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Analysis

7 home truths about vexed customs partnership

by Hugo Dixon | 08.05.2018

The Cabinet are fighting like ferrets in a sack as they vainly try to come up with a good Brexit policy. Some, such as Greg Clark, the business secretary, are concerned that if we don’t stay close to the EU, we will damage our economy. Others, such as Boris Johnson, are worried that if we stay close to the EU, we will lose control – not take control as he promised during the referendum. He calls Theresa May’s customs partnership idea “crazy” in an interview with the Daily Mail.

There is no way to square the circle – or, as Johnson used to say, to have our cake and eat it. If we quit the EU, we have to choose between two unpleasant alternatives. That’s why Theresa May keeps going round and round in circles, wasting time in the Brexit talks. The Brexit War Cabinet, which failed to agree what to do last week, won’t even discuss it this week because it’s such a hot potato. Debate will be delayed until next week.

The Cabinet battle is over whether we should plump for a customs partnership with the EU post Brexit or “maximum facilitation” of customs checks with the bloc – both of which were explained, albeit sketchily, in this government paper last August. Here are seven home truths about the vexed question.

Customs partnership isn’t enough to avoid border controls

Johnson was basically right when he told the Daily Mail that a customs partnership “only solves the Northern Ireland border question… if you insist on complete regulatory alignment with the EU rule book.”

A customs partnership (or, indeed, a customs union) only avoids the need to impose tariffs at the frontier. To do away with all border checks – whether in Ireland or at the English Channel – we would also need to copy EU rules on goods and agriculture. This is one reason Brexiters smell a rat.

…but Max Fac isn’t even part of the solution

At least a customs partnership/union could be part of a solution to the border problems. The rival maximum facilitation scheme (known as “Max Fac”) isn’t even part of the solution. Embrace that and we undermine peace in Ireland and gum up our industries’ supply lines too.

Customs partnership doesn’t help services

A customs partnership (or indeed union) does nothing to smooth trade in services with the EU. To achieve that, we’d probably need to follow the EU’s rules on services too.

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… and it means being tangled in red tape

Johnson is right that a customs partnership would result in a “whole new web of bureaucracy”. This is because we would have to separate goods coming into the UK into those intended for consumption here and those intended for onward export to the EU.

It wouldn’t be enough to put goods into different channels when they enter our country; we’d have to track them after they come in to make sure they don’t end up in the EU by mistake. And we’d have to do this for components too – so that, for example, a piece of low-tariff Chinese metal doesn’t get popped into an aerospace engine made in the UK. Just thinking about it makes one’s head spin.

… so it won’t be ready for donkeys’ years

The EU has already rejected a customs partnership as magical thinking. But they might conceivably accept it as some theoretical end-goal so long as we stay in the customs union until all the blue-sky technology works – and provided we align our rules with theirs.

The Brexit War Cabinet was told last week that the technology wouldn’t work until at least 2023. But this article for Irish broadcaster RTE talks about a 10-15 year wait. That means we would be stuck in a customs union for donkeys years while we tried to figure out whether the partnership actually worked – another reason the Brexiters are going bananas.

All this would turn us into a rule-taker

We are currently one of the EU’s most powerful nations, making the rules for the single market and helping drive its trade agenda with the rest of the world. Regulatory alignment for goods for ever – plus a customs union for donkeys years – would turn us into what Johnson used to call a “vassal state”. We’d have to follow the EU’s rules both for the single market and trade with the rest of the world. How’s that good for our power or our pride?

Only good solution: stay in EU

There is only one way to avoid Irish border controls, stop our industry’s supply lines being gummed up, protect our world-leading services industries and remain a rule-maker: stay in the EU. As the Cabinet thrashes around looking for a Brexit deal that will satisfy nobody, all the more reason why the people should have a vote on it.

5 Responses to “7 home truths about vexed customs partnership”

  • Phil,
    I am sure you are well aware other countries participate in these without EU Membership. Neither issue was mentioned on the Referendum ballot paper. And even some prominent leave advocators suggested continued Single Market membership. I am sure a fair number of idiots thought that that leaving the EU would be a simple matter, but sadly those that are most responsible for peddling that untruth are sitting in HMG’s cabinet. Maybe you should offer the Government a plan for leaving rather than just saying “Get on with it.”. I think they could do with one.

  • You can’t avoid all regulation. The benefit of a single market etc is that you have one set of regulations, agreed together, and then let things flow. The alternative is having two sets of rules, the EU rules and our own and thus more barriers to trade. One set of rules for one big cake instead of lots of little dinky muffins with their own rules.

  • What Leavers never mention or appreciate is that only 37% of eligible voters voted to leave the EU. For such a momentous decision, this does not feel like the kind of ringing endorsement which should be required. And even ignoring the blatant distortions of the campaign, it is now painfully obvious that many on both sides of the debate had no idea what leaving would involve. In light of this I think some humility is in order – and another vote on the final deal is only logical.