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February 09, 2018

Is the Labour Party shifting towards a customs union?

We continue to dismiss the possibility of a second Brexit referendum. While we see a possible parliamentary majority in favour of a customs-union version of Brexit, we cannot see a parliamentary majority that would force an election that would then bring about a majority supporting a second referendum.

But there is one serious alternative: an agreement, possibly time-limited, for the EU and the UK to enter into a customs union, similar to the agreement the EU has with Turkey. 

Peter Foster of the Daily Telegraph reports this morning that, during his meeting with Michel Barnier, Jeremy Corbyn expressed openness to the idea of staying in the existing customs union with the EU. As Foster rightly notes, that seems to be an important shift from only a week ago, when the Labour Leader told the BBC journalist Andrew Marr that he wanted a different kind of customs union, not the current one, because the current one would require the UK to be a member of the EU.

We know that Corbyn, and many others, are getting their concepts mixed up. It is clearly not possible for the UK to stay in the customs union, which is indeed integral to the EU. But there is nothing to stop the EU and the UK to reach a customs union agreement - an international treaty. It would severely limit the UK's rights to negotiate third-country trade deals. And it would not include financial services. It is possible that such an agreement might be frustrated by the EU itself, which would try to impose restrictions on the UK's ability to seek a competitive advantage elsewhere. The UK would not be a member of the single market, but it would have to abide by single-market rules for products. A customs union would solve the Irish problem at a stroke. It would reduce both the negative economic effects that result from trade disruption, but also some of the potential positive impact that might result from regulatory divergence. 

We are not sure whether Corbyn's statement constitutes a genuine shift in position, or just marks another stage in a confused circular motion. But if there is one sensible alternative to the course set out by the British government, then this is the one. It is not membership of the EEA (that window has closed). Nor is it a Brexit revocation. 

There was a lot of debate about Nick Timothy's article in the Daily Telegraph yesterday about a campaign to unseat the present government and seek a second referendum. We noted that the salient point of his article is that this campaign is based on a fundamental misreading of Article 50, and a misunderstanding of the EU's legal and political position. And Timothy is right that a vote against the agreement will simply mean exit without agreement, just as Article 50 says.

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