Brexit and the Single Market
Professor emeritus of economics, John Weeks, goes through the labyrinth of misconceptions around the EU, single market, and the customs union all within the context of Brexit
SHARMINI PERIES: It’s the Real News Network. I’m Sharmini Peries coming to you from Baltimore. The Tory-led UK government unveiled a proposal for a temporary customs union with the EU on Tuesday. The proposal was blasted as fantasy by the EU parliaments and Brexit coordinator, Guy Verhofstadt. Meanwhile, Keir Starmer, the Opposition Labor Party shadow minister for Brexit, said that they are incoherent and inadequate proposals designed to gloss over deep and continuing divisions within the cabinet.
Now, when it comes to Brexit, YouGov Polling Agency is reporting that there are bitter polarization between UK citizens over Brexit and over the kind of trading relationship the UK can and should have with the EU after the Brexit, with some claiming catastrophic consequences for the UK economy if it doesn’t keep access to the single EU market.
I spoke to economist and professor John Weeks earlier and asked him to explain what he thought people need to understand and know about the European Union and the single market. John Weeks is Professor Emeritus of Economics at the University of London, and author of Economics of the 1%: How Mainstream Economics Serves the Rich, Obscure Reality and Distorts Policy.
Good to have you with us, John.
JOHN WEEKS: Thank you very much. Good to be back.
SHARMINI PERIES: John, lets begin by explaining to us, our audience, the controversy over access to the single market and why it matters.
JOHN WEEKS: The way to begin is to realize the political context of all of this within Britain and later, I can talk about within the, on the continent. In Britain, the move to leave, the campaign to leave the European Union, was led by the right wing of the Conservative Party. There were some progressives from different groups that supported leaving the European Union, primarily because they were outraged by the way that our leaders of the European Union had treated Greece, and there are many aspects of the European treaties that are not very progressive at all.
It has become increasingly a neo-liberal project, step by step over the last 40 years, so there were some progressives that wanted out of the European Union but, by far, the great majority of the people who led the fight to leave the European Union was the right wing, and they did it for a very specific purpose. They wanted to escape the business regulations on the environment, the environmental constraints, or what the UK business sees as constraints, on their operations, on the labor regulations and also on various human rights and civil rights regulations that affect businesses, such as the right to protest, the right to strike, issues such as that.
It’s very concrete, it’s not at all obscure. About 18 months ago, the Conservative Party had to drop provisions in its bill to reduce the power trade unions, had to eliminate some provisions of that, because they violated European Union law. The business community wanted out of that. Though it’s slightly more complicated than that, because the financial sector in Britain, which is very powerful, was of two minds, and is of two minds, about this on the one hand, they don’t produce anything, so they don’t have to worry so much about work regulations, though there are still questions of employee rights. On the other hand, they, too, would like to be free of European regulations. London, along with Dublin and some other places such as the Cayman Islands, is a center for money laundering and it would probably be easier if Britain were out of the European Union. On the other hand, I think that many of the big British banks think that their operations on the continent might be somewhat curtailed were Britain to leave the European Union.
SHARMINI PERIES: John, let’s take a listen to Jeremy Corbyn, leader of the opposition UK Labour Party, speaking to BBC regarding the single market.
BBC: The reputation as a straight-talker and clear answers, there’s one issue on which you won’t give a clear answer. When you are asked, “Would you like to see us leave the single market?”, you can’t tell us.
JEREMY CORBYN: The single market is dependent on membership with the EU. What we’ve said all along is that we want a tariff-free trade access to the European market and a partnership with Europe in the future.
SHARMINI PERIES: Is Jeremy Corbyn’s statement that it is not possible to be a member of the single market after leaving the EU accurate, and what’s the difference between the single market and the membership, say, for tariff-free access to the market?
JOHN WEEKS: That’s an excellent question, about which there’s tremendous confusion and tremendous misrepresentation. Strictly speaking, Jeremy Corbyn is absolutely right, and that’s partly because, legally, there’s no such thing as a single market. If you look at the European treaties, which I have gone over in great detail — I don’t recommend it, it is very tedious — the term “single market” is never used. The term that is used is, “the internal market,” or “the European market.” As should be obvious, you cannot be a member of the EU internal market unless you are a member of the EU. That’s true by definition.
However, the press, The Guardian being a good example, and the BBC, almost always refer to the internal market as the “single market,” but there is no such thing as a single market. You might say what is slightly confusing about what Jeremy Corbyn said, and overall, I support his position, is that a government of a country which is outside the European Union can negotiate to have the same trade status as a member of the European Union. That is, it doesn’t make you part of the internal market, but it means you are rather like an annex to the internal market. You have the same rules and the same rights as a member of the European Union, though that must be negotiated. There’s no package where you can say just sign this little document and you’re part of the internal market. It is a rather complex arrangement and now two countries have the same arrangement with the European Union, that aren’t members, I mean.
SHARMINI PERIES: In your article about the single market, you argue that commonly cited arguments for staying in the single market don’t stand up to interrogation, and they also neglect the fact that the union was about, the European Union in this case, was about cooperation. Could you explain that further and can that kind of cooperation be remodeled here outside of the European Union?
