The Customs Union debate is a complicated one – with strong arguments on both sides. Personally, my preference is that we remain in the Customs Union and Single Market AND had an ongoing say, but this would raise the question: why did we leave the EU?
If we don’t get an ongoing seat at the table and leave the Single Market, here are 10 reasons why we might consider leaving the EU Customs Union (EUCU):
Control part 1: If we stay, we won’t have a say on how policy evolves – even if it hurts the UK (and we’d still be under the thumb of the ECJ)
This isn’t about sovereignty for the sake of sovereignty. If we stay in the EUCU, we will have no say whatsoever on how policy evolves – even if it directly negatively impacts the UK! Turkey, as an example, had little to no say in the EU’s negotiations of a FTA with Canada.Further, a Customs Union needs a centralised decision making body. The UK would be bound by current and future ECJ decisions on the interpretation of the customs union
- Control part 2: If we stay, we’ll have to accept all FTA’s that the EU negotiates, without reciprocal access If the EU negotiates a FTA with a Third Country, we will have to accept all terms of the FTA, even if it specifically hurts part of UK industry. Those negotiators will likely not care about the impact on the UK economy. Further, we will have to grant the Third Country complete free market access & to top it all off, we won’t necessarily have reciprocal free market access in the Third Country’s market.
- It will be near impossible to negotiate FTA’s with any other country if we stay By definition, the UK couldn’t enter into Trade Agreements with no or reduced tariffs with non-member countries, making it practically impossible to benefit from the ‘new trade deals’ we were promised in the BREXIT debate. Turkey (who has it’s own Customs Union with the EU) has barely strung a single FTA together since entering their Customs Union.For reference, the EU does not have a FTA with the USA, China, Japan, India, Australia, and the Latin American Mercosur.
- We’d have to oblige by additional non-tariff matters, making FTA’s even harder We would need to oblige to non-tariff related matters (safety/quality standards, etc) – another blocker to negotiating deals internationally. This also reduces our ability to change controls for our local market.
- If it works for Norway and NAFTA, why can’t it work for us? Norway & Switzerland are out of the EUCU and still do the majority of their trade of goods with the EU. Turkey is in & has arguably suffered. NAFTA isn’t a Customs Union. And CETA (Canadian/EU FTA) is not a Customs Union.
- We can have our cake & eat it too We’ve gone into more detail on this here, but there are various ways in which we can leave the EUCU whilst minimising the red-tape costs (such as Rules of Origin). Examples include derogation of Rules of Origin (which might be in the EU’s interest given the trade imbalance), a mutual recognition agreement (MRA) on product standards, self-assessment for Authorised Economic Operator (AEO) traders and others.
- Technology can help Technology can play a huge part in helping to smooth out the impact of leaving the EUCU. Across documentation, pre-screening, Rules of Origin and many more, thoughtful technology investment could streamline red tape and reduce all the hidden costs that leaving the EUCU entails.
- The UK runs a very efficient customs process The UK is already known for running a very efficient customs process. We currently employ ~ 5,000 people. With investment in infrastructure and with increasing the workforce, the UK could still run an efficient customs process, even outside of the EUCU
- It could lower inflation As we could negotiate FTA with other countries, goods that are currently subject to high tariffs to protect non-British companies across the EU will slowly dissipate. An example of that is that the UK has to levy high tariffs on many kinds of foodstuffs which are not grown in the UK, but are grown elsewhere in the EU mainly in Southern Europe.
- We could benefit more from customs and duties monies The EUCU collects money into a common EU-wide pot, which the UK doesn’t benefit enough from.
(if you want detailed facts / description of any of these points, drop me an email at email@example.com)