fbpx
Analysis

We could well end up with perpetual CRAP

by Hugo Dixon | 05.06.2018

The best guess for Theresa May’s final Brexit deal is that it will be perpetual CRAP – or an indefinite Customs and Regulatory Alignment Period, to use its full name.

That, of course, isn’t what the government will say. But, after Parliament’s half-term holiday last week, the prime minister is no closer to finding a long-term plan to avoid frontier checks in Ireland and prevent trade being gummed up at our other borders.

The only thing her squabbling ministers seem to be able to agree on is a temporary CRAP, during which we would stay in the EU’s customs union and follow its rules on goods until we’ve figured out a permanent arrangement.

Even if CRAP was only temporary, it would be a miserable staging post for a proud nation like the UK. But the only type of CRAP that the EU might agree would be perpetual. That’s hardly taking back control.

May’s idea seems to be that CRAP would be a sort of second transition period that kicks in after the first one. The two together might last five years, in the hope that, by then, we will have come up with a long-term customs solution.

Irish CRAP must be permanent

The snag is that the EU has already shot down the idea, in part because it is “time-limited”. The bloc is insisting that any deal to avoid border controls in Ireland has to be permanent.

The other countries won’t let us abandon any stopgap until we come up with a viable alternative. And they have no confidence that any of the government’s cockamamie plans – some rejigged version of “Max Fac” seems the current favourite – will work.

But that’s not all. The EU is saying we can’t use an agreement designed to avoid frontier checks in Ireland as a back door for the whole UK to get access to its single market.

It’s not clear whether the EU will insist on this. After all, permanent CRAP could suit it rather well. Goods would flow freely between it and the UK, and we would follow its rules. Given that the EU has a big trade surplus in goods with us, many of its concerns about losing access to our market would be solved.

Services, where we have a surplus, wouldn’t be covered unless we negotiated “CRAP plus” – probably in return for offering the EU something a bit like free movement of people, which wouldn’t go down well with Brexiters.

Demand a vote on the Brexit deal

Click here to find out more

Pay the money and follow the rules

The EU would still have two other worries. One is that we would be getting some of the advantages of membership without paying a fee. It would therefore probably insist that we pay into its budget.

The other is that we might gain an unfair advantage, by dumping products on its market. The prime minister already promised in her Mansion House speech in March to follow EU competition rules. But the bloc will also be worried about us abandoning its social and environmental rules, so it’s likely to insist we follow those too.

If the EU demanded these extra concessions, May would not be happy. But what are her alternatives?

She can’t credibly walk away from the Brexit talks. Her own officials have prepared a “Doomsday” scenario showing how crazy this would be.

Nor can the prime minister say that CRAP would apply only to Northern Ireland. The Democratic Unionist Party, which is propping her up, says its “only red line” is that Northern Ireland is treated the same way as the rest of the UK.

Another option would be to let MPs force her hand, perhaps when the EU Withdrawal Bill returns to the House of Commons next Tuesday. But if they tell her to stay in the customs union and keep the Irish border open indefinitely, May will probably still end up with a policy that is fairly like CRAP.

The problem is that CRAP wouldn’t please anybody. It would be bad for our economy, as it wouldn’t fully protect our world-beating services industries. That, in turn, would mean less money for public services such as the NHS.

It wouldn’t give us any meaningful freedom to cut trade deals with the rest of the world either because we’d have to follow the EU’s trade policy in goods. So all those Brexiter dreams about swashbuckling around the world would vanish in a puff of smoke.

CRAP would also turn us into what Tory Brexiter Jacob Rees-Mogg calls a “vassal state”. We are currently one of Europe’s most powerful nations, making the rules for both the single market and trade with the rest of the world. In future, we would be rule-takers.

There are many ifs, buts and maybes in this prognosis. But if we do end up with CRAP, the case for asking the people whether they still want Brexit or would prefer to stay in the EU will be overwhelming.

Edited by Luke Lythgoe

5 Responses to “We could well end up with perpetual CRAP”

  • Well, you say indefinite CRAP is bad; but permanent CRAP is a lot better than most other proposals. We could stay with CRAP until we rejoin the EU.

  • I can’t think of anything positive that the Cabinet has done which would reassure the Nation that the Brexit negotiations are in hand and ‘going well’. But having the idiocy to come up with a so called policy with the acronym ‘CRAP’ beggars belief. Here’s another one: ‘CABINET RESHUFFLE , ALTERNATIVES PLEASE’

  • InFacts promotes purely an IN EU option, but to avoid the worst of what might happen, we need to concurrently promote the super soft andrex brexit to minimise harm. Then when people realise the modest extra flexibilities of EEA/EFTA + Customs agreement are overshadowed by the disadvantages, the UK can go back in the EU after a suitable break.

  • Now trump has shown that we are not a “special friend” when it comes to steel tariffs, doesn’t it make sense (common!) that we need the support of the EU. Without it we are sitting ducks in the trade world!!