JOHN WEEKS: The people who are for staying in the European Union, and they are not all, but many of them are, the neo-liberal wing of the Labour Party. Let me say, I worked during the referendum, I campaigned to remain in the European Union, however, I did not do so for the economic advantages. Britain actually has a large trade deficit with the European Union. If you think exporting to the European Union increases employment, then you must also think that importing from the European Union reduces employment. Let me say, I would make neither argument, but when someone says, “Oh, if we were to not be in the single market, if we did not have standard links to the European internal market, it would be bad for our employment,” that either shows ignorance or it shows a complete misunderstanding or a misrepresentation.
I would say that the economic advantages of the European Union are not what would be stressed. The reason I supported the European Union is for a couple, there’s several, I think, basic reasons. Despite its neo-liberal character, its protection of worker’s rights and its protection of civil rights, environmental rights, it is much stronger than was in British law and, in addition to that, the Europeans have had an alarming tendency to go to war with each other during the 19th and the 20th centuries. The European Union, I think, is a force for peace among Europeans, though it’s not perfect and we shouldn’t get carried away.
Then, in addition, I think it is quite important that the function the European Union has in terms of the general defense of democratic institutions, it is unfortunately the case that the world has many rather unsavory dictatorships or near-dictatorships, dictatorships in the making, China, Russia, Turkey, and the European Union, for all its flaws, is a democratic institution. Though again there, there are certainly problems, Poland, Hungary, and so on, but on balance, I think the European Union is a force for supporting democratic institutions.
SHARMINI PERIES: John, you also explained, this is also in your article, that a precursor to the EU was the European Coal and Steel Community, followed by the ECC, or the European Economic Community, and that these creations worked to prevent tariff wars and political conflict. Does that mean that you don’t agree with the left critique that these institutions were really creations of the capitalists for capitalists?
JOHN WEEKS: I think that they were, but they were in a context of very strong social democratic and Christian democratic governments in Europe. By social democratic governments, I mean governments which emphasize a strong welfare state and which were based on trade union voters and trade union strength. By the post-war Christian democracy, I mean a rather paternalistic view that the excesses of capitalism had led to World War II and that we shouldn’t allow that to happen again, that it wasn’t in the interests of the capitalists to have unbridled competition.
I can remember when I was in Britain in the early 1970s, the Chancellor of Germany, Helmut Schmidt, he’s the one who followed the famous Willy Brandt, Helmut Schmidt came and spoke to a congress of the Labour Party and he said, “Come join us,” this was just before Britain joined the European Union, he said, “Come join us to make a socialist Europe,” by which he meant a social democratic Europe.
I think that it was once a project which was a progressive project, it wasn’t a revolutionary project, but it was a progressive project, but it is no longer. This makes it very difficult to determine what should now be the progressive position, or position of progressives, in Britain towards the European Union.
SHARMINI PERIES: John, while the European Union was established to uphold a democratic will of the people, and it’s doing a pretty good job at that, as we would both agree, right now the neo-liberal capitalist financial sector has a grip on its behavior and how it conducts itself and it’s difficult to separate those two objectives. Given this situation, what should people be fighting for right now when it comes to, especially the UK, because it is in the process of the Brexit?
JOHN WEEKS: The European Union treaties, as part of their evolution into a neo-liberal arrangement, in the last 10 years, there have been two new treaties. In those treaties, it appears that there is a clause, an article, in one of the treaties called the Treaty on the Function of the European Union, that could be interpreted as prohibiting re-nationalization of industries. The Labour Party is committed to the re-nationalization of transport. In the European Union, transport is a special case, but the Labour Party is, quite possibly, would enter into other nationalizations, that is under discussion. Remaining a member of the European Union might result in making it more difficult to bring those nationalizations about.
Another issue is the question of the free movement of capital. In general, that is one of the requirements for being in the European Union, that there can be no capital controls, except over illegal movements, money laundering, drug money, such as that. In general, progressives have not been very keen on free movement of capital. That is for several reasons. One is, you need capital controls of various types to limit the power of the financial sector. Also, the financial sector can use short-term capital movements to undermine governments by a run on the pound or a run on British bonds. I would think that a Labor government — let me say, I have no inside information, and this is a very volatile subject — would at some point consider the possibility of different types of capital regulations. That would not be allowed in the European Union.
Then, the third thing which is problematical, is the European Union, to be a member of the internal market or associated with it on the same terms, you have to accept what they call the four freedoms, which is a rather grotesque use of the term, “four freedoms,” because, as you may know and some of the watchers may know, Franklin Roosevelt coined that term to mean freedom from want, freedom of religion and so on, while for the European Union, it’s free movement of labor, free movement of capital, free movement of goods and free access to public services.
That means if a Labour government were to move to nationalize the railroads, they are now in private hands, under European Union rules, it would probably have to throw that nationalization open to bids to the private sector. For example, if you wanted to put out the, under the National Health Service now, there are many activities which, I regret to say, begun by the Labor Party under Tony Blair, are privatized, or out to private bidders. Whether or not those could be re-nationalized, and whether or not, well, it could be, whether or not that would be in conflict with European law, is open to question.
You have all of these issues, which the Labour Party leadership must grapple with, while at the same time trying to balance a party in which a majority of its voters are probably for remaining in the European Union.
SHARMINI PERIES: I thank you for both the history lesson and giving us some moral guidance in terms of how to think about these issues right now as they are evolving. I thank you so much for joining us today, John Weeks.
JEREMY CORBYN: Thank you very much for having me, and this is an ongoing story, as you know. Perhaps I’ll be on again to talk about it.
SHARMINI PERIES: Thank you for joining us here on the Real News Network.