Sky Views: Labour's shift on Brexit is a big gamble
Monday 26 February 2018 14:09, UK
Faisal Islam, Political Editor
It is not quite the Ides of March, but this week and the coming month will go a long way to deciding where Brexit lands - if it avoids a crash landing, and who gets to be the pilot.
Today, Labour will come off a fence on a customs union relationship with the European Union. Jeremy Corbyn will shift Labour into territory which Number 10 vacated only in the past few weeks. Having left open a customs union as a viable option, it will become the Opposition's stated policy. But then on Wednesday, a key legal text detailing the EU27 understanding of the Phase 1 Agreement, particularly on Northern Ireland, will be circulated, which could pile on the pressure ahead of the PM's big "road to Brexit" speech on Friday.
Labour will outline a relationship well beyond that of the "Turkey model". For starters, the customs union relationship envisaged will be basically the same in scope as is covered within the EU - so cover all goods (not just industrial ones) and agriculture too.
And in recognition of the UK's current size and status, Labour believes it can negotiate a much improved arrangement of influence over deals with third party countries. "How much of a say is a discussion Europe is up for having," says one Labour figure.
Despite Corbyn's longstanding parliamentary euroscepticism, the move on customs unions is of no huge surprise. The downsides of not keeping such arrangements - friction in the trading relations with our biggest market - are keenly felt by the big unions. The upside - the freedom to negotiate independent free trade deals - is not a bonus that the Labour movement cares much for.
The Opposition is now making judgements that it can negotiate a better customs union than Turkey, some movement on Freedom of Movement longer term, and achieve the terms of a phase 1 agreement. It is a type of shadow negotiation with Brussels.
Corbyn and John McDonnell have protested more free trade agreements than they have sought. The leaked Government impact assessments, which showed a fraction of a per cent GDP benefit from new trade deals, versus 5-8% hit to the size of the economy over a decade and a half from being out of frictionless trade with Europe, only intensified that basic calculus.
The Labour leadership thinks it is the only party that can sell any type of soft Brexit to Britain, and that message has been communicated to the business community. The argument within the shadow Cabinet was finally won by an appeal to pragmatism and perhaps a bit of ego. It stretched as far as suggesting that, when in Downing Street, Corbyn and McDonnell would not want to have to arrange a bailout caused by a "Tory hard Brexit", for which they would get the blame. Better head that off at the pass now was the logic.
There are two big problems with this approach - the single market, and the Labour Leave vote. Staying in a customs union covering goods and agriculture, will, necessarily also mean staying in a hefty chunk of the EU law single market acquis. That is easier for Labour as they are instinctively flexible on finding new shared jurisdiction court mechanisms, and there is no wing of the party arguing for divergence, deregulation, and undercutting of EU standards as a business model.
But Labour believes it can get a deal out of the EU27 that offers some flexibility on freedom of movement, while maintaining maximum single market access. The PM long ago abandoned this type of path, out of respect, she said for the EU's four freedoms.
Right now, however, it is not about European Economic Area membership, the Norway option, preferred by many backbench Labour Remainers, or current EEA membership. Mr Corbyn will say that Labour "would seek to negotiate protections, clarifications or exemptions, where necessary, in relation to privatisation and public service competition directives, state aid and procurement rules and the posted workers directive". Some argue that the "exemptions" are not necessary, that there are already ongoing renegotiations of, for example, the posted workers rules, and therefore, ultimately, the Labour position on this will allow a modified Norway option.
The big gamble, is, of course, the Labour Leave voters, and in particular the notion that staying in a customs union is a "betrayal" of that vote. David Davis believes that, unsurprisingly, and a small number of Labour Brexit MPs too. The evidence of the 2017 General Election, however, was that the Conservatives lost many more seats and therefore their majority, because of Remain voters feeling betrayed, than Labour lost seats because of leave voters. Are Labour voters really itching for a trade deal with the US and China?
The really significant shift though is over Northern Ireland. Corbyn for the first time at Prime Ministers Questions told the PM that a customs union was necessary for the sake of keeping a soft border. The Phase 1 agreement is interpreted by the shadow Cabinet as requiring Northern Ireland to stay in the customs union. The Opposition now believe they have a policy that actually makes the Phase 1 agreement work. As it happens this precise issue will be fleshed out by Brussels on Wednesday by the finalisation of this part of the legal text.
And really that is the most significant thing about these events ahead of Friday's big speech by Theresa May. The Opposition is now making judgements that it can negotiate a better customs union than Turkey, some movement on Freedom of Movement longer term, and achieve the terms of a phase 1 agreement. It is a type of shadow negotiation with Brussels. No doubt the Government would argue that such divergent voices can only undermine its negotiation. Though in recent months, it has proven perfectly capable of achieving that itself with separate negotiating positions from different Cabinet ministers.
There is a bigger presumption here, however. At some point, the EU27 and Commission will have to assess whether they want to bend over backwards to accommodate May's red lines - for the end state and the transition. They did help fudge things at a delicate time, indeed the perception in Dublin is that they consciously moved to shore up the PM in December, for fear of something more chaotic.
The very real question is whether Labour's new stance now fundamentally changes that equation.
Sky Views is a series of comment pieces by Paste BN editors and correspondents, published every morning.
Previously on Sky Views: Adam Boulton - The Great Paste BN Debate