On both sides of the Brexit divide there are fundamental misunderstandings about what a customs union would actually entailby David Henig / May 16, 2019 / Leave a comment
There is little the UK’s increasingly polarised Leave and Remain tribes agree on, but the horror of a UK-EU customs union “compromise” seems to be one such rare beast. It feels like every day there is an article on how bad this will be, how the UK will be economically and politically damaged, possibly irrecoverably, if it signs up to one. Visions of EU bureaucrats carving up UK industry are summoned, in which UK officials wait meekly to be given our ghastly instructions. The final humiliation.
Though one can be forgiven sometimes for wondering why if customs unions are so bad there are so many of them around the world, and indeed why Turkey, not known as a country which likes to depend on others, has one with the EU.
So what exactly is a customs union? How do existing models work? And crucially, would it really be so terrible if Britain signed up to one? The debate is riddled with confusion. Even the Labour Party, whose Brexit policy is officially a customs union, seem hazy on the details. But they are right that while a customs union is not a panacea, economically there are worse end states for Brexit Britain.
One problem with the scare stories is that they don’t quite agree on what a customs union will actually entail. In some accounts the EU will be negotiating trade deals on our behalf, in others we have to negotiate but follow the EU’s lead. Some say a customs union will be just about a shared external tariff, thus failing to solve the Northern Ireland border issue, others that it includes alignment in regulations.
There is good reason for the confusion, which is that a customs union is not actually something you buy from a supermarket but an international agreement you reach through negotiation. Some of the choices to be made are those above. Rejecting out of hand a customs union without acknowledging this is simply propaganda.
At base a customs union is a supercharged free trade agreement in goods, with the parties agreeing not just to reduce tariffs between them, but to actually eliminate them by having a common external tariff. It does not have to cover all goods, just most. The EU-Turkey customs union does not for example include primary agricultural produce.…