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10 April 2019

Customs Union wouldn't work

I’m getting seriously concerned by the intellectual capacity of those who would be our leaders. I’m thinking particularly of the UK, but I wouldn’t by any means make the criticism exclusive, frankly. What is particularly irritating me at the moment is the fatuous discussion of “a (or the) customs union”. Customs Union develops from the Zollverein which was promoted by Prussia originally after the end of the Napoleonic Wars as a way of increasing its influence and decreasing that of its Germanic rival, the Austro-Hungarian Empire. The Zollverein established a level of tariffs around the outside of the German Confederation, while at the same time abolishing the myriad duties and levies that had previously been in existence between the numerous states of the Confederation; over the course of the nineteenth century, it came to cover most of what subsequently became the unified state of Germany (Prussia). As an aside, we could note that the two Free City-States of Hamburg and Bremen, with probably the longest history of international trade, were the last to join, in fact not until 1888, which was seventeen years after the formalisation of German Unification; and, notably, both negotiated to preserve a part of their port outside the Zollverein.

So far, so good. The Zollverein continued effectively until the German Reich was replaced by the Weimar Republic at the end of the First World War. Subsequently, the concept has been revived as the EU’s Customs Union, which is also an external tariff barrier, with no internal duties or levies between member states. Sounds like a good idea, and - with the proviso that my own preference is for free rather than protected trade in general - it works pretty well. Certainly, it makes trade and the movement of goods between the EU members states a straightforward operation, which must be a good thing.

Some of our politicians, therefore, have latched on to this, and decided that to remain in the Customs Union once the UK has left the EU would be a great wheeze, and would preserve that ease of trading with the remaining members. Well, maybe that sounds reasonable. The problem is, it doesn’t work. 

Consider this. The EU negotiates a tariff-free trade arrangement with a third country. That means that goods from that third country will be allowed into the EU Customs Union territory without any levies or duties. At the same time, it means that goods from the EU will be allowed - equally duty and levy free - into the third county. So, if the UK is then in the Customs Union but outside the EU, the position would be that no provision would have been made to cover UK exports to the third country (because the UK is not an EU member state) and that goods from the third country would be tariff-free into the UK (as a member of the Customs Union). Not a very good position, I would suggest. 

“Ah,” say the proponents of this scheme, “but the third country would negotiate an arrangement with the UK, and the EU would support the UK’s position and give assistance.” Mmmm… I don’t think so. There would be no incentive for the third country to do anything - after all, they have access to the UK market without having to reciprocate: so why would they? I am a Europhile and particularly a Francophile; however, I’m also not deaf. Listen to some of the statements made by Emmanuel Macron, for example; they show absolutely no sign that he would support helping the UK in this, after all the bitterness of the Brexit decision and negotiations. No, the UK would be powerless in that situation, trapped by the incompetent negotiation of its own politicians.

And that is my point. I’m not here arguing for or against UK membership of the EU; what’s done is done. I am pointing out how badly served we are by inadequate politicians and negotiators. Whether you voted remain or leave, this is an idea which is frankly away with the fairies, and yet it is a policy of the opposition, and threatens to be slipped under our noses by the government.

A few weeks ago I had a brief conversation with the political correspondent of one of our most respected weekly papers. “Is the problem we face”, I asked, “that the intellectual calibre of our politicians is simply inadequate for the responsibilities they hold?”

“Well”, he replied, “I would certainly agree that that is the case in the leadership of the parties, but there are some good people amongst the backbenchers.”

Well, if that’s so, then it’s about time they began to show it. Right now, the mindless parroting of the Customs Union proposal suggests to me that either they are seriously intellectually challenged and genuinely don’t understand, in which case they should not be in the job, or they don’t care as long as they can keep climbing the greasy pole, in which case - well, you can work it out for yourselves.  



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