Netherlands 'will block UK-EU deal without tax avoidance measures'

Trade agreement would have to include strict rules to prevent Britain becoming offshore haven, Dutch deputy PM says

The Dutch deputy prime minister, Lodewijk Asscher. Photograph: AFP/Getty Images

The Guardian – Observer, Daniel Boffey in Brussels, Saturday 14 January 2017

The Netherlands will block any EU trade deal with the UK unless it signs up to tough tax avoidance regulations preventing it from becoming an attractive offshore haven for multinationals and the rich, the deputy prime minister of the country has said.

Lodewijk Asscher, who was recently elected leader of the Dutch Labour party (PvdA), which is currently a partner in the ruling coalition government, has written to socialist leaders across the continent stipulating his party’s red lines in coming talks.

On Sunday, Theresa May suggested the UK would leave the single market when it leaves the EU in 2019, but seek to agree a trade deal with the remaining EU member states on triggering article 50 negotiations on the terms of Britain’s exit.

The vision of a low-tax Britain that enforces fewer regulations in terms of workers’ rights on businesses has been a motivating force for a number of high profile Brexit supporters.

In a letter seen by the Guardian, however, Asscher writes that it is in the interests of both the UK and the remaining 27 EU member states that May’s government is prevented from creating a low-tax neoliberal outpost.

In a sign of the complexity of the trade negotiations to come, he writes: “If you and I pay taxes, so should the large enterprises. Let’s fight the race to the bottom for profits taxation together which threatens to come into existence if it is up to the Conservative UK government.

“This will affect all Europeans, as it deteriorates our support for our social security system and leaves ordinary people to bear the costs. This is why I propose to come to a new trade agreement with Great Britain, but only if we can agree firmly upon tackling tax avoidance and stopping the fiscal race to the bottom.”

Asscher was elected as the Dutch Labour party leader in December. He has been deputy prime minister in the country’s “purple coalition” government with the centre-right People’s Party for Freedom and Democracy, led since 2012 by the Dutch prime minister, Mark Rutte.

During that period, the Labour party’s polling under the leadership of Diederik Samsom plummeted from 25% to as little as 10% of the vote, with its working-class voter base splintering to Geert Wilders’s anti-immigrant Party for Freedom (PVV), or the hard-left.

When he was elected to replace Samsom ahead of a general election in the Netherlands in March, Asscher vowed to listen and act on the concerns of those who had left his party in droves.

In his letter to all of the leaders of the left-of-centre grouping in the European parliament, known as the European Socialists, Asscher also calls for parties of the left to respond to the rise of xenophobic politics, which he claims is gaining the upper hand, with a form of “progressive patriotism”.

He calls on socialist parties to reject any suspicion of those who voice patriotic sentiments and vows to use the Brexit negotiations to seek reform of the EU’s current rules around freedom of movement.

His call comes after the British Labour party leader, Jeremy Corbyn, walked into a row about his party’s policy on the contentious issue earlier in the week. Corbyn appeared to suggest that he would accept the current immigration arrangements in return for the UK retaining access to the single market.

Corbyn’s comments came hours before a speech on Tuesday in which he said he was was not wedded to the continued retention of the principle of freedom of movement across Britain and the rest of the EU.

Asscher writes, however, that radical reform of the current EU rules on immigration are needed. “Wage-lowering labour migration in Europe nowadays leads to unequal competition between workers,” he writes.

“Migration leads to tension within and between communities. And this lack of control cannot be diminished by making forced efforts to emphasise a European identity. For this we need unity in diversity. Progressive patriotism is the required antidote not only against the nationalist and xenophobic politics, but also as an alternative for the politics that ridicules or even throws suspicion on the longing for community or national identity.”

In his letter to socialist leaders, Asscher specifies reform of the EU’s posted-workers directive, which allows companies to pay foreign workers less than locals who benefit from collective bargaining, as a priority. Corbyn has also repeatedly said that this is the goal of the British Labour party.

Asscher also suggests a broader rethink of the left’s attitude to immigration. “For too many people, the European Union has become the symbol of social injustice, which fades its enormous achievement of peace and cooperation into the background, he writes. “Is it strange that people are fed up with the EU? I believe not.

“This is why we need new, fair and progressive rules of the game. And those can only be set when we collaborate. The forthcoming Brexit negotiations provide us with a unique opportunity to set those new rules.” 

A spokesman for Asscher said Corbyn had been “very positive” when he received the letter.

In a statement to The Guardian, Asscher said: “Let’s not give populists a monopoly on the notion of national pride. If we discuss migration only in terms of economics, labour migration within the EU for example, or in terms of humanitarian obligation [the refugee crisis], we run the risk of diminishing tolerance instead of increasing it.

“Newcomers’ ticket to our society? The adoption of our shared values, ranging from freedom of speech and religion to equal treatment of men and women and respecting the rights of the LGBT community.

“We need to show that our societies are based on the principle of give and take: You can only be part of a society when you participate in it. Everyone must accept the basic premise that if you want to be accepted, you have to accept others.”

Labour’s shadow chancellor, John McDonnell, said: “After six wasted years of the Tories opposing every Labour proposal to clamp down on tax avoidance, this reveals what our European neighbours believe is the main priority for Theresa May’s government. It also gives an insight into what a Tory Brexit would truly look like – a tax haven off the coast of Europe.”