Customs union membership means surrendering all control of our international trade policy

Customs union membership means surrendering all control of our international trade policy

As a member of the Exiting the EU Select Committee I have taken a special interest in international borders – both the EU external border and other borders between non-EU trading nations. This is a relevant issue right now as the Labour Party and some of my Conservative colleagues recommend ‘a’/’the’ or some other form of customs union with the EU post-Brexit, whether wholly or sectorally.

Relevant international borders would be Turkey/EU, US/Canada, Norway/Sweden and the arrangements – obviously not involving a land border – between Australia and New Zealand. The Turkey option, advanced by some, would lead to the worst of all worlds and a slowly, slowly slippage back towards quasi-EU membership with ‘vassal’ written clearly on the British ship of state.

At the heart of these recommendations, barely disguised, is the attempt by some to use the Irish border issue as an insoluble problem that requires a Brexit in name only (BRINO) solution. I couldn’t disagree more: there are technological measures available via trusted trader schemes, pre-clearance procedures and simple one-line additions to existing statutory VAT information to cope with tariff collection (even if that should ever be necessary), with an acceptance of small leakages of duties on flows of local cross-border trade as advanced in a government paper of last August.

Indeed, with differential Excise, VAT and tax rates we have accepted for years, and on a statutory basis, tax leakage across the EU – this would be nothing new. We should be bold enough to declare, as I noted in the House of Commons last Wednesday to the Minister for the Cabinet Office, that there shall be no circumstance under which the UK would implement physical borders between Northern Ireland and the Republic. If the EU requires a border, then that should be a matter for the Republic and the EU to construct and manage, and for them to sell the concept and need to the citizens on both sides of the border.

Turkey’s relationship with the EU is a curious one, with foundations in the Ankara agreement of 1963 as a long glide-path to EU membership. Whether EU membership will ever be realised is perhaps more distant than ever. Turkey’s participation in the EU’s Customs Union is not as a full and equal partner; it is not allowed formal input into new FTAs the EU might negotiate and remains a supplicant to the results of any.

Any new tariff-free deals concluded by the EU means tariff-free access to the Turkish market, but not automatic reciprocation to Turkey in trade the other way around unless a bilateral deal is concluded by Turkey with the new country. When Jeremy Corbyn suggested last week that his new customs union idea would include the UK having a say in any future EU international FTAs, I can but imagine the peals of laughter in Brussels.

Evidence to the Brexit Select Committee last week from Dr Pinar Artiran, Assistant Professor at Bilgi University, Istanbul and Pascal Lamy, former Director General of the WTO, on the reality of Turkey’s participation in the EU’s Customs Union was enlightening.

Pascal Lamy said:

“It’s a bit of an awkward situation… an arrangement that nobody’s happy about, not least because de facto Turkey has lost control of its trade policy.”

Dr Artiran outlined the deficiencies even more clearly on delays at the Bulgarian border:

“Depending on the nature of the product, especially if it is a product that is related to the sanitary and phytosanitary standards, it might be checked… Sometimes, they said they are stuck at the border for a couple of days.”

In summary, customs union membership leads to a total loss of international trade policy. It does not offer the solution for frictionless trade as Single Market standardisation rules offer a further excuse for compliance inspections. It offers those wishing to disregard the referendum a further excuse for de facto EU membership that after the Customs Union, total compliance with Single Market rules are the next essential to ensure frictionless trade, presumably followed by full acceptance of the writ of the European Court of Justice.

I am minded of a fairly old joke: that of the parrot that refuses to speak. The pet shop owner recommends the purchase of a bell – doesn’t work, still no words out of Polly. He then recommends a mirror – still no words out of Polly. He then recommends a cuttle-fish bone – still nothing. As the parrot falls off the perch some weeks later, its dying words are “How about some bloody food?” Those wishing to keep us in the EU will never be satisfied.

The solution is not in the current lexicon of the EU, and that is the mutual recognition of standards and trust between advanced trading nations. The EU has an empire to keep together based upon rules and compliance – and protectionism. Protectionism against third world suppliers, protectionism working against value for money for its citizens and protectionism bought by large corporates keen on the status quo.

I want to see a new impetus for global trade. Attachment or association with a moribund EU won’t create it, but the UK taking her place at the WTO and on the world stage just might, with mutual recognition at its core.