Brexit on the brink

INCREDIBLE AS IT MAY SEEM, nothing has been agreed. The Tory government has spent the whole time arguing among themselves instead of negotiating on the real issues. In fact the Tories seem to be playing a game of chicken with the EU negotiators, claiming they will crash out of Europe without a deal unless they are offered concessions. The Chequers agreement hammered out among the Conservative cabinet only this July is in tatters. The Tories are squabbling, so the government has no agreed negotiating position.

Liam Fox says crashing out without a deal is more likely than not to happen. The main losers if Britain does leave the EU with no deal are likely to be the British people. It could also be chaos all round. We learn that food and pharmaceuticals are being stockpiled just in case. That sounds scary! Is that just the ‘remoaners’ spreading Project Fear again? We’re in the dark – we just don’t know.

Theresa May wants a time-limited transition period where EU rules would still apply to Britain in order to forestall chaos, but EU negotiators demand that Tory Britain settles the exit terms first. Deadlock. If Britain crashes out without a deal, the country is left to trade on World Trade Organisation (WTO) rules. That would mean tariffs on EU imports and higher prices in the shops.

Average tariffs with the EU are only 1.5% so that doesn’t sound so bad, but Europe takes up 43% of Britain’s trade with the rest of the world. Tariffs and other customs arrangements on some sectors such as motor manufacturing could be devastating. Under WTO rules Britain would then have to go on to try to negotiate separate free trade agreements with almost 200 countries in the world, including separate deals with all the 27 existing EU countries.

The Withdrawal Bill has given the government dictatorial powers over the withdrawal negotiations. Their powers have been compared with those of Henry VIII, whose decrees could nullify the will of Parliament. But that was way back in 1539! Leaving the EU does not necessitate a Tory dictatorship. It is a basic democratic principle that Parliament should have a decisive say on the terms of the deal. The government wants to sell us a pig in a poke.

What should Labour’s attitude to the withdrawal process be? Unfortunately we are not in charge of negotiations. We have to react to the government’s proposals as they come up. Our stance is essentially defensive. Our watchword: what is in the best interests of the working class?

Should we support a second referendum? We don’t know yet what terms will be on offer. Certainly the British people should have a decisive vote on the deal. It has been described as the  most important decision facing us since the Second World War. It is monstrous that the Tories intend to just spring the outcome of their negotiations upon us without our say-so. We agree with John McDonnell that what we really need is a general election so we can sweep away this rotten Tory government and Labour can negotiate the best deal possible for the working class.

Labour’s attitude to exit from the EU so far has been described as “constructive ambiguity”. The reasons for this are clear. Although about two thirds of Labour supporters voted Remain, there was a very significant Leave majority vote in a number of Labour constituencies, particularly in the Midlands and North. Labour’s leadership is trying to keep both sides on board. Constructive ambiguity seems to have worked so far, but it’s a tricky act to keep up. It’s the political equivalent of riding two horses at once.

What are the issues Labour must take a position on? First is the question of the border with the Irish Republic, the only land border with the EU. If Ireland is to remain a tariff-free part of the EU while Britain (including Northern Ireland) has the right to impose tariffs on goods from Europe and vice-versa, then the border will have to be policed. It’s 310 miles long and has 275 crossing points. There are farms in Ireland where cattle can be driven from the UK to the Republic in the same field.

A hard border, even like that between friendly countries like Canada and the US, necessarily involves armed guards on both sides. It can also mean disruption to trade. The Irish people did not vote for their trade to be disrupted. Ireland lies at the western edge of the EU and most of its trade with Europe passes through Britain.

Nobody has come up with an alternative solution to a hard border, apart from negotiating a customs union with the EU. Within a customs union Britain would have the same structure of tariffs as the EU. No tariffs, no need for a hard border. The Tories are adamantly opposed to remaining within the customs union. Labour must speak up for the Irish people.

Although the issue of tariffs, taxes on imports, loom large in the discussion, they are not the most important issue for the preservation of jobs. If a tax on imported goods saves a worker’s job (and that’s a big ‘if’) then it’s usually at the expense of someone else’s job. A trade war piling on tariffs can just shrink trade and everyone loses - a ‘beggar my neighbour’ policy.

The disruption to trade posed by borders in modern 21st century capitalism without a customs union could be the real job-killer. Airbus is a European consortium. Airbus has warned that if Britain crashes out of the EU without a deal, then there could be a haemorrhage of the sort of skilled jobs Britain desperately needs.

Airbus employs 14,000 workers in the UK, including at Broughton where they make the aircraft wings. 100,000 other workers are involved in the supply chain, which has been painstakingly put together and controlled electronically. The slightest disruption to this just-intime supply chain could be devastating. Delays would mean Airbus pulling out of Britain. So far no thought whatsoever has been applied to such practical problems by the Tory negotiating team.

The BMW-owned Mini is another classic globally integrated firm. The ‘British’ Mini, like other cars produced in the UK, is about 40% made in Britain. The Mini’s crankshaft is actually cast in France. It is then shipped to Birmingham to be drilled and milled. It then moves to Munich to be fitted into the engine. Finally it arrives at Oxford to be assembled with the car. It could later be transported to the continent as an export. All in all, the crankshaft can cover 2,000 miles.

These supply chains are typical of modern capitalism. Profit margins are shaved in the process and the viability of a supply chain is fragile. Building an alternative supply chain on account of disruption can involve an outlay of hundreds of millions of pounds. Dover Port chiefs claim that just a two minute delay at the port could lead to a 17 mile tailback on the M20. Under WTO rules tariffs with the EU for cars and car parts would be 10%. Britain would also have to negotiate mutual recognition agreements for product standards, and that takes time. Such restrictions could do enormous harm to the UK car industry, which employs 186,000 workers and has a turnover of £82bn.

Do the Tories care? There is no sign that they’ve even considered the issue. So far they have got away with cavalier generalities about “taking back control”. Labour has the duty to protect every job. If that means accepting some standards set by the EU customs union and within the Single European Market (SEM), so be it.

As to the SEM, there is a wing of the Tory party which wants to use Brexit as an excuse to have a bonfire of regulations and turn Britain into a low wage, low tax haven for capital. For instance Jacob Rees-Mogg is famously Eurosceptic. His hedge fund, Somerset Capital Management, is managed via subsidiaries in the tax havens of the Cayman Islands and Singapore. The EU is proposing action against tax dodgers like him. He has also enthused about the potential to slash environmental and safety laws after Britain leaves the EU. Regulations that were “good enough for India”, he has argued, should be good enough for Britain.

We support the preservation and enhancement of all regulations which protect workers’ rights, consumers and the environment, whether they come from the EU or not, because they are in the interests of the working class. If there are no adequate safeguards for workers’ jobs and conditions, we should throw a squalid Tory deal back in their faces.

What future can we offer? Labour’s defence of jobs and workers’ rights in the face of the perils of a Tory Brexit is necessary. But it is not enough. Labour’s programme for the 2017 election, For the Many, not the Few, represented a huge step forward compared with previous manifestos. However, workers need a path towards a secure, prosperous future. Under Jeremy Corbyn we must put forward a concrete programme of jobs and investment, offering a socialist transformation for Britain. That must be Labour’s priority