5 Reasons the Left Should Support Leaving the Single Market

by Fraser Watt

9 March 2018


After Jeremy Corbyn’s recent Brexit speech received unlikely praise from the Confederation of British Industry (CBI) and the Institute of Directors (IoD) for backing a modified customs union with the EU post-Brexit, it was later confirmed this would take place outside the EU single market (the legal structure guaranteeing free movement of capital, services, goods and people).

This is a positive development, as Labour’s manifesto would be impossible to implement inside the EU’s internal trading bloc. Here are five reasons socialists should support leaving the single market.

1. Labour’s illegal investment banks.

To counter Britain’s economic imbalances – both geographical inequality and reliance on the financial sector – the next Labour government will need to embark on a vast industrial strategy, from national and regional investment banks to ambitious projects like the manifesto pledge to shift the energy grid to 65% renewable sources by 2030.

Whatever form this investment takes – grants, tax relief or government contracts – it would quickly put Corbyn’s government into conflict with EU state aid laws.

These laws prevent government assistance that “give an advantage to specific undertakings” or “have the potential to distort competition”, which is exactly what these investment projects would aim to achieve.

Whether Labour’s manifesto promises are illegal under EU law would not be decided by voters, the House of Commons or the European Parliament, but unelected officials in the European Commission.

2. European markets vs public ownership.

Alongside public investment, the conversation Labour has opened up around nationalisation and public ownership is increasingly irrelevant in the context of an EU which openly pursues objectives of ‘competition’ by enshrining markets into EU laws around public services.

Whilst privatisation generally hasn’t gone as far on the continent as consecutive British governments have, the continent-wide direction of travel is clear. Using the railways as an example, the most recent railway package states that use of the rails as well as passenger services must now go through a bidding process.

3. Learning from the European left’s failures.

Conflict between left wing governments and European capitalism is neither hypothetical nor new. French President François Mitterrand was elected in 1981 on a platform of mass nationalisation of industry, reducing the working week and increasing the minimum wage.

Mitterrand’s programme was met with investment strikes from private firms and large-scale capital flight. If a Corbyn government were faced with this scenario, the free movement of capital guaranteed by the single market would prevent action against capital flight, while state aid laws would stop government attempts to replace lost investment from capital strikes.

More recently, the EU responded to the election of a Syriza-led Greek government and the following Oxi referendum in 2015 after a decade of austerity and economic crisis by cutting off cash flow to the Greek banks until they agreed to deep social security cuts and privatisation of state assets.

Although the Bank of England’s independence prevents this specific scenario, events like this, alongside similar ignored democratic mandates in Ireland, Portugal and Italy suggest Brussels will have little interest in the program the next Labour government is elected on.

4. Breaking from imperialist trade policy.

Beyond the EU, the European Commission also dictates Britain’s current trade policy with the world beyond Europe.

Despite the internationalist rhetoric of the EU’s proponents, its trade agreements with some of the poorest nations on earth have a modernist colonialism at heart, imposing free market dogma to extract natural resources in the 21st century from the same countries colonised with military force up until the 20th.

Britain’s historical record gives us no moral high ground, but with senior opposition roles held by lifelong anti-imperialists, we have a unique opportunity to make a decisive break with our colonial past.

Kate Osamor, shadow secretary of state for international development, has begun to outline what this break would look like, describing a “whole-of-government approach to international development policy with other government departments – Treasury, Trade and Investment, Foreign Office, Ministry of Defence – actively involved in formulating and delivering on our ambition to build a world for the many, not the few”.

Achieving this is unlikely while the European Commission is imposing programs such as the Raw Materials Initiative, which prevents developing nations such as Zambia and the Democratic Republic of Congo from raising investment through export taxes or regulating conditions in their dangerous raw minerals sectors.

5. The false promises of ‘remain and reform’.

Fundamental reform of the EU in order to overcome these obstacles to a socialist program would require left wing governments elected in all 28 member states before negotiating the rewriting of the Treaty of Rome, the EU’s founding document.

With the collapse of the centre left in Germany, Macron’s acceleration of neoliberal reforms in France and victories for the far right in Austria and Poland, this already unlikely scenario seems increasingly implausible.

As we leave the EU and a renewed British left prepares to take power, debates about how our society is structured can no longer be outsourced to unelected officials abroad while we either wait for change across Europe that may never come, or rely on Brussels to moderate the most reactionary tendencies of our own governments.

The exemptions already laid out by the Labour leadership are welcome steps in the right direction, but if there is any serious intention of implementing their manifesto these will need to be red lines. Otherwise, the road to British socialism will be at risk.

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