Henry Newman is Director of Open Europe.
The row over the Government’s customs policy is really a proxy for a bigger concern – the nature of Brexit. Supporters of the Customs Partnership seek a mechanism to lock the UK into a close orbit with the EU: the Partnership would do just that. Many don’t particularly like the policy itself, but know that, if it failed, the alternative would be a Customs Union.
Those backing the alternative technology-based Maximum Facilitation plan prefer it as it leaves the UK freer to forge its own path. The intrinsic merits of each proposal are, for many, secondary to their broader implications for Brexit and the UK’s future relations with the EU. Unsurprisingly, the breakdown of support for each option almost exactly mirrors the Cabinet’s position on the referendum, with the exceptions of Gavin Williamson and Sajid Javid. Very little has changed during the last two years.
For the last few days, the customs stalemate has captivated Westminster’s attention to a surprising degree. For sure, customs policy is an important aspect of Brexit. But overall, we are arguing over a relatively small slice of our economy. The UK economy is almost 80 per cent services-based. Even if we consider just goods exports, less than half of those head for the EU.
That’s not to under-state the value of achieving a low-friction system for our EU goods trade, especially for those industries with complex and integrated supply chains. The bloc is our largest single market for goods. But it is a reminder that the next few years of Government policy must obsess about more than just customs arrangements. The British Chamber of Commerce’s Adam Marshall is right to point out that the best Brexit deal won’t matter much if the Government doesn’t create the conditions for growth at home.
When it comes to Brexit overall, the negotiations are currently jammed up around the issue of the Irish border. And that’s a problem which is rather hard to resolve definitively without more political goodwill, and without knowing the nature of our future relations with the EU. But putting that issue aside (and the likely forthcoming ‘crisis’ in the talks), the EU is still proceeding on the assumption that the UK will receive a zero-tariff free trade agreement. Both sides have also agreed a standstill transition, removing much of the threat of the UK leaving without any deal next April. Despite the bumps ahead, the UK is heading for a negotiated exit.
Before Article 50 comes into effecr, the Prime Minister is keen to get as far ahead as possible with locking down the UK’s future relations with the EU. According to my diplomatic contacts here in London, Theresa May has repeatedly stressed this in her private meetings with heads of EU27 governments. Yet member states continue to leave much of the mechanics of Brexit to Brussels, which has every incentive to drag things out. I’ve repeatedly criticised the Government for not being clear enough about their Brexit plans, but it’s also true that the EU27 and most member states haven’t spent nearly enough time really thinking – beyond the narrow, technical process of Article 50 – what the future relations between the UK and EU should look like either.
One exception to this is the European Parliament’s Brexit lead, Guy Verhofsdadt, who has proposed an association agreement for the UK. Another is Emmanuel Macron, who previously gave a soft push for the UK potentially joining an outer tier of EU membership in the future. Yet Macron is facing other distractions, and is looking increasingly isolated in Europe. His proposals for European reform have received a general ‘nein’ from Berlin. He received the Charlemagne award last week for services to European unity, but this was quickly dubbed a consolation prize by the Italian media.
Serious thought on our future relationship is also often lacking in the UK. In Parliament, tensions are heating up again with a Remain revanchism evident in the Lords. While Labour has a Brexit policy which is patently unachievable, the Conservatives are busy re-fighting the referendum campaign. Both sides of the party hold positions which are in danger of becoming caricatures. The Prime Minister is pulled in two opposing directions, exacerbating her temperamental reluctance to take decisions. And both ‘wings’ of the party are reluctant to seek genuine compromise, for fear of relaxing the pressure on the Prime Minister and seeing her jump the other way.
On one side of the Tory Party, the European Research Group of Tory MPs are setting out an implacably tough position and refusing all compromise. My mild suggestion that – given Whitehall’s Treasury-led go-slow on Brexit preparedness and the lack of investment in customs facilities on the Continent – that we might not be ready to leave the Customs Union on time was met with accusations of “pro-EU group think”. That’s not something of which Open Europe is often accused.
At the other end of the scale, Stephen Hammond has recently called for Brexit ‘compromise’, by which he means the UK remaining in the European Economic Area – a policy which would likely necessitate continued Free Movement and leave the UK as a broad-spectrum rule taker, something which even Philip Hammond and Mark Carney have ruled out.
The never-ending circular discussion in the UK political class is certainly dull, but it’s also profoundly damaging. The more we seek to re-take decisions which have been previously addressed, the less time and energy we have to focus on the real choices facing the country in the future. We are also in danger of not seeing the wood for the trees – of missing the bigger picture: for example, the EU’s protectionist moves to exclude the UK from the Galileo satellite system. If the EU excludes us from projects which are in our joint shared interest, this will have inevitable repercussions for our future relations, in security but also in trade. These are the issues which we should be debating, and pressing with our allies on the Continent.