A major part of the Vote Leave campaign, to which I contributed, and the resulting vote on June 23 2016 to leave the European Union, was to gain control of our trade policy. This meant and means leaving the EU’s Common External Tariff, in other words, its customs union, the very thing that Brexiteers of all stripes took as given and a boon and exactly what the Remoaners dominating the House of Lords are wilfully determined to ignore.
Last week, at the Report Stage of the European Union (Withdrawal) Bill, the Lords voted 348 to 225 in favour of Lord Patten of Barnes’s amendment, which seeks to make the passing of the EU withdrawal legislation conditional on the Government seeking to ‘negotiate a customs union as part of the framework for a future UK-EU relationship’.
This was but one of the Remainer wrecking balls that reverberated through Parliament last week. As if in concert with Lord Patten’s resolve to leave us with an ‘in name only’ Brexit, Nicky Morgan and fellow select committee chairs also tabled a back-bench debate on ‘customs and borders’, which will, it seems, take place on Thursday. The motion is calling for ‘the establishment of an effective customs union’ between the UK and EU.
Both come on top of further wrecking measures to the Trade Bill in the Commons, such as amendments NC5 and NC1, both of which call for us to stay in the customs union. For instance, NC5 calls for ‘implementation of a customs union with the EU’ after Brexit, and NC1 calls for an ‘international trade agreement which enables the UK to participate after exit day in a customs union with the EU in the same terms as existed before exit day’. In other words, to stay in the current EU’s customs union.
If these any of these amendments were about our economic interests, it would be one thing, but they are not even about economics, let alone about the British people’s best interests.
That’s why Brexiteers must now welcome the opportunity to take these Remainer wrecking attempts head on. It’s their chance to explain the economic case, once again, for leaving the EU Customs Union; to explain why there is no economic case for staying; why it would be against the national interest; and why anyone advocating remaining in it must have a poor grasp of trade, be mad as a hatter or have an ulterior personal motive.
The customs union is back at the forefront of political debate for a while and they need to make the most of it.
First, they need to explain all over again just what a customs union actually is. Politely you might call it a form of economic integration – a type of regional trade arrangement or free trade area where a common tariff is established to protect the group from imports from non-members levied on goods such as clothing, footwear and food. Putting it more bluntly, it is a protectionist racket as Ryan Bourne describes here that has resulted in trade being diverted away from non-members, such as the Commonwealth, to the members of the customs union. The long and short of it is that the EU is internally trade-liberating but outwardly protectionist. This is what they need to underline – and why one of the reasons for Brexit is to correct this trade diversion by coming out of the customs union.
Harold Macmillan foresaw this in 1956. Discussing our position in relation to the European Common Market, he said: ‘We would of course have the right to preserve our own tariff arrangements against other countries, who are not members of the free trade area, and that’s the difference between the Free Trade area . . . and the Customs Union. We would have the right to maintain our tariff arrangements against other countries.’
Of course this did not turn out to be the case, but it was always desirable. It is the difference between a free trade agreement, which is what the Government is now negotiating for with the EU and a customs union. If we stay in a customs union with the EU, we will still have a common tariff on imports, yet no say on which products the tariffs are levied or the rate of the tariff itself, nor any say on non-tariff barriers. This would be most unsatisfactory. Indeed, in Lord Lawson of Blaby’s words, it would provide us with a ‘quasi-colonial status’, making us rule takers not rule makers.
The Brexit minister Lord Callanan summed up the position when he spoke in the House of Lords debate last week. If we do not leave the customs union when we leave the political institutions of the EU, we will lose all influence over our trade policy. He explained that ‘if the UK were to remain in the customs union and be bound by the EU’s common external tariff, it would mean providing preferential access to the UK market for countries that the EU agrees trade deals with, without necessarily gaining preferential access for UK exports to such countries’. Or, he went on, ‘we would need the EU to negotiate with third countries on the UK’s behalf. This would leave us with less influence over our international trade policy than we have now, and would not, in our humble assertion, be in the best interests of UK businesses’.
It most certainly would not be, it would be madness! We would be going into the ring with our hands tied behind our backs.
These Remainer amendments are not in the national or economic interest, for staying in the customs union is as mad as a March hare. They don’t want us to be able to diverge from EU’s rules and tariffs; to be able to negotiate, to sign and implement our own trade deals.
The only sensible interpretation is that they want to make it impossible to implement the referendum result at all; to force the Conservative government to rescind on the promise it made in its manifesto, that ‘leaving the European Union also means we will be free to strike our own trade agreements with countries outside the EU’.
The manifesto was clear – these words mean leaving the customs union to be free to choose who to trade with, to liberate us from the bondage of the EU’s Common External Tariff, not to make that bondage worse.