Barry spoke to an international seminar organised by the TUC, ETUC and Rosa Luxemburg Foundation on 20 March 2018.
Many thanks to the TUC, the ETUC and the Rosa Luxemburg Foundation for the invitation to be part of this important discussion.
As you’ll be aware, the theme of EU-UK relations post-Brexit is consuming almost 100% of our time and attention in the UK, so it’s a great opportunity to come over here and get some broader perspectives from the progressive Left in Europe.
But in order to kick off from the British side of things, let me set out the position that Labour has taken on a progressive Brexit, and how we got there.
As you know, the result of the 2016 referendum was that 52% of the British people voted for the UK to leave the EU, on a 72% turnout. As the result of our triggering Article 50 on the 29th of March 2017, this means that the UK will formally cease to be an EU member state in a year and ten days’ time.
As confirmed yesterday, when David Davis met Michel Barnier here in Brussels, there will be a transition period from April 2019 to the end of December 2020 during which the UK and EU will continue to be bound by the same commitments as at present, even though the UK will no longer participate in the governance bodies of the EU.
The Labour Party respects the referendum decision, even if many of us campaigned for the UK to remain in the EU. I know the TUC has also committed to respect that decision, as affirmed in the TUC General Council statement to Congress last year, even though the majority of its affiliates argued for a Remain vote.
As a member of parliament who believes in the democratic process, I have always maintained that this is the only position we can honestly take. However much some of us may regret it, the British people were offered a referendum, they cast their votes in that referendum and we have to respect the decision they made.
The most immediate consequence of all this is that, as of the 1st of January 2021, the UK will no longer be a member of either the EU customs union or the single market. Whatever alternative forms of participation in those structures may be open to us, membership of the customs union and the single market is available to EU member states only. So the question then turns to what sort of relationship the future EU-UK relationship will be.
In the first months of the debate, we in the Labour Party made a deliberate choice to concentrate on defining the outcomes we wanted from the negotiations, not the structures of the new relationship. Again, this was a position which we shared with the TUC in its call for a jobs-first, rights-first Brexit.
We focused on the following elements, which represent a careful mix of continuing trade and continuing high standards, as this reflects our primary concern to sustain the millions of decent, well-paid jobs that are bound up in UK-EU trade. In particular, Labour called for a deal that delivers:
• tariff-free goods trade, with the best possible solution for rules of origin and other regulatory alignments
• the best possible services deal – crucial for the UK economy, which relies on services for 80% of all employment, and for around half its trade
• maintaining the social and environmental standards we have enjoyed in the EU, and going beyond them where possible; this is particularly important given the well-known comments of certain UK government ministers who see leaving the EU as a golden opportunity to deregulate the labour market
• mutual recognition of technical standards, such as ensuring adequacy status for the UK under the EU’s General Data Protection Regulation so that we can continue cross-border trade in both goods and services
• preserving the status quo in Ireland without a hard border, so as not to jeopardise the 20 years of peace on that island between north and south.
As I say, we deliberately kept our focus on outcomes, not structures, because we saw the Brexit debate increasingly being dominated by a right-wing discourse that spoke only of free trade and the benefits of deregulation. That even included groups such as the Economists for Free Trade calling for unilateral removal of all tariffs, despite acknowledging that this would lead to the loss of over three million jobs across the UK.
At the same time, we engaged in a great deal of internal discussion and consultation with trade unions, business and other stakeholders to tease out what the various structural options might mean in practice. And this is where we start getting into the alternatives to membership of the EU customs union and single market, with all the technical and political arguments that go with them.
You saw the fruit of those discussions when Jeremy Corbyn delivered his speech on a ‘Labour vision for Britain after Brexit’ in Coventry at the end of last month.
We had always supported the idea of maintaining our current relationship with the EU customs union and single market during the transition period, so that government and business need only make one set of adjustments in the Brexit process, not two.
In his speech, Jeremy went further to say that a Labour government would seek to negotiate a customs union with the EU as a viable part of our long-term relationship.
Crucially, we are clear that this would be a symmetrical arrangement which would require the UK to take its place alongside the EU in negotiating trade deals with other trading partners. And it’s important to stress this point, so I will quote what Jeremy said in his speech:
A new customs arrangement would depend on Britain being able to negotiate agreement of new trade deals in our national interest. Labour would not countenance a deal that left Britain as a passive recipient of rules decided elsewhere by others. That would mean ending up as mere rule takers.
This means that we would not support a Turkey-style relationship with the EU customs union, with all its asymmetry and attendant problems. I’m not going to reiterate all the shortcomings of that relationship here, because I want to use my remaining time this afternoon to take the discussion forward – but some of you may have seen the piece that I wrote for the Guardian last July, when I drew attention to the problems that Turkey has faced by virtue of its asymmetrical agreement with the EU. Those of you who have read the detailed papers looking at Turkey’s experience will be in no doubt that this is not a model we would wish to adopt for the UK.
