While yesterday’s motion for a referendum on any Brexit deal won the most votes, a proposal for a customs union suffered the narrowest defeat. Perhaps MPs felt able to get behind Ken Clarke’s motion because it wasn’t a fully fledged plan.
The motion said the government must “ensure that any Withdrawal Agreement and Political Declaration negotiated with the EU must include, as a minimum, a commitment to negotiate a permanent and comprehensive UK-wide customs union with the EU” (motion J).
The phrase “as a minimum” is open ended. What other add-ons will be needed?
The Northern Ireland backstop is a big problem. A customs union by itself isn’t enough to keep the Irish border open. For that, there also needs to be regulatory alignment between Northern Ireland and the EU in various areas, especially goods and agriculture.
Does Clarke want just Northern Ireland to follow these rules? In that case, it would be partly cut off from Great Britain. There would also be regulatory checks between Great Britain and the EU, so goods wouldn’t flow freely backwards and forwards. That would gum up supply chains for our car makers and the like.
Or does Clarke want the UK to follow EU rules on goods and agriculture? In that case, the whole country would be a rule-taker – or, as Boris Johnson would put it, a “vassal state”.
There’s also a lack of clarity about the term “customs union”. Does Clarke want the UK to be automatically enrolled in any deal that the EU cuts with another country, such as America or China? That could be risky, as we wouldn’t have any vote on those deals. The other 27 countries might decide to let US health care companies compete with the NHS or Chinese steelmakers undercut what’s left of our steel industry. Again, we wouldn’t have a vote.
But if we are not automatically enrolled in the EU’s trade deals, that would also be problematic. We would have a deal like the one Turkey has with the bloc. This gives the EU’s trading partners access to Turkey’s market by the back door but they don’t need to let Turkish exports into their markets. This one-way setup would provide little incentive for other countries to cut trade deals with us.
There are plenty of other questions about Clarke’s proposal. For example, what role would the European Court of Justice play in the arrangement?
What’s more, a customs union alone would do little for our services industries. That’s 80% of the UK economy – and while we have a trade deficit with the EU of £95 billion for goods, we have a surplus of £28 billion in services trade. The EU will only let us have free movement for services if we agree free movement for people. But once you put those into the mix, you are talking about the full single market plus customs union package – a rather different proposal that has its own problems.
Now that Clarke’s motion has become a frontrunner, it needs to be fleshed out and subjected to more scrutiny. Until then, it is just another blind Brexit.