Tomorrow, I will publish a comprehensive and lengthy essay on why joining an EU Customs Union would be a serious mistake for the United Kingdom, and would in the medium term be democratically unsustainable.
Nevertheless, it troubles me that 35 Conservative MPs voted precisely for this option on Wednesday night in the House of Commons. The option, in the name of Kenneth Clarke, was only defeated 272-264. A previous vote last summer was also only narrowly defeated, by 307-301.
There is a serious risk that the UK might sleepwalk into this Customs Union relationship, but without having had a proper debate on it. The main proponents in the debate last week – Ken Clarke, Keir Starmer and Hilary Benn – all seemed to want to avoid scrutiny of the proposal. All were all noticeable in not taking any interventions from the only former Minister for Trade Policy in the Commons.
I have written previously general pieces against the Customs Union, including on this site before the vote last July on that previous vote, on why the move would make no sense as a trade policy, on how it would leave us at the mercy of the EU and on how it would create a democratic deficit.
Most of the criticisms of the Customs Union are written up in the context of it meaning that the UK would be unable to do independent trade deals. Some might shrug their shoulders at this, as the UK hasn’t been able to do independent trade deals since 1973 anyway – it isn’t as if we are losing something we don’t enjoy at the moment, after all?
But being in an EU customs union has a significance well beyond this. Let me just take one aspect. The UK will face a serious loss of foreign policy influence.
Remarkably, some of the 35 Conservative MPs who supported it have strong foreign policy backgrounds. Mark Field is even a current Foreign Office Minister. Alistair Burt was similarly a week ago. Rory Stewart has exemplary foreign policy credentials. Andrew Mitchell is a former Secretary of State for International Development. Nicholas Soames a former Defence Minister. Another Foreign Office Minister, Sir Alan Duncan, abstained. As did Tobias Ellwood, the Defence Minister. As did Tom Tugendhat, the Chairman of the Foreign Affairs Select Committee.
So what is the foreign policy influence we would lose? The most obvious part is that trade is a key part of diplomacy. All of these MPs must know this. The UK doesn’t have an independent trade policy, but is highly influential in setting the EU’s trade policy. And over the last 40 years, the UK has been the most pro-free trade member. So the UK has very plausibly been able to argue with third party countries like the United States, Canada, Korea, Japan, China, and more that the UK will help their case in Brussels for freer trade, whilst the UK can ask for something in return, which may or may not be trade-related.
It might be for human rights in China, about promoting a UK candidature to an international organisation, or against the Japanese position on whale hunting, to name but a few examples. That is how diplomacy works. But if, in the future, the UK has neither its own trade policy nor any say over the EU’s, we have literally zero leverage on anything to do with trade. The United States would have more luck talking to Latvia.
This isn’t just the case with developed countries. Take also the setting of trade preferences for the developing world. For example, the EU currently has three schemes of preferences: Everything But Arms (EBA) for the Least Developed Countries, the General Scheme of Preferences (GSP) for Lower or Middle Income Countries like India, and GSP+ for Lower Middle Income Countries which sign up to a host of international agreements around labour, the environment and so on.
Within a Customs Union, we would have to follow the EU’s trade policy towards the developing world: when it comes to trade preferences, we could be overruled by protectionist voices of the EU27, who fear, for example, GSP+ countries Pakistani or Sri Lankan production of garments could threaten their industries. There would be a huge loss of UK influence, particularly in Lower Middle Income Countries such as India, Pakistan, Sri Lanka, Kenya, Nigeria and others, as the UK has been their best friend at the EU when determining these trade preferences. The UK can and does use this influence for leverage on other issues like security and migration. This will now all be gone.
How do I know this? I have been in the room at both ends. For 2017-2018, I sat on the EU Trade Council, where we debated these issues. The UK was the both the biggest friend of free trade and the biggest friend of countries like India, Pakistan, Sri Lanka and Nigeria, in ensuring they had preferential access to EU markets. I have been on ministerial visits to some of these countries, where I have been in the room while our ambassador or High Commissioner has skilfully used Britain’s leverage within the EU on trade to then develop UK interests around issues like counter-terrorism, human rights issues, regional security and more. All of this would be lost if we had neither our own trade policy, nor any say over the EU’s. We would be less important than Luxemburg.
So I fear that the Commons is sleepwalking into this. The EU would undoubtedly favour us being in a customs union. At the trade bargaining tables of the future, it would be able offer up access to the UK’s 65 million consumers without the UK getting anything in return. Michel Barnier’s number two, Sabine Weyand, gave the game away when she briefed EU ambassadors in November that in her view the Future Partnership document “requires the customs union as the basis of the future relationship”.
Helpfully, the revised documentation the Prime Minister delivered at Strasbourg has restated that the future relationship does not have to be a customs union – it will be up to a future UK negotiation team to ensure we win this argument. That is why the best available course of action is to vote for the Withdrawal Agreement, and start afresh to ensure we avoid the Customs Union. Let us make sure that we don’t sign up to it this week, before that negotiation has even begun.