Chatham House speech about the Common Market 2.0 plan
Thank you Tom, Nick, Robin and everyone at Chatham House for organising this event. Thanks also to my fellow panelists today. We’re a motley crew, but it has been a pleasure and a privilege to work with you, and I am truly proud of the way in which we have left our party political tribalism aside, to work in the national interest.
And thank you all, ladies and gentleman, for coming along today, early in the morning, for what I hope will prove to be an informative conversation about our proposal. We call it Common Market 2.0; Michel Barnier likes to call it Norway Plus. But either way, we think it is the best way forward that can win parliamentary support, and begin to reunite our deeply divided country.
Now, someone once told me that the beginning of a speech should always contain a surprise for the audience. Something that will really make them sit up and take notice… So, ladies and gentlemen, I’d like to start by telling you that I completely agree with Nigel Farage.
Yes, I agree with Nigel, who in 2016 said the following to a BBC Question Time audience: “I hear people say “Wouldn’t it be terrible if we were like Norway and Switzerland?” Really? They are rich, they’re happy and they’re self-governing countries.”
And I also absolutely agree with Nigel’s fellow Brexiteeer, the MEP Daniel Hannon, who said: “Norway and Switzerland… I can’t help thinking they’re doing pretty well.”
And if that wasn’t enough of a surprise for you, I’d like to add that I concur entirely with their pal the Tory Brexiteer MP Owen Paterson, who in 2015 said: “Only a madman would actually leave the market.”
Now, whilst you might find my budding bromance with these ‘bad boys of Brexit’ quite amusing, there is actually a deadly serious reason for me sharing those quotes with you. Because what they demonstrate is that in 2016 Euroscepticism meant something that it apparently no longer means today.
Today, Euroscepticism seems to mean setting off into the Brexit fantasy forest of unicorns and rainbows. Yet in 2016 Euroscepticism meant simply being opposed to political integration whilst cheerleading for the single market.
It meant keeping the strong mutually beneficial economic ties, whilst defending the nation state as the primary source of political power and accountability. And that, in a nutshell, is what Common Market 2.0 is all about.
Theresa May’s interpretation of the referendum result spelled the end of the pragmatic Euroscepticism of 2016, and replaced it with a new brand of isolationism that has not only been deeply counter-productive for the Brexit negotiations, it has also profoundly damaged our country’s reputation on the global stage.
The fact is that 52/48 is not a mandate to remain in the EU and carry on with business as usual, but neither is it a call for a hard Canada-style Brexit, or for leaving without a deal. The referendum result must be seen as a call to leave the EU’s ever-deeper political integration whilst maintaining a strong, close and productive economic relationship with those 500 million consumers on our doorstep.
In short, it the referendum result is an instruction from the British people to move house but stay in the same neighbourhood. So, what does Common Market 2.0 actually entail for the UK, and what is the pathway to get there?
Well, for a start, it only requires a renegotiation of the short political declaration on the future relationship – which the EU are open to amending. It does not require changes to the 580+ page Withdrawal Agreement, which the EU has made crystal clear is sealed shut.
This rewriting would specify a UK-EU future relationship whereby the UK maintains full participation in the European Economic Area by joining the EEA’s European Free Trade Association pillar.
EFTA is an intergovernmental organisation that promotes free trade and economic integration without political or monetary union. The EEA’s single market is essentially an extension of the EU’s internal market beyond the EU28, to also cover the three EFTA states that are signed up to the EEA – Norway, Iceland and Lichtenstein.
Due to the issues with the Irish border, during the transition phase (ending December 2020) the UK will need to negotiate on its succession to EFTA a derogation that will allow us to negotiate with the EU a comprehensive customs arrangement, including the common external tariff, unless and until alternative arrangements to secure frictionless trade on the Irish border can be agreed.
A major strength of Common Market 2.0 is that it is by far the fastest route to Brexit – and therefore attractive to those MPs and members of the wider public who are desperate to ‘get on with it’, whilst at the same time removing almost all the risk of the Irish backstop ever coming into play. It also recognises that a permanent customs union is not strictly necessary.
Common Market 2.0 would give the UK full membership of the Single Market, which the UK helped to create and which underpins so many British businesses’ trading success. But we would leave the EU’s political institutions, the jurisdiction of the ECJ, the common agricultural and fisheries policies and the EU’s drive towards “ever closer union”. We would also increase our power to control freedom of movement.
Crucially, it is popular with voters. Whenever myself, Lucy, Rob and Nick are out on the doorstep in Aberavon, Manchester, Harlow or Grantham, we hear the same message, time and time again from our older voters: “We voted for a Common Market, not all this political stuff.”
In the 1970s and 1980s, the British people broadly supported our membership of the European Economic Community (EEC) because it delivered clear economic benefits to British businesses and workers. It was only as the “ever closer political union” took hold that paths began to diverge.
A newly formed UK-EU common market for the 21st century would respect the public desire for striking the right balance between political sovereignty and economic integration. It would recast our country’s relationship with the EU in a way that would better reflect our history, geography and politics.
Common Market 2.0 should also be seen as a reset moment for Europe. Popular consent for the European project is diminishing, and Macron was right to recently talk about Europe’s future being one of “several circles”: “We have to build a Europe with several formats, to go further with those who want to go forward, without being hindered by states that want – as is their right – to go not as fast or not as far.”
