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Customs union, single market, cake: What does it all mean?

A guide to some of the key terms in the current Brexit debate.

Jeremy Corbyn has set out Labour’s Brexit plan to keep Britain in a customs union with the European Union, laying down a clear dividing line with Theresa May’s “three baskets” approach.

Both the leaders’ plans are subject to negotiation with a sceptical Brussels, which wants to stop the UK “cherry-picking” the best aspects of EU membership while discarding the worst – an approach described as “the cake philosophy” by European Council president Donald Tusk.

But what does it all mean?

– “The” customs union

Both Labour and the Tories have committed to leaving “the” EU customs union, which guarantees tariff-free trade with no border checks, but imposes a common external tariff which stops individual members striking their own free trade deals with countries outside the bloc.

– “A” customs union

But Mr Corbyn has now committed to a “new and comprehensive” customs union, tailored to suit Britain’s needs by giving it a say in future trade deals the EU negotiates with other countries, and by ensuring it is not a rule-taker.

It would in theory avoid a hard Irish border, allow goods to cross borders without any tariffs or checks, but stop the UK signing trade deals with the likes of the United States or Australia.

– Three baskets/managed divergence

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Brexit

Overall the Prime Minister’s favoured approach can be seen under these terms alongside her rejection of a customs union so that the UK is free to sign trade agreements with countries around the world.

Broadly speaking, the UK would start from a position of alignment with EU rules.

In the first basket, industries such as automotive and aerospace would simply preserve that status. In the second ministers will agree shared goals on issues such as workers’ rights but agree to achieving them through different means. In the third basket the UK would diverge sharply from Brussels regulation.

Underpinning this approach will be a “customs partnership” or “highly streamlined customs arrangement”, which would differ from a customs union and could involve technological solutions to ensure “frictionless” trade.

– Single market

Staying in the single market which currently allows free trade within the EU and with European Economic Area countries such as Norway would mean signing up to its “four freedoms”, including free movement of people, paying into the Brussels budget, and submitting to the jurisdiction of the European Court of Justice (ECJ).

Despite calls from some Labour MPs, opposition parties and indeed some Tory Brexit rebels, both Mr Corbyn and Theresa May have ruled this out as it would be very similar to being an EU member but without the UK having any say over changes to the single market’s rules.

– The cake philosophy

The EU has already rejected Mrs May’s “three baskets” plan and described the Cabinet’s agreement on “ambitious managed divergence” as an “illusion”. It is still of the opinion the UK is trying to “have its cake and eat it”, and is likely to react similarly to Mr Corbyn’s approach.

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