Here’s why it would be madness to stay in a customs union with the EU

Here’s why it would be madness to stay in a customs union with the EU

Many suggest that, despite it being made very clear at the time of the referendum that a vote to Leave the EU meant leaving the Customs Union, we should Leave the EU but remain a member of the – or a – Customs Union.

This would very much mirror the situation in which Turkey finds itself – and that itself should be a lesson as to why this is a bad idea and why going WTO on 29th March would be infinitely preferable by comparison.

A customs union with the EU means that the UK would not have its own trade policy. Therefore we would not be able to strike preferential agreements affecting trade in goods or services with other countries; we would not be able to set our own tariffs to suit the UK economy; and we would not be a full member of the World Trade Organisation. It seems extraordinary that any MPs and others can seriously believe that restricting the UK’s options in this way to be a good idea.

The second aspect of a customs union with the EU that I don’t think many MPs and others realise is that any goods exported to the EU or imported from there would still need to be covered by a movement certificate. This is detailed in the proposed Withdrawal Agreement on pages 342 to 353. The proposed A.UK document would appear to mirror the A.TR used for trade with Turkey. This document has to be completed by the exporter and then stamped by HMRC before being sent to the customer.

For businesses like mine which despatch large numbers of small consignments, we would need to employ an extra person just to complete these documents – which would be far more expensive than the cost of paying the applicable tariff. It could also potentially lead to delays in despatching urgent orders where – as is the case with Turkey – it is required that the stamped document accompanies the order.

Shipping under WTO rules, as we do to most of the more than 120 countries in which we have customers, requires no movement certificate, no pre-stamping, just invoices produced here. This means that orders are despatched on the day of receipt and in Europe and North America delivered next day customs cleared.

Ironically, this means that if the UK were in a customs union with the EU, our competitors in the United States would be able to supply our customers in the EU quicker than us. Their goods would have arrived with our customers whilst we would still be waiting for HMRC to stamp the A.UK movement certificate!

I think it is important to note that neither Norway nor Switzerland as members of the European Economic Area have shown any desire to be members of the EU customs union and have instead preferred to define their own trade policy, with great success. As one of the largest economies in the world, it seems extraordinary that we should even consider tying our hands in this way.

To me, as someone trading all over the globe, it would be madness being in any sort of customs union with the EU and we should maximise trade through simplicity and have no hesitation going WTO on 29th March.