Norway and Labour Brexits aren’t the same, but both are bad

Two “soft” Brexit options being debated by MPs tomorrow are superficially similar. One known as “Common Market 2.0” is backed by a group of Tory and Labour backbenchers such as Oliver Letwin and Stephen Kinnock. The other is Labour’s proposal, described in Jeremy Corbyn’s “five demands” letter to Theresa May.

Both combine elements of the single market and the customs union. But they also have important differences. What’s more, neither is deliverable and both are worse than staying in the EU.

What are the differences?

Labour’s proposal talks of a “permanent” customs union with the EU, but only “close alignment” with the single market. Common Market 2.0 wants “full access” to the single market but only a customs “arrangement”.

Both argue that their solution will provide “frictionless trade”. But only full membership of both the single market and the customs union will ensure this.

Labour doesn’t say what role there would be for the European Court of Justice (ECJ), merely calling for “clear arrangements for dispute resolution”.

Under Common Market 2.0, disputes over single market matters would be judged by the EFTA court, which rules on Norway, Iceland and Liechtenstein – countries that are in the single market but not the EU. It’s not clear what court would rule on the new custom “arrangement”, as Norway doesn’t have one with the EU. It’s also not a dead cert the EFTA countries would even agree to us joining their arrangement.

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Labour unicorn

Both proposals make unrealistic assumptions about what the EU will agree to. Labour’s has two problematic elements.

UK say on future EU trade deals

While the EU might let us have some sort of consultation on its future deals, we wouldn’t get a vote.

State aid and competition law

Corbyn has previously talked about negotiating “protections, clarifications or exemptions” from the EU’s “privatization and public service competition directives, state aid and procurement rules”. The other EU 27 countries wouldn’t agree, fearing an unfair advantage outside the single market.

Common Market 2.0 cake-and-eat-it

The cross-party backbench scheme has three fantasy elements.

Leaving the EU’s common agriculture and fisheries policy

Although Norway has independent farming and fishing regimes, it doesn’t have open borders with the EU. Common Market 2.0, by contrast, seeks to avoid all border controls. Given this, it’s hard to see how the EU would agree to us subsidising our farmers more generously than it subsidises theirs. But if we subsidised ours less generously, they would be driven out of business. Meanwhile, France and other countries have made clear we can’t have access to their market for our fish unless we give them access to our fishing grounds.

“New powers” to control EU immigration

This is disingenuous. Norway enjoys an “emergency brake” if immigration levels reach crisis point. The UK would struggle to convince other European countries that immigration was so high that we could trigger it.

Paying less money to the EU

Common Market 2.0 claims we could pay half our current membership fee. This is unlikely. If we have access to the single market and customs union – as well as the EU’s cultural, scientific and security programmes – we could end up paying more than we pay. This is because we would no longer benefit from the £4 billion a year “rebate” Margaret Thatcher negotiated.

Both are bad

Labour’s proposal and Common Market 2.0 are worse than our current deal with the EU.

Both are blind Brexits. They rely on changing the non-binding political declaration on our future relationship with the EU. Promises can be made now and broken, especially since Theresa May is likely to be kicked out and replaced by a more right-wing prime minister. MPs should remember that an earlier version of Common Market 2.0 was called “Norway for Now” – making explicit the idea that we could start off with a soft Brexit and then flip to a much harder one.

Both versions would also turn us into rule-takers on a massive scale. We’d have to follow the single market rules. It would be against the national interest to have laws made for our top industries such as financial services without having a vote on them.

We’d also have to follow the EU’s trade policies. The other countries could negotiate to open up the NHS to competition from American health providers without us having a vote on it.

This would be humiliating for a proud nation such as the UK. As a result, if ever some form of “soft” Brexit was negotiated, it’s not clear it would stick. Within a few years, Nigel Farage and his ilk might be back with a vengeance campaigning to tear up the deal and go for the hardest of hard Brexits.

Edited by Hugo Dixon