Brexit

Why we must leave the Customs Union: debunking the myths

BY Alexander Fiuza   /  25 July 2017

Donald Trump has committed to a wide-ranging post-Brexit trade deal with the United Kingdom, apparently already under construction. Japan has joined in the enthusiasm, hinting a trade deal could be done before its own deal with the European Union. Australia too says it wants a deal as fast as we can move. They are joined by dozens of other countries. An almost literal ‘world of opportunity’ awaits; a world on which the Customs Union would slam the door.

The Customs Union itself is a free trade area with a common external tariff. In other words, members cannot have trade deals with non-members – participation requires embracing protectionism. EU Tariffs on non-agricultural goods average 3.6%, but on agricultural goods they average 22.3%. Not coincidentally, EU food prices are almost 20% above world prices. While we are in the EU, the tremendous trading opportunities opened by Brexit are shut to us.

However, europhiles have chosen the Customs Union as one of their key battle lines. Their claims vary, but some common themes emerge. One is the claim that Customs Union membership is the only way to trade freely with EU Member States. This is not true. Every trade deal the EU has made with countries outside Europe – notably its recent and remarkably extensive deal with Canada – has left its partner outside the Customs Union. ‘Membership’ is simply not necessary to trade freely with the EU.

Another trick, building on the last, is stating the EU provides 45% of our trade, while any randomly selected nation wanting a trade deal with us constitutes less. This is simply not true, as it implies we cannot have free trade with the EU outside the Customs Union. This is doubly misleading as it assumes trade is static. Not only has the EU’s share of our trade been falling for decades, but as we forge good trade deals with the wider world, it will fall faster. 55% of our trade already comes from other countries outside the EU, many of which are restricted by EU trade barriers. Remove the barriers, and they would buy more from us – and sell more to us!

Once the generalities of trade are out of the way, the Remainers move on to evocative but unfounded hyperbole. Europhiles claim there would be endless snaking queues of trucks at Dover if we left the Customs Union.

Again, this is not true. There is a system of electronic customs registration, allowing documents to be submitted and approved in advance, with the ability to undertake customs clearance at importers’ premises once the goods have been delivered, rather than being cleared at the border. This system ensures the huge queues at Dover in Remainer propaganda will remain a myth.

Currently in the UK 99% of customs declarations are already received electronically, and of these, 96% are cleared within seconds. Of the remaining 4% which get random physical checks, there is usually only a straightforward document check. There may be a need to upgrade Customs software to handle increased traffic, but the Government is already on top of this. They are bringing in new Customs software in Autumn 2018, more than 6 months before we leave. This gives us plenty of time to smooth over any bugs before leaving the Customs Union.

A customs cooperation agreement will be important to make sure this works efficiently between the UK and EU – and we will get one. The EU will want convenient procedures to be in place on the UK side of the Channel as they export so much to us, including big volumes of perishable agricultural products. Endless snaking queues at Calais or elsewhere, would not be in their own interests.

What about avoiding a hard border in Northern Ireland? This problem has been trumpeted by Remainers, but in reality, it is easily resolved. Pre-clearance could be used for almost all goods, with any needed inspections taking place at dedicated zones away from the border. This, combined with the Common Travel Area between the UK and Ireland, which pre-dates the EU, would avoid a hard border. It would require cooperation and investment, but both sides want it to work, it will.

We mustn’t forget, too, that the British territory of Gibraltar does not participate in the Customs Union. This does not stop the thriving cross-border trade with Spain, as well as numerous Spanish people commuting across the border to work there every day. Gibraltar is so successful, in fact, it has a GDP per capita of £53,835, while the UK average is £33,460. Exclusion from the Customs Union has hardly impoverished the Gibraltarians.

Leaving the Customs Union when we Get Britain Out of the EU will not be a huge leap. Like our own territory of Gibraltar, and like almost every country in the world, we would continue to sell to -and buy from – the EU, from outside the Customs Union. If we stay in the Customs Union, on the other hand, we would gain nothing we couldn’t have from outside, and we would lose the massive opportunity for a global Britain to forge trade deals with the wealthiest and fastest growing nations in a changing world.

Alexander Fiuza is a Research Executive at cross-party grassroots campaign Get Britain Out