This is absolutely the right strategy. There are several European countries that will never join the Euro, will never sign up to a European army, and are opposed to the free movement of labour. The creation of an outer-ring of non-EU countries that participate in the single market but opt out of ever-deeper political integration would be a huge step in the right direction, and the UK could play a central role in that outer circle.
Now, let’s turn our attention to one or two of the elephants in the room: one or two of the myths that have been circulating about Common Market 2.0.
Let’s start with one that I just alluded to: free movement of labour. Yes, it is true that free movement would continue initially under Common Market 2.0, but there would be a marked improvement in our position in that we could apply the safeguard measures written into the EEA Agreement.
These safeguards give a qualified but unilateral right to any EFTA EEA members under Article 112 of the EEA Agreement to suspend freedom of movement if that country believes it is suffering “serious societal or economic difficulties”.
We could then seek to renegotiate freedom of movement under Article 113, perhaps based on regional or industry quotas. But if negotiations break down we could not be forced to reopen our borders. Article 114 allows retaliation from the other single market countries, but this reaction would have to be reciprocal – they could not, for instance, respond to our decision to suspend the free movement of labour by suspending our exports of goods or services.
These measures are clearly not to be used lightly, but the Article 112 and 113 safeguard measures could help to ease voters’ existing fears about the seemingly limitless nature of EU migration.
The second myth is that the UK would become a rule-taker. This is simplistic, and ignores the fact that under the terms of Common Market 2.0 the UK would be leaving the ECJ and therefore ending the principle of direct effect.
The EFTA Court that the UK would join respects national sovereignty in a way that the ECJ doesn’t. Plus, we’d have one of four EFTA court judges rather than 1 of 28 EU judges.
Under EEA-law making the EFTA nations have a right to be consulted by the EU at a technical level. And once a directive has become EU law, it is passed on to the EEA Joint Committee, on which the EFTA nations sit alongside the EU. From there the EFTA nations can delay, adapt or veto legislation either by claiming it is not “relevant” to EEA nations, or that it triggers constitutional requirements.
It is worth noting that between 1993 and 2011, Norway and Iceland derogated from EU law on 400 occasions between them. And it’s also worth remembering that less than a third of EU directives affect the EEA in the first place. Under Common Market 2.0, we would restore policy-making power in vast areas including agriculture, fisheries, foreign and security affairs, justice and home affairs and taxation.
Myth 3: We have to pay more or less the same amount into EU budgets. This is wrong – we’d pay close to 50% per capita of what we pay now, so less than £5bn. Each EFTA EEA member pays only for the institutions and services that they access.
Myth 4: Norway don’t want us. Well, the Norwegian Prime Minister has made clear her position. She has said: “If that (joining EFTA) is what they really want, we will find solutions in the future. To find a good agreement is important for all European countries and I hope that we will see an orderly deal that doesn’t disrupt economic affairs in Europe.”
Myth 5: The EU don’t support it. Well, in May 2018, Michel Barnier said: “The only frictionless model for the future with the UK would be Norway Plus, Norway being part of the Single Market plus a customs union.” From the outset, Barnier made it clear that a Norway-style relationship would have been welcomed by the EU side, and that it had not been explored because of the Prime Minister’s red lines.
Michel Barnier has also made clear that the EU was ready to renegotiate the future relationship. In January, he said: “If the United Kingdom chooses to change its red lines, and to be more ambitious and go beyond a simple free trade deal in our future relationship, then the EU would be ready to immediately.’
So, that’s a flavour of the Common Market 2.0 proposal that we are putting forward. But how do we get there? How do we break the deadlock in Westminster?
There can be no doubt that our politics is both polarised and paralysed. At one end of the spectrum we have the People’s Vote campaign, fighting tooth and nail for a second referendum. And at the other side we have the ERG – desperate for an ideological, 19th century No Deal, Brexit built on rainbows, unicorns and Empire 2.0.
But in all truth it is not really parliament that is the problem. The problem, of course, is the Prime Minister. It is her red lines that have tied our country up in knots. It’s her stubbornness that has plunged us into this political and constitutional crisis by depriving the House of the opportunity to have a proper debate about the most important issue to face our country since the Second World War.
The fact is that there has always been a cross-party parliamentary majority for a sensible, pragmatic, bridge-building form of Brexit. Our cross-party group of MPs has held very constructive and productive conversations with the leader of my party and his team, and we hope that we will be able to secure the Labour whip in support for a backbench-driven Common Market 2.0 amendment.
And if we can combine that Labour block vote with a sufficient number of Conservative MPs, then we believe that we can get Common market 2.0 over the line.
Ladies and Gentleman, Britain is a great country, but we are more divided than we have been at any time in living memory: young versus old, graduate versus non-graduate, city versus town.
These divisions were not created by Brexit, but they were ruthlessly exposed at the ballot box in June 2016. Since then, the fault lines have deepened and widened, to the extent that I believe that our country is in serious danger of tipping into a culture war.
It is time now for parliament to step up and do its job. It’s time for us to re-discover the lost art of compromise, and to break the deadlock. It’s time for us to find a way out of this mess. It’s time to heal the wounds, and to re-unite our deeply divided country. Thank you.