Daily Telegraph: A Customs Union is the Real Brexit Unicorn — and it Would be Wrong to Pursue it

MPs return to Parliament this week for another bout of backbench-sponsored constitutional mayhem, with a number of the proposals before them containing a customs union. In the Brexit fatigue in which the whole country is sunk, there are some MPs who think that a customs union is a reasonable, compromise proposal that will get some sort of Brexit over the line. It is not: MPs must realise what a customs union entails; that it is practically and even morally wrong for a country like the United Kingdom.

It is trite and true that the pledge to leave the customs union was not only in the Conservative manifesto in 2017, but was an outcome of the Brexit vote spelled out by both Vote Leave and the Remain campaign in 2016. A customs union is not an outcome of the Brexit process that can seriously be presented as respecting either vote.

But let us put to one side, for the moment, the niceties of electoral promises. Let's just look at whether a customs union is in any way a good idea.

A free trade area, much preferred by most economists, abolishes tariffs between member states. That is very much to be welcomed. A customs union, by contrast, in addition imposes a tariff wall around the outside of the tariff-free area. Accordingly, the central feature of the EU's customs union is a common external tariff and a common external trade policy. The two things naturally hang together: if member states are all to have common tariffs, they clearly cannot be set independently.

This has a number of consequences. Firstly, it abolishes an independent external trade policy: if a single country is to engage in free trade talks with another country, it clearly needs to be able to control its own tariffs. It is vital that Britain has an independent trade policy for the Twenty-First Century, given that Europe is a declining part of the world market - the EU’s own figures state that 90% of global economic growth over the coming decades will come from outside Europe - and given that our history puts us in a unique position to capitalise on the emerging markets.

But even if you are somehow not convinced by the prospects for expanding trade with the rest of the World, the second problem is that the UK will have abandoned any trade defences in handing them over to a body that we have decided to leave and has no reason to safeguard our interests. If the UK wishes to maintain a tariff to protect a domestic industry, but the EU wishes to lower it in pursuing a third-party trade deal, then the EU will do so regardless of any effect upon the UK.

And the common external tariff is, further, a protectionist measure, intended to protect inefficient industries against competition from the rest of the World. Why, after all, should the UK continue to apply a tariff – an effective tax on consumers - on products which we do not produce domestically? All that does is increase prices for ordinary people - hardly helping the poorest in society, as customs union proponents claim.

A customs union’s protectionism is not just criticised by unabashed free traders on the Conservative side. Indeed, prior to his conversion, Jeremy Corbyn lambasted the customs union for its “protectionism against developing countries”. So be quite clear: a customs union is a protectionist measure that discriminates against the developing world. It is a clear anti-fair trade measure. It is, even, morally dubious for the UK to continue to subscribe to one.

Worse, if the EU were engaged in trade discussions with a third party, it would be able to offer up access to the UK’s market without any guarantee or reciprocal market access, as is the case with Turkey. Just think about that for a moment. The World’s fifth largest economy, a proud democratic nation, having no independent trade policy, no control or say over its trade policy, and with its domestic market as a bargaining chip to be used for the benefit of a trade block that we have just irritated by deciding to leave. How would any rational person think that would be in the UK’s best interests?

But even if you do not accept any of that, a further problem with a customs union is that it simply does not work, and does not achieve the frictionless trade that its proponents claim for it.

The EU's customs union does not dispense with the need for declarations and inspections, particularly in the field of food and animal traffic, and so does not "solve" the Irish border problem, which has always been, in any event, a political problem rather than a practical one. And so even if Britain were to subject itself to a customs union, it would take more to keep the Irish border invisible and free from checks or infrastructure to carry them out, whether carried out at or away from the border.

And so membership of the single market would be needed as well, which really would mean European Union membership in all but name.

And because of all these factors, whilst the pure EFTA/EEA proposal advanced by George Eustice and others has something to be said for it - keeping the friction-reducing benefits of the single market - any proposal to keep a customs union simply does not. If the EFTA states, all of which combined are vastly smaller than the UK, have concluded that a customs union is contrary to their national interest, why on earth would it be in ours? Why should we, as a proud free-trading nation, shy away from an independent trade policy when the Norwegians and the Swiss – even the 300,000 people of Iceland - have the confidence to embrace it? These nations recognise the folly in sacrificing complete commercial sovereignty for a minor reduction in trade friction – and so should we.

So, a customs union - and any proposal containing one - is a seriously bad idea for Britain’s economy and its democracy. It does not deliver frictionless trade. It does not protect jobs or help the poorest in our society or around the World. It is expressly against the Conservative manifesto, the letter and the spirit of the referendum. Why on earth would anyone propose one? Because a customs union is a political tool. No country that does not have an independent trade policy can ever be truly independent. All customs unions - which are a nineteenth century concept - are created with the intention of an eventual political union: the German Zollverein and of course the European Union itself being the obvious examples.

Given these inarguable and devastating drawbacks, one can only conclude that the intention of those championing a customs union is ultimately for Britain to be so close to the EU that she will have to be reabsorbed in the future. MPs must not be fooled by promises to the contrary. Nor must the Government. Any proposal containing a customs union is contrary to the letter of the Conservative manifesto, and as such should be whipped against. And this manifesto pledge is critical: there have been plenty of manifesto promises that the Government has abandoned since the election, but this - because it is constitutional and because it concerns Britain’s very independence - goes to the very heart of what it means to be a Conservative. Moreover, it stands a very real chance of destroying the Conservative party in a historic split, mirroring those over the Corn Laws or Imperial Preference, all of which have been about tariffs.

Nor should the Cabinet be exempt from that whip: we cannot continue to have a political world in which collective responsibility no longer applies. Cabinet ministers cannot pick and choose which manifesto pledges they choose to keep, and it is clearly incorrect to say that the party does not have the votes to get its manifesto commitments through the Commons, given the margins by which a customs union has been defeated on a three line whip since 2017.

Thereafter, the goal must be to pass the Prime Minister's Withdrawal Agreement which, whilst dreadfully flawed, is now the only way to deliver a Brexit that in any way resembles that which the UK voted for nearly three years ago or that makes any logical, practical sense. If ever there were a unicorn in the Brexit debate, it is a customs union, and it must not be pursued.

Robert Courts MP

This article appeared in the Daily Telegraph on 01.04.19.