Instead, let me highlight the benefits of our call for a symmetrical customs union between the UK and EU. Firstly, and perhaps most importantly, a customs union opens up the possibility of frictionless trade between the UK and EU. This is crucial not just for trade in finished goods but also for the integrated supply chains that now criss-cross the frontiers between the UK and the continent. It does not in itself deal with issues such as regulatory alignment, of course, nor even potentially the need for customs declarations themselves. But it does provide the basis for further elements towards a friction-free relationship once we are outside the EU.
Secondly, and stemming from this, a customs union creates the conditions for a long-term settlement of the Irish border issue. Again, having a customs union does not deal with all the issues that need to be dealt with there, and we are under no illusion that there are other significant areas to cover. Yet a successful customs union could represent a substantial part of any future deal, as has been made clear by the Irish Congress of Trade Unions, which represents workers on both sides of the border.
Finally, of course, a customs union means that we remain a united bloc in relation to third country FTAs, with the concomitant advantages this brings. I will come back to the issue of our future trade deals with third countries in my closing remarks.
Let me stress once again that a customs union does not deal with all the outcomes that we set out in our original definition of the progressive relationship we wish to see for the future. To begin with, customs unions are obviously restricted to goods trade and thus silent on services, which always need additional treatment. Nor do customs unions of themselves deal with all the regulatory issues that are clearly crucial in any new deal.
However, a customs union is an important element in the potential final deal to be negotiated with the EU, and we have been very encouraged by the positive response to our proposal from business and trade unions alike. We are aware of the political challenges that a symmetrical relationship will pose to the EU institutions, but there is a genuine economic prize on offer here for member states to grasp if they wish.
Jeremy also talked in his Coventry speech about our new relationship with the single market, and he repeated our commitment to putting a floor under existing rights, standards and protections. As I said earlier, we cannot be members of the single market once we’ve ceased to be an EU member state. But there are other forms of participation in the European Economic Area as we know from Norway, Iceland and Liechtenstein.
Yet here we come into the realm of political problems, in that we would still be required to respect the four freedoms, and this is manifestly at odds with the spirit of the referendum result. We would be dependent on the Court of Justice of the European Union, and we would still be paying in significant sums to the EU budget – without any more having a seat at the table to influence EU decisions.
In this regard, many of us have been fascinated by the 900-page official review of 20 years of EEA experience by Norway, published back in 2012. I’m very grateful that there is an English translation of the key parts of the report, as it enables me to quote from it here on the consequences for democracy of becoming a rule taker – as it says:
The most problematic aspect of Norway’s form of association with the EU is the fact that Norway is in practice bound to adopt EU policies and rules on a broad range of issues without being a member and without voting rights. This raises democratic problems. Norway is not represented in decision-making processes that have direct consequences for Norway, and neither do we have any significant influence on them. Moreover, our form of association with the EU dampens political engagement and debate in Norway and makes it difficult to monitor the Government and hold it accountable in its European policy. This is not surprising; the democratic deficit is a well-known aspect of the EEA Agreement that has been there from the start. It is the price Norway pays for enjoying the benefits of European integration without being a member of the organisation that is driving these developments.
The final aspect to mention from Jeremy’s speech is where he touched on the need to ensure that any final relationship with the EU enables us to deliver Labour’s progressive economic programme, including taking the essential steps to upgrade and transform our economy in line with Labour’s industrial strategy.
Again, much has been written – not all of it accurate – about the restrictions that would apply to Labour’s industrial policy if we remain under the ambit of EU law. And this links up with the work of the Rosa Luxemburg Foundation on the policy space available for a progressive European industrial policy under what you neatly term the “neoliberal trajectory” of European integration over the past 25 years.
As you put it in your recent report, EU rules on state aid and competition policy are a “major barrier” to industrial policy, and we in the Labour Party are now undertaking the legal work to ascertain the policy space available under the EU treaties for progressive intervention. This is why Jeremy in his Coventry speech specifically called for “protections, clarifications and exemptions” to safeguard Labour’s industrial policy from EU rules – exactly as the Rosa Luxemburg Foundation report called for a temporary exemption of industrial policy initiatives from EU competition, state aid and single market regulations.
We know, for instance, that it is permissible under EU competition rules to have public ownership of service providers, but that it not permissible to create horizontally and vertically integrated public monopolies that close down the market in those services that have been liberalised at the EU level such as rail, post and energy – even if public monopoly is known to be the best way of ensuring the necessary cross-subsidisation to allow public services to thrive.
We know that EU state aid rules allow for horizontal infrastructure development in support of R&D, training and SME start-ups, but that they are much more restrictive when it comes to the types of vertical or sectoral interventions that we will wish to make in delivering Labour’s industrial strategy.
We know that there is a major difference between EU public procurement directives and the high-level principles of the WTO’s Government Procurement Agreement, and that being subject to EU regulations may well undermine Labour’s policy requirement that all companies bidding for government contracts must recognise trade unions, have a maximum pay ratio of 20:1 between highest and lowest paid, and have in place a plan to tackle their gender pay gap.
