London calling the shots

London Labour has been buoyed by election results thought impossible a year ago.

So, the one definite thing in what happens next is that Gordon Brown won't be a part of Labour's future.

The other certainty is the release of the grip that Scottish politicos have had over the Labour Party -- and British politics by default.

Power fills a vacuum, and that hole has already been filled by Labour London, which has created a formidable fighting machine and is buoyed by election results thought impossible a year ago. It is the kingmaker that will decide if David Miliband will take over.

The political map of the capital now has a solid core of red. It controls eight more Labour councils, having gained more than 180 councillors. Westminster seats were secured despite Ashcroft cash; the party held Hammersmith -- home of the Conservative easyCouncil project -- plus Westminster North and Tooting. And it won the marginals of Harrow North and Enfield.

The BNP and Respect were seen off by what Tessa Jowell called "highly targeted campaigns", run by disciplined and focused teams which get the job done with little fuss.

And now the area organisers are looking for both blood and payback. Labour central had already been told that Brown was no longer an asset. "This makes it easier to put the knives in," was the reaction by one activist to the PM's statement.

What is not generally known is that a team within London Labour -- including senior MPs from the capital -- had quietly opened negotiations with the Liberal Democrats over power-sharing months ahead of the election to lay the groundwork for a deal.

Ed Balls is out of favour (too close to Brown), but David Miliband cannot take support as a given: London members long ago tired of being taken advantage of.

The local party's intense focus is now on the city's mayoral race, which it believes is for the taking with a decent "non-Ken" candidate.

"Oona [King] is a possible, but she's got a life outside politics and needs some convincing," said one Hackney activist.

London Labour is confident it can turn a possible bid by Boris Johnson for David Cameron's job into a chicken run -- and the Tories are seriously worried by the Labour turnout.

One Tower Hamlets member reflected on Winston Churchill's wartime coalition as its 60th anniversary fell this week: "This is not the beginning of the end, but the end of the beginning. We're just getting started; it's time one or two in the party sat up and took notice."

Chris Smith is news editor for the MJ and a former lobby correspondent. A specialist on UK government at all levels, he has written for the Guardian, the Times, Sunday Times, the Channel 4 News election FactCheck, Auto Express, HSJ and ePolitix.com.

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What is the EU customs union and will Brexit make us leave?

International trade secretary Liam Fox's job makes more sense if we leave the customs union. 

Brexiteers and Remoaners alike have spent the winter months talking of leaving the "customs union", and how this should be weighed up against the benefits of controlling immigration. But what does it actually mean, and how is it different from the EU single market?

Imagine a medieval town, with a busy marketplace where traders are buying and selling wares. Now imagine that the town is also protected by a city wall, with guards ready to slap charges on any outside traders who want to come in. That's how the customs union works.  

In essence, a customs union is an agreement between countries not to impose tariffs on imports from within the club, and at the same time impose common tariffs on goods coming in from outsiders. In other words, the countries decide to trade collectively with each other, and bargain collectively with everyone else. 

The EU isn't the only customs union, or even the first in Europe. In the 19th century, German-speaking states organised the Zollverein, or German Customs Union, which in turn paved the way for the unification of Germany. Other customs unions today include the Eurasian Economic Union of central Asian states and Russia. The EU also has a customs union with Turkey.

What is special about the EU customs union is the level of co-operation, with member states sharing commercial policies, and the size. So how would leaving it affect the UK post-Brexit?

The EU customs union in practice

The EU, acting on behalf of the UK and other member states, has negotiated trade deals with countries around the world which take years to complete. The EU is still mired in talks to try to pull off the controversial Transatlantic Trade and Investment Partnership (TTIP) with the US, and a similar EU-Japan trade deal. These two deals alone would cover a third of all EU trade.

The point of these deals is to make it easier for the EU's exporters to sell abroad, keep imports relatively cheap and at the same time protect the member states' own businesses and consumers as much as possible. 

The rules of the customs union require member states to let the EU negotiate on their behalf, rather than trying to cut their own deals. In theory, if the UK walks away from the customs union, we walk away from all these trade deals, but we also get a chance to strike our own. 

What are the UK's options?

The UK could perhaps come to an agreement with the EU where it continues to remain inside the customs union. But some analysts believe that door has already shut. 

One of Theresa May’s first acts as Prime Minister was to appoint Liam Fox, the Brexiteer, as the secretary of state for international trade. Why would she appoint him, so the logic goes, if there were no international trade deals to talk about? And Fox can only do this if the UK is outside the customs union. 

(Conversely, former Lib Dem leader Nick Clegg argues May will realise the customs union is too valuable and Fox will be gone within two years).

Fox has himself said the UK should leave the customs union but later seemed to backtrack, saying it is "important to have continuity in trade".

If the UK does leave the customs union, it will have the freedom to negotiate, but will it fare better or worse than the EU bloc?

On the one hand, the UK, as a single voice, can make speedy decisions, whereas the EU has a lengthy consultative process (the Belgian region of Wallonia recently blocked the entire EU-Canada trade deal). Incoming US President Donald Trump has already said he will try to come to a deal quickly

On the other, the UK economy is far smaller, and trade negotiators may discover they have far less leverage acting alone. 

Unintended consequences

There is also the question of the UK’s membership of the World Trade Organisation, which is currently governed by its membership of the customs union. According to the Institute for Government: “Many countries will want to be clear about the UK’s membership of the WTO before they open negotiations.”

And then there is the question of policing trade outside of the customs union. For example, if it was significantly cheaper to import goods from China into Ireland, a customs union member, than Northern Ireland, a smuggling network might emerge.

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.