We must leave the Customs Union if we are to escape the protectionist whims of the EU

We must leave the Customs Union if we are to escape the protectionist whims of the EU

In 2008, after seven gruelling years of negotiation, the Doha round of trade talks collapsed as India, China and the US failed to agree on farm import rules. TTIP continues to founder as unions promulgate the barely even half-truth that it will lead to mass privatisation of the NHS. And the raging US presidential debate piles myth on top of myth about the supposed damage caused by free trade, with startling implications for not only TTIP but other trade agreements as well. During these events, the UK’s voice in trade was subsumed into that of the EU. No longer.

Leaving the European Union has undoubted risks. We have seen this with the slide in Sterling and we may yet see it in business confidence and inward investment as the Article 50 negotiations proceed, with every summit, every press conference and every crossed word, capable of moving markets. But on the other side of this valley, there is a sunlit upland – a more liberal approach to free trade than we could advocate for and participate in from within the EU.

The prime mover here is simple – if we are to become a global, trading nation once again, we must leave the Customs Union. Whilst some UK businesses, accustomed to the existing arrangements may cry foul, it is surely a price worth paying to be outside it. If we are not, we cannot strike free trade deals of our own and will continue to be bound by the protectionist whims of the EU.

The Single Market is hardly a free market. It is worth remembering that while tariffs have been eliminated between member states, they are most certainly imposed on countries outside the EU. It is also worth keeping in mind that these tariffs were devised to protect certain EU industries in which the UK may not have a significant interest. Once outside, we can reduce tariffs on such non-EU countries meaning lower prices for British consumers.

Achieving a mutually beneficial UK/EU trade treaty is viewed as a challenge by some but in reality, all we have to do, is merely strive to maintain the status quo, which so many EU businesses, despite pressure from some EU leaders, are keen to see. Notably, if no specific trading relationship were put in place, the UK would continue to trade with the EU using WTO most-favoured nation tariff rates. For most manufactured goods the EU’s most favoured nation tariff rates are low, so UK exporters could certainly continue to trade profitably. And to reiterate, this is actually the worst case scenario, in that no alternative arrangement had been put in place.

We should not underestimate how integrated UK and EU markets are and therefore the barriers to signing a free trade agreement are much lower than with third countries. To those who refer to the recent difficulties in talks between the EU and Canada, this gives insufficient credence to the amount of existing alignment in standards and regulations already in place.

Once outside the EU we will automatically become a member of the WTO. Those saying we will have to re-join by renegotiating with 163 countries are not quite right. As WTO Director General Roberto Azevedo has said, Britain would ‘remain’ a member but would then need to re-establish the defined terms in the WTO for trade in our goods and services – but we could put ourselves on the fast-track to do this by accepting higher commitments – this would involve opening up our economy significantly. But then, that is where the future should lie for our trading policy anyway.

This free trading approach is already gaining traction. At the recent G20 meeting in China, India, Mexico, South Korea and Singapore, all hugely dynamic economies, expressed an interest in freer trade with Britain.

I hope this is the optimistic and outward-looking approach that the Government ultimately adopts but there those who say leaving the customs union and indeed the Single Market cuts off relations with our most important partner before we have begun. So we need to think dynamically. It is true that nearly half of our £500bn of exports in goods and services currently go to the EU with only £48bn going to the Commonwealth. But this surely just shows us what potential for growth we have. Take China: we have doubled exports there in the last five years and Chinese investment into the UK is growing at 85%. Imagine what we could do outside the Customs Union.

Britain’s re-entry into this most vital of debates is exactly what it needs to dull the voices of protectionism and get global free trade talks back on track. Since as far back as the Suez Crisis, so many have questioned what Britain’s role in the world is and should be. I think we may have found it again.