Earlier this week, Downing Street stated that “it is not our policy to be in the customs union”, a move that has divided opinion within the Conservative Party. It will anger Remainers and those in favour of a ‘soft’ Brexit, who have pushed for the UK to work to forge a close relationship with the EU after Brexit. However, Conservative Brexiteers, who have threatened PM Theresa May with a leadership challenge if she seeks to align the UK too closely with the EU at the expense of alternative trade deals, will be pleased with such a commitment.
MP Jacob Rees-Mogg, a leading Conservative Brexiteer (Source: ITV)
The European Union defines the customs union as “a single trading area where all goods circulate freely, whether made in the European Union or imported from outside”. Put in simpler terms, this means that when goods are imported from outside the EU, duties and checks only happen when they first enter the bloc, and face the same tariff wherever they arrive first. After that initial tariff, they are entitled to travel freely through all EU member states.
EU Headquarters in Brussels, Belgium (Source: Shutterstock)
It will be interesting to see if and how the government will deliver on this intention, considering they have already signed up to an agreement with the EU that refers explicitly to the customs union. The joint report stipulated that the UK will “maintain full alignment with those rules of the … customs union which, now or in the future, support … the all-island economy and the protection of the 1998 [Good Friday] agreement”.
A hard border in Ireland must be avoided at all costs, and isn’t ideal for any party. A hard border would reopen old wounds left by colonialism, partition and the Troubles. Furthermore, the border would become an instant security risk. That said, if an open border exists between Northern Ireland and the Republic of Ireland (the latter is still in the EU), American agricultural goods such as chlorinated chicken could arrive in the UK tariff-free, than spread through the EU after entering Ireland without any EU tax or regulation.
The problem facing the government is that outside the customs union, any trade deal the United Kingdom signs with China or the United States will force us to cut our tariffs whilst the EU maintain theirs. The government will be forced to spend billions on building lorry parks, to accommodate longer queues and delays at borders, as well as hiring thousands more staff.
The ‘iconic’ pre-EU British passport, a symbol of a different time in British history glorified by Brexiteers (Source: PA)
Clearly, Theresa May’s policy will have potentially disastrous effects on the UK’s economy, as well as negative geopolitical implications between the Republic of Ireland and Northern Ireland. Hardline Brexiteers such as Jacob Rees-Mogg are fond of portraying Brexit as an opportunity to truly globalise Britain, often citing the opportunities for new trade deals as adequate compensation for leaving the customs union and the single market. Despite their claims, the government’s own research has demonstrated that the UK will have no net gain from leaving the EU, and so the principled objections to membership of the single market and customs union must not come at the expense of the nation’s prosperity. The future of the UK’s place in the customs union will go a long way in deciding how much the nation is able to get out of the Brexit process.