Tuesday, 17 January 2017

Leaving the Single Market and Customs Union: Statements of the Bleeding Obvious



We must assume, I suppose, that the big speech Theresa May will be giving today vis a vis our strategy on leaving the EU will not see her stand up, say Brexit means Brexit and then sit down again. The Sunday newspapers claim that she is going to go much further than hitherto. She is going to say that we are going to have a so called hard Brexit.

This is as much of a meaningless phrase as Brexit means Brexit. It is meant to mean that we will be leaving the Single Market and the customs union. But again this is a statement of the bleeding obvious. Of course we are leaving the Single Market. We are leaving the EU and our membership of that and of the Single Market go hand in hand. And nobody on our side of the debate during the referendum ever claimed that we would stay in the Single Market. It was a given that we would leave. Indeed there is currently no legal basis for our staying in if we leave the EU. We will also be leaving the European Economic Area as this is nearly the same thing.

The Single Market is not all it is cracked up to be anyway. It is part of the reason why we need to leave. It is an excuse for endless regulations and interference on trumped up claims of the need to homogenise us all. For the EU Commission the Single Market was a dream come true. They had the perfect excuse for their pettifoggery and their intrusion into matters that ought to have been none of their concern. Thanks to the Single Market they became the arbiters of how Britain does business, even when that business is exclusively domestic in nature.

By stating that Britain will be leaving the Single Market then the prime minister will just be acknowledging the truth of our position. This is not to say that we will not be able to negotiate access to and deals with the Single Market. In doing so however we will be negotiating access in the same way that any other sovereign country does so. We can reasonably hope for most favoured nation status given our proximity, the size of our market and the confluence between British and European markets. In industries like the car industry and aerospace for instance there is every reason to presume that common sense will prevail. These interdependent industries that rely on cross border movement of the huge number of components that make up modern cars or aircraft require a deal to be done. This is not to say that they could not work without such a deal, even if we were to revert to WTO terms. But it would be easier and more practicable if a common sense deal were done to suit both sides.

As to our leaving the customs union well that is a no brainer. Britain needs to be outside the protectionist customs union so that we can negotiate free trade deals with the rest of the world. The USA may well be our first port of call in this regard, as Donald Trump has indicated, a deal that has eluded the EU because of how many parties need to agree it before it is ratified. It would be a tremendous statement of intent for Britain to do such a deal with the biggest market in the world. From that deal many more would quickly follow.

The markets have of course reacted to this non-new news in their customary headless chicken way. No doubt, once they think about it, reality will dawn once again. Britain is leaving the EU. We have known this now for six months. The sky has yet to fall on us all. We have not yet fled to the mountains having emptied the stores of tinned goods and other non perishables. Mrs May has been criticised for failing to give enough detail about what she plans. She should not give away her negotiating position. What she no doubt will do today is state boldly that Britain will be just fine even if the EU behaves irrationally. The rational position is up for grabs. We have an excellent hand to play when negotiations finally get underway, a hand that even our former Remainer Chancellor illustrated at the weekend when he told a German newspaper that if Europe played hardball we will retaliate with measures to slash tax and regulation and turn Britain into the Singapore of the west - something we should actually go ahead and do anyway. Perhaps the Chancellor might think of starting this process when he gives what will be the last ever spring Budget statement in March.

By next week we will know if parliament needs to legislate to invoke Article 50. That is when the starting pistol is fired. Today the PM will reassure us that there is a plan and that Britain is open for business with Europe and the whole world. Our leaving the EU will just make matters easier.

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