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Who is making the case for leaving the customs union?

23 April 2018

1:43 PM

23 April 2018

1:43 PM

Whole industries will be devastated. There will be thirty mile queues of lorries stretching back from Dover. The price of food will rocket, our farmers will be wiped out, and the IRA will be letting off bombs all over the UK as the Troubles return to Northern Ireland. With every day that passes, the scare stories about leaving the customs union are getting more and more hysterical – and the pressure is growing to stay inside.

In fact, most of it is nonsense. The fifth largest economy in the world is perfectly capable of managing its own trade arrangements. But leaving needs a big sell. Why? Because there is a powerful alliance of industrial lobbyists and ultra remainers behind staying inside, and that means the case for getting out may easily be lost.

When she took over as PM, Theresa May made a gutsy decision to leave the customs union. She worked out quite rightly that there was not much point in all the hassle of leaving the EU if all it meant was we didn’t need to fly those blue and gold flags anymore. We needed to start making our own trade deals, and our own regulations again. Otherwise it would be meaningless.

In time, we will be better off out. The customs union is mostly about protecting European industries in which we have very little stake in. For example, in 2016 it increased the tariffs on citrus fruit from three per cent to 16 per cent. But we grow remarkably few oranges or lemons in this country – surprise, surprise – so all it means is we end up paying more for them. The customs union imposes hundred of tariffs on products from umbrellas to footwear. Outside, we would be free to set our own, almost certainly at zero – after all, it is a long time since we worried about protecting our agricultural industry, and rightly so. At the same time, we would be free to strike our own trade deals, and could do so with a lot more flexibility than the EU can.

There is a problem, however. Just like competition policy, or any form of deregulation, there are a few very big losers (big businesses and trade groups) and lots of people who gain a tiny bit (consumers). The overall gains are worth having, but the losers have a lot at stake, and the winners not much. The result? It doesn’t happen – or if it does, it only happens with a huge fight. At the same time, the ultra-remainers see the customs union as a back door to staying inside. They lost the referendum, and they lost the argument over the Single Market. But if they can win over trade and tariffs we will stay closely linked to the EU after we leave. The result? Industrial lobbyists and Remainers have formed a natural and powerful alliance.

To resist that, Leavers need to champion their case. They need to make the argument that we will see lower prices in the shops, which essentially means a rise in living standards for everyone. They need to make the argument that we can design our own trade policy, and set our own regulations. It is a credible and convincing position, especially as most of the opposition is little more than disguised protectionism. But if it is not made soon, the case will be lost – and one of the greatest potential prizes of leaving the EU squandered.


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