Customs Union

I’m quite in favour of a customs union between the UK and the EU, for now, but I think the argument splits into two.

First, I’m very much in favour of a free trade agreement, just because any other approach seems to be cutting off our nose to spite our face, and because we trade so heavily with the EU currently.

But a customs union is more than that. It is also the two blocs showing a united front to other countries. Common tariffs, standards etc.

My gut feel is that anything that the EU arranges with, say, the USA is nothing to do with the UK. And vice-versa. But one argument persuades me otherwise. What if, on item X, the UK charges a tariff of 10% and the EU a tariff of 5%? Or vice versa? For your smart American merchant, it’ll be cheaper to import their product at Rotterdam rather than Southampton. And, with the UK and EU in a bilateral free trade agreement, they could just drive the goods the rest of the way, and avoid the higher tariff.

I mean, I hear the argument that the UK needs to be able to strike its own trade deals with other countries. I have sympathy for it. But I worry that the UK will develop a policy of undercutting the EU. The money aspect doesn’t worry me so much, but I fear an erosion of workers’ rights. It doesn’t have to be this way, of course, but this is one of the choices that must be made.

For these reason, I’m happy that a customs union trumps a trade deal, at least for now – while the UK and the EU trade so much with each other. It doesn’t have to be forever, though, so I don’t think we should try to tie the hands of our successors. Atthe same time, I think it is something that we have “until further notice”, rather than having a set end-date. But a critical part of the union will be who, then, sets the tariffs?

Well, we’re in a fortunate position that, at the point in time when we leave the EU, both of our tariffs will be the same. So, on Day #1, you have synergy.

But obviously the UK leaving the EU allows for divergence (setting a customs union aside for a moment). I would suggest that in any future talks with other countries, that the UK has one vote and the EU has one vote, and that both need to agree or we stay at the status quo – basically, either side has a veto. (I’m very sympathetic to Brexiteers of this one, that the UK should not just be a rule-taker. And fine, the EU consists of many constituent states, but these stateshave already set their individual statehood to one side, in order to trade as one bloc – the EU.) If one side finds this unbearable, then you need to look at dismantling the CU. Just with this last sentence in mind, we shouldn’t attempt to tie the hands of our successors.

It’s funny because yesterday I encountered a Brexiteer on Facebook, to whom any idea of a customs union was an anathame, whereas I too supported Brexit, but actually wouldn’t mind it one bit.