A Push for Customs Union Should Be Known as a Soft-in-the-Head Brexit

The House of Commons may not be voting for Christmas but it may soon be voting to be Turkey.

By Roger Bootle and cross-posted from The Daily Telegraph.

Last week was always going to be extraordinary – but I hadn’t imagined that it would be that extraordinary! Almost anything can happen now.

The so-called “soft” Brexit that we could be heading for should more accurately be known as a “soft-in-the-head” Brexit. Its primary characteristic is likely to be membership of the customs union. Some people imagine that this means the same thing as endorsing free trade. But it doesn’t. It means free trade with other EU members, but it also means submitting to the EU’s trade policy with regard to non-EU countries. Thus, we would continue to impose the EU’s common external tariff (CET) on imports from the rest of the world. And we would continue to hand over to the EU the bulk of the £3.5bn that we currently collect in tariff revenues.

Under Theresa May’s Withdrawal Agreement, we would also agree to maintain “regulatory alignment” with the EU. Given these two points, we would be practically unable to conclude free-trade agreements (FTAs) with other countries. Worse than this, we would be a part of whatever trade agreements the EU forged with other countries, regardless of how badly such FTAs served our own interests. Having left the EU, we would no longer have a say in the negotiation of such FTAs.

Which other countries are in such a position, you may well ask? Norway is often bandied about as an example – yet it is a member of the single market, but not the customs union. No, the European country that is a member of the customs union is Turkey, with exemptions for agricultural goods. This should give you a clue as to quite how unappealing this “Out of the EU but still inside the customs union” status would be. The House of Commons may not be voting for Christmas but it may soon be voting to be Turkey

It is often misleadingly asserted that much of the rest of the world belongs to customs unions, including the countries of North America, which belong to Nafta. But Nafta is not a customs union. It is a free-trade agreement. This means that no CET is imposed and Nafta members are allowed to set their own tariffs and conclude their own FTAs with third parties, just as Canada has recently done with the EU, even though there is no such deal between the USA and the EU. Similarly, in Asia, Asean is a free-trade area and not a customs union

Continue reading the article (behind paywall)

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