Daniel Hannan is an MEP for South-East England, and a journalist, author and broadcaster. His most recent book is What Next: How to Get the Best from Brexit.
“Not working out the way you thought, Hannan, is it?” I am asked the question daily by angry Europhiles. And, to be fair, they’ve got a point. I had assumed that, by now, we’d have reached a broad national consensus around a moderate form of withdrawal that recognised the narrowness of the result – a Brexit that left intact a number of our existing arrangements, while allowing us to leave the aspects of the EU which all sides could agree were harmful, such as the agricultural and fisheries policies and the common external tariff.
Obviously, no one gets 100 per cent of what they want in a situation like this. I won’t, you won’t and, come to that, Theresa May won’t, because prime ministers must sometimes compromise, just like everyone else. Still, it seemed to me that the rough outlines of an eventual deal were clear on the morning of 24th June 2016. A 52-48 outcome pointed to some sort of association that stopped short of membership. Britain would keep most of the economic aspects of the EU while losing most of the political ones. A compromise would be found on immigration, perhaps allowing EU nationals to take up job offers in the UK without subsidies from the British taxpayer. Britain would stay in a number of EU programmes, paying its share of the bill, but would withdraw from the quasi-federal institutions in Brussels. We’d end up, very broadly, in an EFTA-type arrangement, à la Suisse.
I was prepared for some adjustments to be made to that model, but I was not prepared to end up with absolutely the most harmful outcome imaginable, namely leaving the Single Market while keeping the Customs Union. Boris Johnson is reported to have said, in private, that this would be worse than not leaving at all. If that’s what he thinks, he’s bang on. Giving Brussels 100 per cent control of our trade policy with zero per cent input would plainly leave us poorer and weaker than now.
Yet Labour is now in the bizarre position of demanding this worst-of-all-worlds outcome. “What we want to do is we want to remain in the Customs Union,” said Emily Thornberry on Tuesday, adopting, as she often does, the tone of a primary school teacher addressing six-year-olds. “We don’t want any faffing around with any of the nonsense that the Government is coming up with in relation to alternatives to the Customs Union.”
Labour is cynically pushing what it knows to be a terrible idea, not because it aims for a better Brexit, but because it sees a chance to discomfit the Government. Its leaders know perfectly well what is wrong with the Customs Union. Jeremy Corbyn spoke as recently as January about how it was “protectionist against developing countries”. Barry Gardiner, his trade spokesman, set out in terms why a customs union for a non-member wouldn’t work: it would, he correctly explained, mean that Britain would have to match all EU concessions vis-à-vis third countries, but those countries would be required to reciprocate only to the EU 27, not to Britain. Our home market, in other words, would become a bargaining chip for Brussels to use for the benefit of the 27.
So why the U-turn? Labour pretends that it can get some sort of customs union that gives Britain a say over the EU’s trade policy, but I don’t think it expects anyone to believe that. Its calculation, rather, is that all this is a bit technical, that no one cares about the details, and that the idea of staying in a customs union after leaving can therefore be portrayed as a half-way house.
There is, as I say, a strong case to be made for finding half-way houses, but the Customs Union isn’t one of them. Lord Hill, our former European Commissioner, says that he voted Remain because he wanted Britain to have a seat at the table and that, by his own logic, giving up that seat now means it would be absurd to continue to be bound EU trade policies over which we had no say. Put like that, it’s hard to argue.
It’s clear enough what Labour’s game is. It is focused on trying to defeat, or even bring down, the Government, and will back any Brexit proposal, however preposterous, that might advance that objective. Why, though, are some civil servants also pushing for a customs union, rather than for an EFTA-type arrangement?
Two reasons. First, like a lot of Remainers, they genuinely believe that the only real issue for Leavers was immigration, and so have drawn their red line there rather than on economics. Second, they woefully underestimate – or at least affect to underestimate – the potential of non-EU trade. A Whitehall report leaked in January claimed that the maximum benefit of non-EU trade deals would be equivalent to a gain of just 0.2 per cent of GDP, whereas leaving our current arrangements with the EU would reduce GDP by up to eight per cent. Those figures should strike you right away as fishy. When we do more trade with non-EU than EU markets, how can the gains and losses be so lopsided? The explanation is simple. The report did not consider the possibility of deep and comprehensive trade deals based on mutual recognition, such as the one between Australia and New Zealand. It assumed, for example, that a US-UK deal would simply be like our share of TTIP, the now abandoned US-EU deal. The idea that we could be more ambitious, providing for full reciprocity in services and professional qualifications, wasn’t considered.
And that, ultimately, is the problem. We are going about this process with no ambition. We are approaching Brexit defensively and regretfully, focused on the costs rather than the opportunities. The recovery of Britain’s self-rule is being treated as an exercise in damage-limitation, with officials determined to cling on to as much of the existing dispensation as possible.
“You broke it, you own it,” say some Remainers whenever anyone complains about the way things are developing. But we – we liberal Leavers – don’t own it. The process is largely owned, rather, by people who resent that it is happening at all. No, this isn’t how it’s supposed to be working out.