Stupidity or sabotage part 2

Following last week’s debate on the Customs Union in the House of Lords, Thursday saw the Commons stage a debate, entitled “Customs and Borders”. Dr Richard North followed it and the title of his blog post, “a showpiece of ignorance”  is enough in and of itself to make the point that the level of understanding about the nature of a customs union in the lower chamber is, with a few exceptions, as  appallingly low among MPs as among their Lordships. Dr North described the contribution of Yvette Cooper  and others as “an exercise in futility.” If we have needed any further evidence since the referendum of why we ought to leave the EU, it is our MPs’ total cluelessness of the true nature of the beast.

He also suggest a reason why some MPs are clinging on to the fantasy that staying in the customs union would enable us to enjoy seamless trade with the EU. It only needs a plane trip to the Turkish/Bulgarian border crossing at Kapikule to watch Turkey’s version of “Operation Stack” to expose the fallacy of their argument, so why cling to their illusions?

The most likely answer is that the remoaners have realised that their dream of a second referendum is a non-starter. There is no groundswell among the public to go through all that again. Desperate to stop us leaving the EU, their only hope is via Parliament.

Can they succeed? Unlikely but one must never underestimate the malice of convinced remoaners. They could easily be thwarted, however, if the bulk of MPs realised that a customs union (i) is not joined at the hip to the single market, (ii) would not solve the Irish border problem and (iii) would not lead to seamless trade with the rest of the EU. We can be thankful that the penny has dropped with a few MPs bu they need to show a bit more evangelistic zeal among their colleagues.

The Customs Union – stupidity or sabotage?

Regular readers of this blog will know without a shadow of doubt that there is nothing to be gained by remaining in the EU’s Customs Union. Well, dear readers, you can pat yourselves on the back for you are clearly much wiser than 348 members of the Upper Chamber of our Parliament.

Lord Kerr of Kinlochard, speaking in the debate preceding the vote, said “I do not recall at the time of the referendum any debate about a customs union.” He was perfectly correct in saying this. Staying in the customs union is such a daft idea that no one felt the need to bring the subject up.  As Dr Richard North points out,  “A customs union does not in any way eliminate a border, as we see with the borders between Turkey and EU Member States.” it is therefore no help in solving the Irish border question. 

He also makes the point that, as usual, the Press are all over the place in their reporting of yesterday’s vote. It was not a “big defeat” for the government as the amendment supported by 348 peers only forced “the government to explain what it has done to pursue remaining in a customs union”. In other words, suppose that some degree of light finally dawned and the government realised that there was no point in remaining in a customs union, all this “big defeat” would require them to do would be to say to their Lordships “not much”. Hardly the sabotaging of Brexit which the headlines seem to suggest.

For people looking for a way to keep the flow of trade moving in the immediate post-Brexit period, both across the Irish border and through the Channel Tunnel, it makes for more sense to visit the invisible border between Sweden and Norway rather than Turkey’s version of “Operation Stack” at Kapikule on its border with EU member state Bulgaria. Norway is not in the customs union; Turkey is.  Need one say any more?

The Government should finally lay to rest all this nonsense about a customs union. It should also abandon the current plans for a transitional deal. Further evidence of its inadequacies emerged yesterday  when Cecilia Malmström, the EU’s trade commissioner, said that the UK would no longer be part of trade agreements negotiated by the EU with third countries  once we leave. Re-joining EFTA  as an interim arrangement would not only solve the Irish border issue but would address the issue of our trade with countries like South Korea and Mexico as EFTA has negotiated free trade agreements with virtually all the countries with which the EU has FTAs.

It remains a mystery to many observers why this sensible option isn’t being pursued. For all its well-known faults as a long-term relationship, as a stopgap arrangement it is far better than the arrangement currently being discussed with the EU. Adopting it would put to bed a number of issues which should have been dealt with well before now and thus enable the Brexit debate to move on after being stuck in the same groove for far too long

 

 

Customs Union confusion – yet again

Jeremy Corbyn gave a speech about Brexit in Coventry today. He was 100% correct in his observations about the Government’s progress (or lack of it) :- “They can’t agree amongst themselves about what their priorities are or what future they want for Britain after Brexit….. The truth is we really don’t know much more about where they’re actually heading in these talks.

On the other hand, he has fallen into the trap into which a number of other politicians have fallen – he fails to understand what a customs union actually is.  He said, “During the transition period, Labour would seek to remain in a customs union with the EU and within the single market. That means we would abide by the existing rules of both.”

Why? if he wants us to stay within the single market, remaining in the customs union is superfluous. His reasoning is that “when 44 per cent of our exports are to EU countries and 50 per cent of our imports come from the EU, then it is in both our interests for that trade to remain tariff-free.”  That is fair enough, but Norway, which is not in the Customs union, manages virtual tariff-free trade with the EU. EFTA and EEA membership is sufficient.

Corbyn’s confusion is laid bare when he says that “Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland. ” How can the EU be part of a customs union with the UK while being a customs union in and of itself?

He then went on to say “But we are also clear that the option of a new UK customs union with the EU would need to ensure the UK has a say in future trade deals. A new customs arrangement would depend on Britain being able to negotiate agreement of new trade deals in our national interest.” If the UK was able to make its own trading arrangements, then it could not be in a customs union with the EU. The whole point of a customs union is that it includes a common external tariff. If we negotiated a trade deal with, for example, Australia while the EU did not have one, what would be the point if we were forced to charge the same tariff as the EU on Australian goods?

