On Wednesday 29 March, Theresa May will trigger Article 50 and the process of leaving the European Union will begin. The Prime Minister and David Davis, the Brexit Secretary, have made a commitment to “pursue a bold and ambitious free trade agreement with the European Union.” On 24 January in Parliament, Davis went even further and committed the government to negotiating “a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have”.
As Labour’s Shadow Brexit Secretary, Keir Starmer set out earlier this week, it is critical that we hold the government to account on Davis’ pledge. But it is also crucial that the Labour movement gets to grips with the new reality of trade deals with the EU and other countries, resists any knee-jerk protectionist instincts and makes the right progressive demands on workers’ rights and environmental and consumer protections.
The successful negotiation of a free trade deal with the EU is essential. Together, the remaining 27 EU countries are by far and away our largest export market. And we import more from the EU than from any of our other trading partners. A UK-EU trade deal will therefore be the single most important free tree agreement the UK will ever have to strike, and if it covers both goods and services it will also be the most comprehensive deal that any country has ever negotiated with Europe.
The stakes are high. Our EU membership has given us unfettered access to the single market which is so much more than a free trade deal. It is a vast, integrated factory floor across which goods conform to the same regulations and standards. At the border with the EU, goods are not subject to customs duties, onerous rules of origin or time-delaying checks. Given that services make up 80 per cent of our economy, the government must seek much greater access for our services than the EU has been willing to grant to other countries in the free trade deals it has negotiated so far.
Retaining the exact same benefits is going to be a huge challenge. Indeed, there is no guarantee that such a deal will be achieved, particularly within the two-year period set out under Article 50. The government has already struck the wrong tone with our European partners. The Foreign Secretary seems intent on needlessly upsetting them. The PM parrots the mantra “no deal is better than a bad deal”, effectively threatening to walk away. It is crucial that a new positive dynamic is established to create mutual goodwill and help deliver an ambitious UK-EU trade deal.
There is a substantial risk that the government’s mishandling of Brexit could see the UK fall out of the EU with no trade deal at all, thereby falling back on to World Trade Organisation tariffs and barriers. Furthermore, we would do so with none of the technical agreements in place – such as financial services equivalence agreements and mutual conformity of assessment agreements – that other major countries around the world enjoy. As Sir Ivan Rogers, the former UK Permanent Representative to the EU, recently asserted in his evidence to the Exiting the European Union Select Committee, on which I sit, “no other major player trades with the EU on pure WTO-only terms”.
The Prime Minister asserts that “no deal is better than a bad deal”, but it is increasingly clear that no deal is the worst possible deal. It would do considerable damage to our economy. And yet, we have learnt that Cabinet members have been told to plan for the no deal scenario. In recent weeks, Davis has admitted to the Brexit Select Committee that the government has conducted no analysis of what this would mean for the British economy. Labour will fight strongly against such a reckless step which would hit jobs, living standards and growth.
As Starmer said in his speech to Chatham House, the government must agree a strong and collaborative relationship with the EU. If it does not, it will not be acting in the best interests of the UK and it will not have Labour’s support.
I believe that Labour must champion the right free trade deal with EU over the next two years. We must demand that the government accepts meaningful transitional arrangements that will be necessary to successfully complete such negotiations. A successful EU-UK deal could then become a template for future agreements. After all, our country’s future economic prosperity rests on striking free trade deals not just with the EU but with other G20 economies and developing countries around the world. So Labour must become a champion for striking progressive free trade agreements.
Yet this poses a challenge to the Labour party. Within our movement, there is currently a heated debate about what our approach to trade should be. This was exposed by the recent votes in the UK Parliament and European Parliament on the Comprehensive Economic and Trade Agreement (Ceta) between the EU and Canada when Labour MPs and MEPs were divided. I fear Labour risks sliding into a dangerous position: one of perpetual opposition to trade deals that puts us the wrong side of the public interest and history. Globalisation cannot be stopped but it can be regulated. So the real challenge is how to make it work for people so that they can benefit from an increasingly globalised world.
No trade deal is ever perfect. Each is inevitably the result of negotiation and compromise. However, if we followed the advice of some on the left and refused to ratify any trade deals, no matter how progressive, the UK would be isolated, poorer and left behind. Of course we need assurances that public services will be safeguarded, that workers’ rights are protected and environmental and consumer protections are in place in any deal, but we also need to open up markets. Trade deals are not the threat to public services that some claim, but a failing economy facing trade barriers that puts a squeeze on the public finances is a clear and present danger.
Labour’s values place us in a strong position to lead the way in rejecting the Tory right-wing approach of unfettered globalisation, a race to the bottom and unchecked markets. We must show that we are the party of work and workers, looking to both create jobs and protect the rights of workers in our future trading relationships. Our internationalism can be expressed by establishing progressive global rules and opening up markets, using trade to bind nations together in a way that prevents conflict and opens minds.
As these historic negotiations begin, Labour must hold the government’s feet to the fire and champion regulated and progressive free trade deals with the EU and other countries. Turning our backs on properly regulated free trade will not further social justice or economic prosperity on our shores, it will only serve to do harm to both. Labour has to reject the defeatism of protectionism and instead embrace progressive free trade agreements if we are to truly succeed in building a fairer and more prosperous economy for the people we represent.