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Don’t write off the single market; the grande lady has yet to sing

In a few days, the Supreme Court is expected to rule on whether parliament should have a say on Article 50. It’s expected to confirm that, as every student knows, parliament is sovereign in our constitution, and that Mrs May was out of order in trying to push the Brexit process through under the pre-democratic powers of royal prerogative.

Hitherto, Mrs May insisted that “a negotiator doesn’t show her hand” because that gives the other side an advantage. But this is disingenuous. No one is suggesting that the PM should lay out exactly how she intends to achieve her objectives – but it is essential to know what those objectives are. Assuming she actually has any.

We all know that “Brexit means Brexit” and that Britain is leaving the EU. But six months on, as the former British ambassador to the EU, Sir Ivan Rogers,  made clear in his resignation memo, there is no conception of what comes after it. Something must replace the institutions and protocols that have governed Britain’s trading relations, not just with Europe, but with the world for the last 40 years. Much of British trade with non-EU countries has been under Brussels rules.

The EU is a whole range of institutions, some good, some bad, some necessarily evil. The Common Agricultural Policy, which accounts for 40% of the EU budget, has rightly been criticised as a protectionist club that hands too much money to agricultural corporations. The European parliament is a phoney legislature which doesn’t really have proper powers. In the absence of real democratic legitimacy, Brussels has fallen into the hands of technocrats and bankers, who have little interest in the welfare of the ordinary people living in Europe.

I don’t think this democratic deficit was a reason to leave the European Union, but I can respect the arguments of those who think it was. Small countries such as Norway and Iceland wanted to remain aloof from Brussels, not just to preserve their fishing grounds, but because they did not subscribe to the neoliberal economic doctrines and the lack of accountability of the EU.

However, they didn’t make the mistake of throwing the free trade baby out with the bureaucratic bathwater. Norway made the sensible decision to join the European Single Market. This means they are part of the richest trading block on the planet, but don’t have to put up with the rest of the Brussels machine.

Europe is not a state, but essentially a tariff-free zone with a lot of co-operative institutions on top. Its main economic objective, since the Single European Act of 1986, has been getting rid also of non-tariff barriers to free trade – all the petty rules and regulations that countries use to make it difficult for trading partners to gain access to markets. The Conservatives should know this better than anyone since the single market was largely inspired by Margaret Thatcher, as the former Tory chancellor Ken Clarke confirms in his autobiography.

All those directives about bent bananas and lawn mower emissions are not barriers put up by the EU; they are about creating a level playing field across the entire continent. The single market is a classic liberal project which tries to create genuinely free trade, not just in goods but in services, which implies freedom of movement of the people who provide the services. Margaret Thatcher wanted free movement because she hoped that would lessen wage inflation – which it did.

Under pressure from Brexiteers, Mrs May prematurely dumped the single market. In her speech to the Tory conference she ruled out free movement, thinking it was synonymous with immigration, and the European Court of Justice, the body that adjudicates on trade disputes in the single market.

But something has to replace it, and Sir Ivan’s resignation email confirms that the Government is bereft of ideas. “Contrary to the beliefs of some”, he wrote, “free trade does not just happen…Increasing access to other markets and consumer choice in our own depends on the deals, multilateral, plurilateral and bilateral that we strike and the terms that we agree”.

Before Christmas, the International Trade Secretary, Liam Fox, tried to row back from the brink by suggesting that Britain might remain in the customs union that preceded the single market. But this would be the worst of both worlds. Customs union countries have to adopt common tariffs on goods from countries outside the union. This means Britain would not be able to negotiate its own trade deals with other countries. Customs unions also have lots of rules, a court and a prejudice in favour of free movement.

Britain’s unthinking rejection of the single market risks taking Europe back to the 1930s when it was a claque of angry countries engaged in almost constant economic warfare, called autarky. The Great Depression was prolonged because world trade shrank as countries erected protectionist barriers and devalued their currencies. This “beggar my neighbour” approach is all happening again. Brussels may have made many mistakes, but the single market was not one of them: it has been a huge force for peace and prosperity in Europe. Unwinding it will be a disaster and not just for British trade.

The greatest danger facing Europe, indeed the world, in 2017 is economic nationalism. If others follow Britain and America down the road of protectionism – and it seems very possible that France, Italy and the Netherlands could be next – then there could be profound political instability. The emergence of a newly expansionist Russia, coinciding with the disintegration of Europe, reads like one of those Higher History questions about the causes of the next conflict.

People scoff at the idea that the EU has prevented European countries going to war with each other, as they did repeatedly in the 20th century. War in Europe may seem a very remote risk today. Except that there already is one: in the Ukraine. Ask countries such as Latvia, Estonia, Lithuania whether they think the EU is still needed and you’ll get a pretty firm reply in the positive. If trade breaks down international relations break down. We’ve been down that road before. Brexit is not just a narrow question of trade, but about the future of European civilisation.

Herald 5/1/17

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About iain2macwhirter

Writer and journalist.

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