’s trade with its continental neighbours.

During May’s late summer visit to Japan, Prime Minister Abe made it crystal clear that there was no UK-Japan trade deal on offer until, firstly, Japan had concluded its current negotiations for a trade deal with the EU as a whole and, secondly, until there was greater clarity on the shape of the UK’s eventual relations with the EU.

What is true for Japan will also apply to other proposed bilateral partners. Even Trump’s pro-Brexit US cannot negotiate a trade deal with the UK until it knows which of the EU’s current trading standards – for food and manufacturing goods – that the UK will remain pledged to maintain.

Sadly some on the left claim that none of this matters. Starting from an accurate characterisation of the EU as a pro-austerity, anti-immigrant capitalist club, a complete non sequitur is constructed: that therefore the correct position is to leave the EU and all its organisations, immediately, as fast as possible, and totally.

The record of the British state is, of course, no better; it has pursued one of the longest and harshest austerity policies on the continent and has taken far fewer refugees than Germany and most of the other EU states. Outside the EU there is no reason to think that the British ruling class will pursue better policies; in fact they will probably be worse, whether on austerity, labour rights, safety at work, the environment, food standards and immigration.

Ah, but – the response goes – we will have a Corbyn government and that will be different. Well, first Corbyn has to get elected; that may or may not be easier in the context of a crashing economy because of a hard Brexit, especially if Labour had supported it.

And secondly, there is nothing in Labour’s last – excellent – manifesto that could not be implemented if Britain remained in the EU. In fact, it would be easier because the levels of state-led investment and stimulus that the manifesto proposed would make a much greater difference to the economy and to the working class if Britain was not simultaneously suffering a sharp contraction in its European trade.

Of course, if a British government proposed to seize control of the commanding heights of the economy, nationalise them without compensation, and embark upon the first stage of socialist construction, then trying to also abide by the rules of the EU would be a problem! But the obstacle constituted by the rules of the EU would hardly be the most difficult thing that such a government faced. The British ruling class and its international allies (including the EU states even if Britain had left) would resist such an outcome with sabotage and even military means. Whether the UK was in or out of the EU in such circumstances would be an irrelevancy.

Anyway, for now, it is better for the relationship of forces in the current stage of struggle of the British working class to be taking advantage of the wider EU market and the expansion of the workforce through free movement of labour to boost the British economy, create jobs and defend living standards.

Labour’s new policy goes in the right direction, politically and economically. It should be welcomed and defended.