As the Brady amendment was passed in parliament this week, Theresa May received with it clear instructions to go back to Brussels and demand a revision on the Irish backstop. How this will eventually turn out, nobody yet knows, but the president of the European commission, Jean-Claude Juncker, already indicated over the weekend that what is needed, in his opinion, to get rid of the backstop is the UK permanently remaining in the customs union.
It’s an idea that has also been advocated by the leader of the opposition, Jeremy Corbyn. But while staying permanently in the customs union would solve the Irish border issue, it would also put an end to the dream of a “global Britain”. In order to deliver a successful Brexit, the UK should reject any such proposals by the commission.
The customs union ensures that there are no tariffs or any other trade barriers between EU member states. At the same time, however, it also forces all of its members to adopt a common external tariff, which applies to all goods that enter the customs union.
Free trade agreements, as part of the customs union, are negotiated by Brussels. Contrary to what the Labour leader says, this means that staying in the customs union permanently makes it impossible for the UK to pursue its own independent trade policy – this is just one of many contradictions in Corbyn’s customs union plan.
Estonia presents us with an excellent case study of this problem. Here we have a country which, after the fall of the Soviet Union, “adopted unilateral free trade – abolishing tariffs on all imports, including agricultural goods,” as Magnus Feldmann writes. But when it joined the EU, the small Baltic country had to give up this highly successful policy and replace it with the EU’s external tariff regime. As Feldmann wrote back then in anticipation of this change: “this de-liberalization process also will mean that Estonia is about to lose one element of its uniqueness in the last decade – its brand name as the ‘Hong Kong of Europe.’”
What’s more, it’s highly unlikely that the UK could, as a member of the customs union but not of the EU, have a say in the EU’s trade policy at-large. It is much more likely that the UK would follow the Turkish example, a country that has membership of the Customs Union in so far as it gives access to all external goods as stated in the EU’s trade deals. But it does not receive reciprocal access to those very countries with which the customs union has trade deals. In addition, Turkey has no say whatsoever in the trade policy of the customs union, since it is not a member of the EU.
Staying in the customs union, therefore, would mean that, while still being able to have unhindered free trade within Europe, the dream of a truly global Britain would be gone – and with it, the UK would not have a say over its own trade policy anymore. In a sense, leaving the EU while staying in the customs union would, at least when it comes to trade, be worse than remaining altogether.
Instead of this foolish option, the UK should stake out a bold vision for its future. As I have written several times over past months, while I as a mainland European am disappointed that, soon, we will have to fight for a freer and less intrusive EU without Britain, the UK could become a “shining city upon a hill”, leading by example by embracing free trade.
This was, after all, one of the main benefits of leaving the European Union, and one which is highly popular – indeed, Brits think of free trade with the world as one of the highest priorities post-Brexit. There is no doubt that the freedom to trade with whomever one wants is highly profitable and essential for sustainable prosperity and wealth accumulation.
By freeing itself from the shackles of the EU’s lagging and often actively protectionist trade policy, the UK could pursue its own course in the world, becoming a country that sees and enables the astonishing benefits of voluntary trade and cooperation, in the hope that others, especially on the continent, would follow this approach eventually.
But none of this would be possible by remaining in the customs union. And while staying in it temporarily for the sake of agreeing on a future relationship with Europe may be needed, no withdrawal agreement should include permanent membership. Only by leaving the customs union for good can Britain become the “force for peace, freedom, and political decentralisation” that Margaret Thatcher argued the EU should become.