Perhaps Mr Corbyn and other advocates of either remaining in the EU’s Customs Union or somehow creating a new one with the EU should see what goes on at Kapikule on the border between EU Bulgaria and non-EU Turkey. Turkey is linked to the EU’s customs union, so you would expect reasonably seamless movement across the border. According  to this report, however, this is far from being the case, with delays for lorries sometimes lasting for several days.  A customs union may be a good idea for micro-states like Monaco or San Marino, but not for a country like the UK, where each year, over 2 million lorries pass through the port of Dover alone.

What we desperately need is a customs clearance agreement with the EU, or else we could face “Operation stack on steroids” on the M20 after Brexit Day.  Unfortunately, if so many of our senior politicians cannot distinguish between customs clearance and a customs union, there are good reasons to fear that Kent may become gridlocked with lorries in a mere 396 days’ time.  Yes, it really is getting that close and on the basis of today’s speech, it seems that the leader of Her Majesty’s Opposition has no more idea of how to save us from such a disaster by delivering a sensible, workable Brexit than our Government.

Photo by Peanut99

A Customs Union with the EU is a daft idea

The latest pronouncements from Michel Barnier, the EU’s Chief Negotiator, provide little comfort to those of us seeking reassurance that the Government knows how to fulfil its declared aim of leaving the EU in 18 months’ time while avoiding a “cliff edge” for business.

Essentially, the rather tired “having cake and eating it” analogy sums up what Barnier sees as the root of the problem. He talked of a “nostalgia” for the Single Market and made it clear that you cannot be outside the Single Market while continuing to enjoy its benefits.  “This is simply impossible”, he said.

There is a wide range of views among Brexit supporters regarding whether or not we should stay within the Single Market. If there is a non-single market option which could provide us with something as near as possible to the frictionless trade which Business is demanding, the Government is keeping very quiet about it. This in turn is resulting in a concern that our Brexit team – and perhaps the Government as a whole – still does not grasp what it means to be a “third country” for trade purposes.

When it comes to the EU’s Customs Union, however, there is no reason to support our continued membership. It is an open and shut issue. We certainly need a Customs arrangement with the EU or else a massive queue of lorries is going to build up on the M20 immediately after Midnight on March 29th 2019, but that is not the same as a Customs Union.

A Customs Union is an area within which goods can circulate without restriction but which imposes a common external tariff on goods from outside.  The first Customs Union was the German Zollverein, established in 1834 and which gradually included most German states. Significantly, the economic union was followed by political union.

The Treaty of Rome, which established what has become the European Union, proposed the establishment of a Customs Union. By the time the UK joined, it was up and running and we had to impose the common external tariffs on all goods from outside, including those from our Commonwealth friends such as Australia and New Zealand. In other words, we surrendered the freedom to negotiate our own trade deals.

Shortly after the Treaty of Rome, the UK which at the time was not keen on joining the European project instead became one of the founder members of EFTA, the European Free Trade Association, which was not a Customs Union. It thus allowed members to negotiate their own trade agreements if they so desired, although EFTA also has negotiated free trade deals on behalf of all its constituent countries. Significantly, EFTA has never sought to create any sort of political union among its members. It was and is purely about trade.

Why then should a non-EU member want to be associated with the EU’s Customs Union? If you are a micro-state like San Marino or Monaco, you are unlikely to have the resources to negotiate your own trade deals and thus piggybacking on your larger neighbours is the best way of keeping trade flowing smoothy across your borders. This is not the case with Turkey, the only large non-EU country which has a customs union with it.

During last year’s Referendum debate, the so-called “Turkish option” received very little coverage. Being in a similar customs union with the EU was occasionally mentioned as one possible post-Brexit scenario but then almost immediately dismissed as being unsatisfactory. The Turks themselves don’t like it, which is one very good reason for rejecting it.

For starters, being a member of the Customs Union requires accepting the jurisdiction of the European Court of Justice. Turkey also may not negotiate trade agreements with non-EU countries but does not benefit from the EU’s Free Trade agreements. Countries who have signed a free trade agreement with the EU can export their goods into Turkey tariff free while imposing tariffs on Turkish goods.

One reason for Turkey accepting this unsatisfactory arrangement was its aspiration to join the EU. We are going in the opposite direction, so there is even less reason for us to adopt it, even as a transitional arrangement.

If further proof were needed of this argument, this article on the Kapikule Border crossing between Turkey and EU member state Bulgaria,  shows that a Customs Union with the EU does not result in quick and easy movement of goods across borders.  A Turkish lorry driver is quoted as saying that a mere 14-hour wait at the customs post constitutes a “good day”!

The article goes on to describe how “each driver clutches a sheaf of several dozen documents — an export declaration, a carnet from Turkish customs officers, invoices for the products they are hauling, insurance certificates and, when lucky, a transport permit for each EU nation they will drive through.”

No one in their right minds should be suggesting that any future UK-EU trading relationship be conducted along these lines.  Like it or loathe it, re-joining EFTA as an interim arrangement and thus accessing the Single Market along the same lines as Norway and Iceland would spare us this chaos. Maybe the Government has some better alternative up its sleeve, although if this is the case, it is playing its cards very close to its chest, but we can’t stay in the EU’s Customs Union if we’re not an EU member; we can only make a Customs Union agreement on Turkish lines and evidence strongly suggests it’s not worth the bother.

 

Photo by Peanut99