Seema Malhotra: We must keep open the option of an EEA-based model

13th June, 2018 9:01 am

The Conservative Party has wasted over 700 days fighting amongst themselves with incompatible policy objectives leading to a lack of clarity about what they want from Brexit. Even when there has been agreement it has changed within months, and every time Theresa May gets close to at least a workable policy, her cabinet falls into disarray.

Last week’s threatened resignation by David Davis was just for starters. This week’s main course saw Kenneth Clarke come out calling on colleagues to vote with him against the government to “rescue Theresa May”. May seems unable to make a decision – instead, she is pulled in every direction by different factions in her own party. This week she was called to the 1922 Committee, and is due to go another cabinet away day next month to deal with yet another internal crisis.

But with October looming and Brexit day not far behind, it’s all too little too late. This week is fundamentally about parliament taking back some control of a process that MPs and the country know is not going well. 73 per cent of all British voters, including 70 per cent of Leave voters, now think Brexit is going badly. Residents and businesses in my constituency and across the country are concerned about the impact that a Brexit led by ideology, not evidence, could have on the economy.

The UK is now at the bottom of the G7 rankings and has the third highest rate of inflation of any EU country at 3 per cent, costing households up to £600 a year already. The Bank of England recently estimated that we were £40bn worse off – around £300m a week – since the referendum. These are, of course, estimates and subject to further analysis, but Brexit certainly shows no sign of making us better off as the Leave campaign promised.

That’s why this week I am supporting the Lords amendments that are coming to the Commons. This means supporting the proposed policy on the customs union, a meaningful vote for parliament where the government must now honour its concessions, and keeping open the option of an EEA-based model.

Remaining in the customs union is vital for the UK economy, for jobs and, together with remaining in the single market albeit with safeguards, for avoiding a hard border in Northern Ireland. I argued this recently in a debate in the House, highlighting evidence that both of the government’s two customs proposals would lead to more barriers and more delays than we currently experience as part of the customs union.

It’s worth noting also that the UK’s current annual goods trade with countries within the customs union is £466bn. The cost of new tariffs alone could be at least £4.5bn per year for UK exporters, according to research conducted by The Independent. Analysis by HMRC suggests new customs checks could increase the cost of imported goods by up to 24 per cent. Think what you want of these numbers, but almost all credible sources suggests costs will be higher, trade less and UK citizens worse off.

The meaningful vote is a genuinely vital safeguard that any Leave-supporting colleagues who believe in parliamentary democracy should support. The government’s proposed watered-down alternative keeps all the power with the government. There needs to be full scrutiny of the negotiations and this amendment will enable parliament – representing the will of the people – to play its rightful role.

And today we vote on the amendment to continue to participate in the EEA and on Labour’s version of this amendment put forward by Keir Starmer, which I will be supporting. I have also co-tabled, with Yvette Cooper MP and Hilary Benn MP, an amendment for a condition on EEA participation referencing appropriate safeguards important for the UK.

This has been a very important debate in parliament and the country. The EEA option is not perfect – but there is a strong argument that it is better as a starting point for further negotiations in the absence of a new deal. The UKBA has participated in the EEA since it was established in 1994. The EEA is closely aligned but not exactly the same as the EU single market. The legal system for the three non-EU members of the EEA is not the European Court of Justice, but the EFTA court. EEA members can have a say but not a vote on new EU rules.

Staying in the EEA has the advantage of keeping the UK in sync with current EU single market rules. There are also options that can be invoked address freedom of movement concerns, in the form of Article 112 and Article 113 of the EEA agreement. These could provide a route for the UK to operate a temporary emergency brake on free movement, and a more permanent way of addressing freedom of movement issues through Article 28. Combined with a customs union, the EEA addresses the Northern Ireland/Ireland border question.

This is alongside other measures we could be taking now that are increasingly being taken up by other EU nations – including registering jobs and stronger EU-led laws to stop the undercutting of workers, which could unite opinion in the UK. Many are measures the government could have been taking over the last eight years.

It is notable also that there are other precedents that could pave the way for a strong bespoke relationship. The Brexit select committee report highlights how the EU’s association agreements with Ukraine, Georgia and Moldova cover most of the internal market. They also provide for selective participation in many of the agencies and programmes of the EU. But free movement of persons is not included and the financial obligations on these countries are minimal. There are reasons for which it may not be practical, particularly the size of the UK and that these agreements are partly about helping countries converge with EU rules. But  it illustrates that the question is over the balance of rights and obligations and negotiations; if you can offer something in return, concessions on free movement might be possible.

The select committee for exiting the EU took extensive evidence on how the EEA model works, how it may differ for different countries in the EEA but outside the EU, and what the trade-offs might be. Our cross-party committee concluded that should the negotiations on a deep and special partnership not prove successful, EFTA/EEA membership remains an alternative and would have the advantage of continuity of access for UK services. We should keep our options open. The EEA is a more flexible instrument than other options. In the event that the Labour frontbench amendment doesn’t pass in the Commons, it would be a strong starting point for negotiating terms of access to the single market, which is Labour’s key objective. Further ping pong on this is inevitable.

What’s missing in this whole debate is a clear vision of our future strategic relationship with the EU that commands broad consensus and puts jobs and the economy first. I am proud Labour has led on the argument for a jobs-first Brexit. People didn’t vote to be poorer. In the absence of the government being able to put country before party, and with March 2019 fast approaching, a different approach is now needed alongside the broader vision and road map for our country’s future.

Seema Malhotra is MP for Feltham and Heston and a member of the select committee for exiting the European Union.

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