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No customs union… May 17, 2017

Posted by WorldbyStorm in Uncategorized.

I don’t often say this, but Pat Rabbitte has an interesting question in the SBP at the weekend. He asks why it is that ‘neither May nor anyone in her cabinet has yet explained the advantage to Britain of leaving the customs union’. As he notes, the departure from the single market is inevitable due to the fetishisation of immigration ‘control’ in the UK, but the customs union?

It’s not entirely true that they’ve not offered an explanation. This handy piece from the IT earlier this year notes:

So long as the UK is a member of the customs union, it can’t sign trade accords with other countries such as China, which may be unwilling even to begin negotiations now, since the UK can’t yet seal a deal. This leaves the trade secretary “unable to do his job,” as Conservative lawmaker Andrew Tyrie wrote in a September report.

Leaving the customs union would allow the UK to pursue its own deals with 85 per cent of the world and ensure the agreements are calibrated in its favour. The Policy Exchange, a think tank, says staying in the bloc also makes the imports of consumer goods, particularly food, more expensive. Embracing free trade could increase the UK’s long-term gross domestic product by 4 per cent, Patrick Minford, a former adviser to Margaret Thatcher and one of the few economists to campaign for Brexit, has argued.


The problem is that there’s a very strong case that the benefits of leaving are outweighed by staying. But as the IT notes all that may be swayed by “Britons’ new independent streak”. Which seems somewhat irrational.


1. simonjkyte - May 17, 2017

Whatever your take on Brexit, there are a number of ‘real world’ problems which now have to be faced. The first is that not only is it forbidden to negotiate with someone who is still in the EU unilaterally, nobody wants to. The second is that everyone assumes that the WTO is there as a net if all else fails. But it has 162 members and the UK is TECHNICALLY not one of them …. the EU is! In fact nobody in the UK knows how to negotiate a trade deal – which isn’t surprising as we haven’t done one since joining the EU. On the other hand when we joined we did actually have to raise tariffs – but it was a rather different world, our exports were still manufactured heavy goods not insurance plans or euro-currency trades.


2. FergusD - May 17, 2017

What is it with this assumption that if the UK negotiates trade deals with other countries e.g China that they will advantage the U.K.? Surely they would have to be at least neutral/mutually beneficial for the other party to agree? Trump says he wants more advantage for the US in the future. Also, the EU is many times bigger than the UK so surely the EU can get better deals? The Tory position makes no sense to me.

Numerous people who know about such things say that there is no WTO default anyway, the UK will have to negotiate with all 162 WTO members if it wants a WTO deal.


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