Customs Union: from Zollverein to irrelevance

By Ian Milne

Preamble

Orwell’s Nineteen Eight Four came out in 1948, less than a decade before the official birth of the European Community.  In Orwell’s vision, three totalitarian super-states, Oceania, Eurasia and Eastasia, were perpetually at war.

The European Community was – is – merely the latest version of the chimera of a single European state that had been pursued in the nineteenth century by writers such as Victor Hugo, by Continental tyrants such as Napoleon, and, in the twentieth century, by German governments led in 1914 by Bethmann-Hollweg  and from 1933 to 1945 by Hitler.

Consciously or not, the European Union was built on similar assumptions: that the post-war world would consist of huge “blocs”, competing for resources & markets, and that European states were destined to amalgamate into a single state. In the Eurocrats’ weltanschauung – world-view – North America constituted one bloc, Europe another, while to the East, (the Soviet Union, its first candidate, having failed) China would exercise hegemony over the Asian land-mass.

The EU Customs Union

Since its accession to the “Common Market”,  “British Trade Policy is not to have a British Trade Policy”. The UK hasn’t been in control of its own trade policy since 1973. What the UK has had since 1973 is being trapped – for the first time in its history – inside a customs union – the EU Customs Union.

The EU Customs Union, the only one in the developed world,  is a relic from the “Fifties” –  the 1850s. This is how it came about.

In  German & French “received wisdom”, customs unions are (still !) a peculiar obsession. The 19th century German customs union – “Zollverein” –  was the mechanism associated in the German collective consciousness with the Bismarckian creation of Prussia & then the German Empire.

On 4th September 1914, a few weeks after the  outbreak of the First World War,  Chancellor Bethmann-Hollweg issued his letter setting out German war aims. War aim number four1 was to “create a central European economic association through common customs treaties…….”. (A Figaro journalist, Eric Zemmour, describes this as a plan for the “vassalisation économique” of France through the mechanism of a customs union2.)

Two years later, in 1916, when the war wasn’t going too well for Germany, Berlin offered a separate peace to the Belgian Government (then in exile in Le Havre3), involving the evacuation of German occupying forces from Belgium & the signing of a bi-lateral Belgian-German customs union4.   This was turned down by the Allies.

In early 1917, when a compromise peace with Britain, France and Russia might just have been possible, German aims were for a “German peace” with a customs union led by Germany and with the involvement of Austro-Hungary and Romania, thereby solidifying Germany’s hold over its supposed allies and converting them to a de facto part of the peacetime German economy, no different from Alsace-Lorraine and a large slice of Belgium which Germany also proposed to retain.

In the next war, in 1942, when Germany still believed it would win, the Reichsbank organised a conference5 in Berlin to plan how Germany would run the European economy afterwards.  This involved a European Customs Union – Zollverein – very similar to the one we have today.  (It also involved a single currency with – believe it or not – an opt-out for the UK).

 Almost two centuries on, in 2016, with average customs duties worldwide (including in the UK) down to a little over one per cent6, customs unions have lost whatever economic raison d’etre they ever had.

The EU is likely to experience a significant decline as an important trading partner in the future due to demographic issues. These two Global Britain briefing notes (here and here) list the projections for population growth and decline within and outside the EU. It is particularly interesting to see the very different projections for France and Germany.

Ian Milne

1          The full text (translated) is: “We must create a central European economic association through common customs treaties, to include France, Belgium, Holland, Denmark, Austria-Hungary, Poland “sic”, and perhaps Italy, Sweden, and Norway.”
2          Eric Zemmour, Figaro, 29.9.16 
3          The building which housed the Belgian government in exile between 1914 & 1918 survived the 1944 bombing & still stands in Saint-Adresse, a suburb of Le Havre.
4          Georges-Henri Soutou, La Grande Illusion, 1914-1920, pp 75.
5         The title of the 1942 conference was “Europäische Wirtshaftsgemeinschaft”
6          In 2013, 82 % by value of all UK imports of goods from outside the EU bore zero customs duties. The remaining 18% of such imports bore an average rate of EU-mandated customs duties of 8%. That 8% average is likely to be lower now.

 

Photo by Polybert49

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4 comments

  1. Adam HileyReply

    yet the Europhiles and Goldman Sachs keep blathering on about the So-called importance of the so-called Single market

  2. Gordon WebsterReply

    Very interesting article from Ian Milne. It seems to me, that since 1870 when Germany became one country, they have been determined to take the greatest wealth to themselves, either by military means or by political stealth. A Free Britain, in the 20th Century, acted as guarantor of Peace and Security in Europe, so we must remove ourselves from this European Soviet, and rebuild.

  3. tapperReply

    The Zollverien, or elimination of regional imposition of local tax on the movement of goods was a fundamental instrument in the liberation of what has become the most powerful single economy in Europe.

    That the German economy was perverted to the political ends of psychos and fools misses the point of the essence of a free market economy.

    Leaving the EU is the single most foolish economic gesture that has been made since Beeching cut up the railways in the 60s and will go down in history as the greatest economic blunder ever.

    • John Petley
      John PetleyReply

      In the short term, there may be a few issues we have to face economically, but it is better to face them now and start to reorientate our economy away from the EU so as to reduce the risk of our exposure to the inevitable financial calamity when, at some point in the next 20 years, the Euro goes belly-up, possibly taking the whole EU project down with it.

      Anyway, the EU Was always a political project rahter than an economic one and the Brexit vote was a vote to restore our independence and our dignity as a nation. As someone who worked his socks off for the four months between Cameron setting the date and the referendum vote, I am and will always be proud of the part I played, if only a small one, in securing our freedom from this club of failures.

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