What is Labour’s policy on the customs union and single market?

Published: 26th Oct 2018

In brief

Claim

Labour is pushing Theresa May for the UK to have access to the Single Market after Brexit.

Conclusion

Labour says it wants to be outside of the single market after Brexit, but has tabled amendments calling on the government to seek “full access to the internal market of the European Union”. Labour suggests the issue of free movement would have to be negotiated in this scenario. It’s hard to judge how feasible this would be as a negotiating position, but it seems to fall foul of the EU’s red lines.

 

Labour is pushing Theresa May for a UK-wide Customs Union.

 

Labour says it wants to whole of the UK to be outside the EU customs union after Brexit, but in a new customs union with similar levels of access, and the ability to strike free trade deals. This, like the government’s Chequers proposal, is likely to be unpalatable to the EU. It’s hard to judge how feasible this would be as a negotiating position, but it seems to fall foul of the EU’s red lines.

Claim 1 of 2

“We’ve got a really clear position that we have had for a long time. We’ve been pushing Theresa May for a UK-wide Customs Union and access to the Single Market in order to protect jobs.”

Lisa Nandy MP, 25 October 2018

What is Labour’s policy on the customs union?

The crucial word here is “a”. The EU customs union is a free trade area in which countries can’t put tariffs on goods and services imported from each other, and set the same tariff for countries outside the union. All EU member states must be a part of the customs union.

Labour wants to leave the customs union, but negotiate a new one on very similar terms. Back in February, Jeremy Corbyn said this would “ensure that there are no tariffs with Europe” and “would depend on Britain being able to negotiate agreement of new trade deals.”

Ms Nandy specified that Labour’s desired customs union would be UK-wide. This is probably because there has been some talk of only Northern Ireland remaining in the customs union, while the rest of the UK leaves it. The government has ruled out only Northern Ireland remaining in the customs union.

What is Labour’s policy on the single market?

The EU single market is more wide-ranging: member countries sign up to the free movement of goods, services, people and money across their borders. The single market is made up of all EU member states plus a few others.

Labour has ruled out remaining in the single market, but still wants access to it. In July, Labour tabled an amendment (which didn’t pass) to the EU Trade Bill, stating that the government should aim “to ensure the United Kingdom has full access to the internal market of the European Union, underpinned by shared institutions and regulations, with no new impediments to trade and common rights, standards and protections as a minimum”.

What exactly this would mean in practice is not completely clear. Some commentators have suggested that Labour’s position is to be as close as possible to the single market (following things like EU court rulings and regulations on workers rights) without allowing the free movement of people from the EU. In June Labour’s shadow Brexit secretary Keir Starmer said freedom of movement would “have to be part of the negotiations”, and also that “in our manifesto we made it clear that freedom of movement will end when we leave the EU. The gritty details of Labour’s policy haven’t been fully  spelled out.

Is Labour’s policy viable?

It’s hard to judge how feasible this stance would be as a negotiating position is, for the simple reason that Labour are not the ones negotiating Brexit.

But much as the EU have rebuffed aspects of the government’s “Chequers proposal” for “undermining the Single Market”, it’s plausible that Labour’s policies on both the customs union and single market would also fall foul of the EU’s red lines.

On the customs union proposals, there’s precedent which suggests it is feasible to negotiate a customs union similar to the one we’re currently in, but it’s unlikely we’d also be able to have the freedom to strike wider trade deals.

The EU does have a separate customs union with a few other countries, for example Turkey. The union with Turkey isn’t as extensive as the EU customs union, or the union Mr Corbyn suggested he wanted in February (services and some non-agricultural goods are not covered). The terms of the EU-Turkey customs union mean that Turkey has limited freedom to strike trade deals with non-EU countries, and must also follow EU rules on things like industrial standards.

The EU said it will not accept a “pick and mix approach” which gives Britain the same rights in terms of customs union access as other EU states, without the same obligations not to strike wider trade deals on its own.

On single-market access, it seems implausible that we could remain as close to the single market as Labour wishes to, without accepting freedom of movement. In June 2016 the EU said  “access to the single market requires acceptance of all four freedoms, including the freedom of movement”. President Tusk summed it up with another culinary metaphor: “There will be no single market à la carte”.


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