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LONDON — To pursue a “jobs first” Brexit, the U.K. Labour Party’s Jeremy Corbyn has argued that the best option post Brexit is a Norwegian-style arrangement: full access to the single market in return for accepting the bloc’s rules. But staying in the single market will come at a hefty price — both literally and figuratively.
Our access to the single market gives us the ability to trade, tarifffree, with all EU member countries. But that access does not come cheaply.
Britain’s total net contribution to the EU’s budget and its institutions was an eye-watering £11.4 billion last year. Our membership has also barred us from striking trade deals with countries outside the EU.
Japan and the United States recently completed negotiations on a landmark free-trade deal, and both expressed confidence a similar deal could be reached with London. Australia, too, has shown a strong interest.
The main obstacle is within our own parliament.
The best way forward is for the U.K. to leave the single market but strike a free-trade deal with the EU. This would give us tariff-free access to its market without the downsides of single market membership.
The question, of course, is whether this is feasible. Would the EU ever accept such an offer?
It’s worth remembering that the U.K. is one of the largest export markets for EU members. Surely, it would make sense for Brussels to offer us terms that are no worse than they are for other countries. But because the EU is also concerned about striking a deal that appears to be too favorable to Britain, we must be prepared to walk away without one.
That means being willing to fall back on the terms set by the World Trade Organization (WTO), which allow us to trade with the EU but impose tariff barriers that average around 3 percent.
We would still be able to sell to EU markets in the same way as, for example, China does. And a hard Brexit could lead to a lower exchange rate, making U.K. exports even more competitive.
The main obstacle is within our own parliament. Since June’s snap election, members of parliament are less likely to favor trading on WTO terms. This substantially weakens the U.K.’s negotiating position at talks in Brussels. The more determined MPs are to stay in the single market, the worse the terms offered to the U.K. from the EU are likely to be.
To be sure, leaving the single market could also come at a cost. The City, for example, could find it more difficult to provide the EU with financial services.
But it bears reminding that the issue goes beyond trade. For many of those who voted for Britain to leave the EU last year, immigration was a major issue.
To remain in the single market, then, means accepting a lack of restrictions on migration and ignoring one of the Leave supporters’ main reasons for leaving the EU.
The issue is not having access to the single market. The question is at what cost.
It also means that the U.K. must accept a large number of regulations and directives — under the jurisdiction of the European Court of Justice — that the vast majority of British business-owners want to see reduced.
Staying in the single market, then, would go against the wishes of the majority of the British people. It makes you wonder why its advocates don’t simply admit that they wish to reverse the referendum result altogether.
We now have an opportunity to remodel our relationship with the EU not on the basis of short-term expediency but long-term stability.
The issue is not whether we will have access to the single market. It’s in everyone’s interest that we do. The question is at what cost.
John Mills is the founder of consumer goods giant JML and chair of the pro-Brexit campaign organization Labour Leave.