And we know that under the Laval quartet of ECJ rulings, the right to bargain collectively and the right to take industrial action in defence of a collective agreement are now subservient to companies’ freedom of establishment and freedom to provide services across borders. This situation has now been amplified by the Holship judgement of the EFTA Court in relation to Norway’s dock workers, which I’m sure has been of major concern to the ETUC. Yet Labour made a manifesto commitment to roll out sectoral collective bargaining as a key part of our industrial policy, and even under the proposed revision to the Posted Workers Directive that commitment could well be in jeopardy.
The final comments that I want to make are in relation to the EU’s trade agreements with third countries, as I know that this has been a major concern for many people in this room over the last few years.
The UK will continue to participate in EU free trade agreements during the transition period up to the end of 2020, but not in the governance bodies relating to them, whether internal EU structures such as the Trade Policy Committee or external ones such as the Joint Committee established under CETA.
The legal basis for the UK’s continuing participation in the EU’s trade deals is Article 31 of the Vienna Convention, which states that treaties are to be interpreted in their context. While third countries may well agree to this, there is clearly a larger job to be done in convincing them not to reopen the FTAs themselves for the longer term, in light of the changed market access opportunities they will now represent. I have met parliamentarians from third countries who have told me they are now preparing to reopen trade negotiations with the EU on the grounds of lost market access, even while they recognise they cannot yet enforce new deals with the UK.
But let me finish by touching briefly on Labour’s plans for a progressive trade policy coming out of Brexit.
As you will know, Labour has taken a lead amongst the social democratic parties of Europe in rejecting the EU’s TTIP and CETA proposals. TTIP’s deregulatory agenda was entirely contrary to our commitment to keeping social and environmental standards high, and we are keenly aware that we will have to fight that same battle again on British soil when it comes to any future UK-US deal.
The Labour Party examined the CETA text carefully, as we would usually welcome a trade agreement with Canada. As so many people said at the time, “If we can’t do a deal with Canada, who can we do a deal with?” Yet it soon became clear that the agreement on offer overstepped our red lines on workers’ rights, on regulatory standards, on public services, on transparency and – of course – on ISDS.
While some MEPs claimed that the institutional shift from ISDS to an investment court system had ‘solved’ the problem of CETA, I agreed with the ETUC, the TUC and progressive civil society across Europe in calling for a ‘no’ vote on CETA in the European Parliament. The vote did not go as we had hoped, and we may now face the ratification debate at the national level as other EU member states have done, as the UK government has recently said it intends to present CETA before parliament for ratification, even though it has also said in the past that it will not introduce the enacting legislation necessary to incorporate the agreement into UK law.
And this has special relevance to our current discussion, in that CETA is still regularly talked about as the starting point for the future UK-EU trading relationship. Labour will not accept a deal with the EU that incorporates ISDS measures, under whatever new acronym they are disguised. We have committed to reopening all our existing bilateral investment treaties when a Labour government takes office, and we were obviously heartened in this regard by the recent ECJ judgement in Slovak Republic versus Achmea, which ruled ISDS in intra-EU investment treaties to be incompatible with EU law.
A Labour government will develop a progressive trade policy. Again, this will be a mix of support for manufacturing and service exports – and the many jobs they sustain – alongside a requirement that we keep standards high, rejecting the deregulatory agenda of ‘new generation’ FTAs. We will also ensure that the UK has a robust trade remedies regime in place to defend our manufacturing industries and the many unionised jobs in them from unfair practices – and please do forgive me in this regard for having to leave the seminar before the end, but I have to go and meet the European Commission this afternoon to discuss possible trade remedies in response to Donald Trump’s latest unilateral tariff hikes on steel and aluminium.
I have argued continuously for a progressive policy in the context of the Trade Bill that is currently going through parliament in the UK. I led the Labour team in our efforts to secure a trade policy that respects human rights and environmental conventions, that is open to full parliamentary and democratic scrutiny and that respects the needs of the world’s poorest countries rather than subjecting them unthinkingly to the Economic Partnership Agreements that so many have rejected. Predictably, the UK government rejected every move we made towards a progressive trade policy, arguing instead for the ‘roll over’ or continuation of existing EU deals.
In conclusion, it’s clear that Brexit poses many challenges. But we need also to seize the opportunities it offers to introduce progressive policies that enhance our social protections and our rights.
We as a Labour Party have been pushing for this kind of politics in the UK, and the response from the public has been spectacular, with an incredible 400,000 new members joining the Party since the summer of 2015.
The revitalisation of the Labour Party is a sign that there is hope for progressive politics in Europe, if politicians have the courage to embrace new and ambitious policies and make them work.
In that spirit, I sincerely hope that this won’t be the last opportunity for us to have this type of discussion and to build towards a common vision of the future across all progressive European parties, trade unions and civil society movements, whether inside or out of the EU.