Thursday 20 September 2018

Corbyn's intervention could be beginning of a soft Brexit - but expect more twists

UK Labour leader Jeremy Corbyn delivers his keynote Brexit speech at Coventry University Technology Park, Coventry. Photo: Aaron Chown/PA Wire
UK Labour leader Jeremy Corbyn delivers his keynote Brexit speech at Coventry University Technology Park, Coventry. Photo: Aaron Chown/PA Wire
Richard Curran

Richard Curran

British Labour Party leader Jeremy Corbyn has finally come alive to what has been happening on Brexit all around him. His policy shift this week to say that the UK should pursue a customs union was significant.

It was either a perfectly-timed intervention chosen when the British Prime Minister is at her most vulnerable, or he simply woke up from a Brexit coma, through which he has had very little to say.

By stating that he would pursue a customs union, he is saying that with the support of some back-bench Tories, they can succeed in forcing the UK government into a much softer Brexit.

Up to now, all of the British government policy red lines on Brexit have pointed to some kind of Free Trade Agreement, similar to that of Canada or South Korea, in its relationship with the EU after Brexit. But it would mean no single market and no customs union.

This would involve some tariffs, especially on services, and inevitably customs checks and associated costs on goods travelling into the EU. Irish businesses, both importers and exporters, would have to reinvent their entire supply-chain logistics or pay higher costs.

A permanent customs union involves something much closer to the status quo and it would diminish the need for customs checks. Some checks would still be required unless all goods transiting were guaranteed to meet EU standards.

However, it would not be altogether straightforward either. He said he would not envisage the UK being in passive receipt of rules from the EU, which would be decided elsewhere.

So the UK would need a mechanism to participate in setting various rules with the EU, while also having a say in future EU trade deals agreed with other countries.

These provisos would not be well-received in Brussels, which has consistently said that the UK cannot have an à la carte approach to aspects of membership.

By maintaining EU standards, it would limit the UK's scope for so-called regulatory divergence. However, Mr Corbyn wants the UK to be unshackled by a variety of EU rules around state aid to companies or sectors, while also being free to negotiate "other protections, clarifications or exemptions where necessary".

Experts believe the greatest cost to Irish business could be through regulatory divergence. This could mean adopting different food or medicine standards in order to sell to third countries. In would also allow for cheap food imports from around the world.

But it isn't clear just how far the UK would go down that road. Another option is for the UK to maintain the same final product standards but use its escape from EU regulations and directives to facilitate tax deals, state aid to sectors and even different standards around the production of goods such as environmental rules.

It seems that even under Mr Corbyn's softer Brexit option, this kind of deviation in the business environment could still take place giving the UK some competitive advantages. But it is hard to see Mr Corbyn going out of his way for British business in any scenario.

His policy position does blow a hole in the Brexiteers' aims of negotiating a raft of new trade deals with third countries.

Brexiteers maintain this is a major benefit of leaving the EU that would enable it to do more trade with places like India, China, Australia and South America.

Brexit has probably brought out the worst in British politics since the referendum campaign but it has also brought up some choice quotes which, at times, have captivated the vacuous nature of some policy positions.

This week, Martin Donnelly, a former permanent secretary to British Trade Secretary Liam Fox, summed up the aim of seeking to transform Britain's fortunes by leaving the EU while negotiating new trade deals elsewhere. He said 60pc of UK trade is either with the EU or the countries it has trade agreements with, and that any divergence from Brussels rules would deal a blow to British services.

He said: "You're giving up a three-course meal, which is the depth and intensity of our trade relationships across the European Union and partners now, for the promise of a packet of crisps in the future if we manage to do trade deals outside the European Union which aren't going to compensate for what we're giving up."

This is beating the Brexiteers in the soundbyte battle, which they have waged since the lies printed on the side of a referendum campaign bus about higher health spending after Brexit.

In fact, pro-Brexit cabinet secretaries have substituted hard analysis with vacuous but colourful quotes, aimed at creating distracting headlines.

Brexit secretary David Davis, in providing his vision for Brexit, said that fears the Conservatives will plunge Britain into a "Mad Max-style world borrowed from dystopian fiction" after leaving the EU were unfounded.

He said very little about what it would be like.

Foreign Secretary Boris Johnson, in his speech supposedly outlining his Brexit vision said: "We will continue ever more intensively to go on cheapo flights to stag parties in ancient cities, meet interesting people, fall in love, struggle amiably to learn the European languages whose decline has been a paradoxical feature of EU membership."

Mr Johnson was at it again during the week. When explaining how technology could avoid a hard border in Ireland, he compared it with moving through London boroughs.

"There's no border between Islington or Camden and Westminster, there's no border between Camden and Westminster, but when I was mayor of London we anaesthetically and invisibly took hundreds of millions of pounds from the accounts of people travelling between those two boroughs without any need for border checks whatever."

Is this another Boris blunder or was it more deliberate? Perhaps he knew this analogy would annoy a lot of people on this side of the Irish Sea, as he feels the pressure put on his government by a firm Irish government negotiating stance on the Border. This was more throwing his diplomatic toys out of the pram rather than making an unforced error.

But my favourite quote, which did encapsulate the disastrous election campaign fought by Theresa May last year came from Conservative MP for Ribble Valley, Nigel Evans.

He compared it to the Titanic: "We were steaming under blue skies and then we created our own iceberg and steered our campaign towards it."

Good soundbytes or bad, pressure is mounting within the British political system. The Brexit referendum was always about Conservative Party splits, but since it was passed, it has been down to the machinations of domestic British politics.

Now that Mr Corbyn has finally got into the starting blocks, it has become a proper race. The Labour leader runs the risk of alienating many Labour supporters in places like the North of England, who voted for Brexit.

Equally, he also stands a chance of scuppering a hard Brexit before it is too late, and thereby triggering another general election.

For those of us in Ireland worried about Brexit, from farmers, to food sector workers, to border business owners and fishermen, Corbyn's intervention may be a source of relief.

Even if there are difficulties with the Corbyn Brexit plan, it would be much easier at some point in the future for the UK to return fully to the single market from the position he is advocating.

But there are probably still many, many, more twists in this tale before we get to see what kind of Brexit really does lie ahead.

Indo Business

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