Forget the arguments about customs arrangements: just remember why we wanted out of the EU in the first place

Forget the arguments about customs arrangements: just remember why we wanted out of the EU in the first place

We are living through yet another drama of our stop-and-go Brexit negotiations. The latest conundrum dreamt up by Remainers and Brussels to keep the UK in the fold is the Northern Ireland and customs arrangement problem.

The issue is more political – politicised – than technical.  International customs arrangements have evolved considerably over time to facilitate trade among countries outside customs unions. The WTO Trade Facilitation Agreement, a multilateral agreement in effect since February 2017, points in the direction of international customs cooperation and the ever increasing use of electronic systems.

French Customs boasts that in the framework of their “Dédouanez en France” initiative launched in 2015, imports enter France in less than four minutes and SMEs get special attention with their customs procedures. Non-EU member Switzerland and the EU maintain a seamless customs procedure and flow of goods. It is hard to understand why the same issue between the UK and the EU is becoming a seemingly insurmountable problem that threatens the essence of Brexit.

The danger is that, lost in the details of customs procedures and loaded political arguments, we are losing sight of the wood for the trees and perhaps this is the goal: to make us forget the real issues and why the majority of the British public voted for leaving.

Remainers seem to believe that some sort of membership – whatever we call it – of the EU is paramount to Britain’s economic well-being. But what is this EU they are insisting Britain should stay in? What is its future?

Brexit is most often discussed in terms of its economic impact.  Are we better off in or out, is trade going to suffer or prosper outside the EU?

There are various problems with this approach. One is that it focuses entirely on the economic aspect of EU membership, divorcing it from the political realities that will determine the future of the Union. Moreover, it focuses on short-term economic aspects while ignoring some basic facts that bode ill for the long-term economic future of the EU.

As it is now widely acknowledged, the euro is a faulty construction. Instead of generating prosperity, it has exacerbated the existing structural weaknesses of the Eurozone and the European Union:

“The unpalatable truth, admitted behind the scenes even by experts at the centre of the system, is that Europe’s united money has not alleviated the European crisis: it has in fact been one of its principal causes.” (David Marsh: Europe’s Deadlock, 2013)

The 2007 financial crisis brought to surface the fundamental deficiency of the EU economic edifice: the structural differences between members’ economies and the concomitant macroeconomic imbalances, which the euro exacerbated and which, in turn, make the euro unworkable. Hence the never-ending pledges to “reform” the eurozone, the grand designs to square the circle. But the circle cannot be squared and the eurozone cannot be made to work because it is neither a proper common currency area nor a willing economic alliance of nation states with an adequate institutional system. 

It is a halfway house based on the economic and political prerogatives of Germany and France where the only factor in place is the desperate will to hold it together but without the necessary concession of sovereignty by all. This explains the array of ad hoc ideas and measures to bridge the gap between ideas and reality, for example the introduction ofEuropean safe bonds(Esbies) to create a eurozone asset that is based on eurozone government bonds but involves no risk sharing. 

“The irreversibility of the euro may be a myth – nothing is irreversible – but it is a useful myth”, wrote Jean Pisani-Ferry, former economic adviser to the European Commission, and to preserve it he is suggesting an internal debt restructuring mechanism for the eurozone since the originally envisaged crisis management method of internal devaluation seems to have politically backfired. Italy, on a much more practical plane, is now considering some form of parallel currency to be used beside the euro to alleviate its debt problem.

Nothing shows better the EU project’s inherent difficulties than the wrangling we can expect about the new Multiannual Financial Framework, the EU’s new budget from 2021, which will have to be drawn up without the UK’s contribution. Predictably, each member state will fight tooth and nail for their own interests. France will insist on keeping the CAP as intact as possible to appease its belligerent countryside, after all “French agriculture is about more than food production. … It is about national identity and a way of life.” Any French government would think twice about disturbing that way of life in order to favour other countries. 

The new Italian government will also want to revise their budget contribution as a price for not pursuing a referendum on EU and euro membership that, as Brussels knows only too well, would be a dangerous exercise. Brussels now threatens Budapest and Warsaw with “redirecting” the cohesion funds from countries which do not share the “EU’s values”, whatever those might be. 

The menace is meant to put pressure on recalcitrant Central Europeans to accept Germany’s arbitrary migrant quotas and to join the eurozone because membership of the common currency is a considerable obstacle in the way of breaking free of the EU, especially in the case of smaller and poorer member states. In the wake of the Italian elections causing tremors running through Brussels, some of these funds will be promised to the Southern fringe whose debt and unemployment levels are still disconcerting and show no convergence with the North.

Tensions are mounting in the EU: between Brussels and individual countries, between the three main regions of the EU, North, South and East, between the eurozone and non-eurozone countries, small and big countries, debtors and creditors, between multiculturalist ruling classes and nation-state supporting citizens. As French politician Hubert Védrine observed, “Brexit is not simply a British aberration but the sign of a phenomenon which exists in pretty much all [EU] countries.” The last Eurobarometer found that 46% of Italians think that Italy would be better off outside the EU.

The EU is a political project. Neither the financial crisis, nor Brexit or Italy’s Eurosceptic election results, have convinced Brussels to change course. In the spirit of “More Europe”, there will no doubt be ever more legislation aimed at straitjacketing member states into a centrally dreamt-up mould and ever more coercion to force everybody into the eurozone. Member states will have to accept the growing burden of one-size-fits-all legislation, even though studies show that domestic legislation is 2.5 times more cost effective than central legislation. EU legislation promoting financial integration under the aegis of the eurozone was one of the issues David Cameron wanted to renegotiate with the EU.

Let’s return to our original question: what is it that Remainers wish the UK to stay a part of? The ultimate goal of Brussels is political union in the form of a United States of Europe. The EU has proven to be economically faulty and politically undemocratic, forcing political integration onto unwilling citizens. Even if it can be held together for a while with quantitative easing, setting countries against each other and firefighting the actual flare-ups, the structure is on a breathing machine. Nobody can repress nature for too long and the EU is not a naturally viable project; it could only be viable as a European alliance based on genuinely shared national interests. At present, this is not the case.

Brexit is a big upheaval.  Understandably, companies whose livelihood depends on EU trade feel strongly about the future EU trade relationship. Understandably, Britain as a trading nation wants to have a deep and special relationship with her nearest geographic neighbours. But it is very important to put things in perspective. Giving up long-term sovereign development for short-term advantages leads to no enduring prosperity.