Foreign Secretary Boris Johnson’s policy on cake is, famously, “pro-having it, and pro-eating it”. This certainly appears to be the predominant ambition among the Cabinet’s leading Brexiteers. Quite understandably, this has led to accusations by the EU that the UK is trying to “cherry pick” which parts of EU membership it wants to retain post-Brexit, allegedly with little regard for the fact that the EU is a package deal – take it, or leave it. The reality, however, is that the EU is not a package deal. Member states have been cherry-picking which parts they wish to participate in since the union’s inception.
Prime Minister Theresa May, lacking a majority in the House of Commons, may well find herself in need of a compromise that she can sell at home. The hard Brexiteers within her own party insist that the UK must be free to strike its own trade deals with third-party states. A small minority within her own party, meanwhile, favour as little deviation from the status quo as possible. This minority was manageable so long as the Labour party backed the government’s position on Brexit. Now, however, Labour leader Jeremy Corbyn, in an ironically New Labour display of third-wayism, has set out its own vision for Brexit: the maintenance of a customs union with the EU post-Brexit. Both the Labour party and the government Brexiteers maintain that free movement of people must come to an end.
To summarise, what May needs in order to sell a Brexit deal domestically is as follows:
Freedom to strike trade deals with third-party states post-Brexit
The end of free movement of people (at least, as we know it)
A (note the indefinite article) customs union with the EU
At the same time, the prime minister also appears to need an arrangement which meets the EU’s principal criteria:
- No special treatment for the UK just because it voted to leave
The government needs an arrangement that satisfies all of the former criteria, but that the deal cannot amount to special treatment. Such an arrangement might seem like political alchemy except for the fact that such an arrangement already exists. It is enjoyed by members of the European Free Trade Association (EFTA) – an organisation of which the UK was a founding member.
EFTA is an international organisation established by a free trade agreement – the EFTA Convention. The EFTA Convention seeks to eliminate tariff barriers and reduce non-tariff barriers between its signatories. Crucially, though the EFTA states have negotiated a number of trade agreements jointly, its members are free to negotiate their own trade agreements with third countries.
EFTA was established as an alternative to the EU’s predecessor, the European Economic Community (EEC). While the EEC sought to liberalise free trade through integration, EFTA’s model was based upon cooperation between sovereign states. The UK and Denmark were both founding members of EFTA, however. When both states joined the EEC in 1973, their substantial trading relationships with EFTA members created an onus to bridge the gap between the two blocs. The result was that the remaining individual EFTA members concluded free trade agreements with the EEC in 1972 and 1973.
The crucial difference between a free trade agreement and a customs union is that the trade agreement is only concerned with how the parties to the agreement trade with each other. Under a customs union, the parties to the treaty not only agree to trade freely with each other, but they also agree to negotiate all future trade agreements with other states collectively. Consequently, the parties to a customs union are not at liberty to negotiate agreements with third-party states by themselves.
More cake, Jeremy?
Labour’s position on cake seems to be: pro-having it, pro-eating it, and pro-vetoing everyone who wants a cake of their own.
Corbyn’s new position on Brexit appears to be even more selfishly selective than anything articulated by Johnson. Announcing the policy, he said:
Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland … But we are also clear that the option of a new UK customs union with the EU would need to ensure the UK has a say in future trade deals.
In essence, Corbyn’s post-Brexit vision is for the UK to form a new customs union with the EU (as opposed to participating in the existing EU customs union). The EU and UK would jointly conclude agreements with third-party states, and the UK would enjoy a veto over such agreements. This not only amounts to a cherry-picking of the EU’s existing trade framework, but an insistence that the UK should exercise an even greater control over the EU’s arrangements with third-party states than exists at present. While indications are that Brussels is looking favourably upon Corbyn’s speech, it is inconceivable that the EU would agree to the form of arrangement Corbyn is presently proposing.
The solution, therefore, becomes increasingly obvious. Membership of EFTA would allow the UK access to the association’s network of existing free trade agreements, as well as retaining the UK’s liberty to conclude trade agreements of its own, thereby satisfying a key demand of Brexiteers. Furthermore, such an arrangement would put the UK far beyond the ambit of the free movement of people that is so anathema to the Conservative right. And while EFTA membership falls short of a separate customs union with the EU, it appears to be as close to Corbyn’s new position as is conceivably possible.
Crucially, such an arrangement conforms with existing arrangements between the EU and EFTA states – in particular, Switzerland – thereby allowing the EU to maintain that the UK is not a recipient of any special treatment. It may well be the case that EFTA’s next member is also its first.