When is a Customs Union not a Customs Union?

Boris’s Surrender Deal means a Customs Union in All but Name.

It is slowly dawning on people that Boris’s miraculous deal with the European Union is nothing of the sort. In fact, it’s just an elaborate tangle of legal and political constraints that is every bit as bad as Theresa May’s deal. Essentially it’s just another way of tying us in to the EU.

Being in a Customs Union means that free-trade operates between members of that ‘Union’. It eliminates tariffs (import taxes) and non-tariff barriers (regulations and ‘standards’ – which are centrally applied across all members) between members and removes custom borders. And it means setting standard tariffs for imports from outside the Customs Union.

Because there are no customs borders it prevents individual members from using the powerful economic lever of International trade for the benefit of their economy.

Why?

Because if goods arrive in the UK from somewhere outside the EU and there is no Customs border with Ireland or France, for example, then goods can travel freely. So if the UK charged zero tariffs on imported South American widgets but Ireland and France, being in the EU, did, then everyone in the EU could buy their widgets tariff free from a UK importer. That wouldn’t really work would it?

So there either has to be a customs border or there can be no customs union right?

Well until now yes.

But in fact what Boris’s new treaty does is this:

The proposed treaty would tie us to a commitment to use ‘Best Endeavours’ to achieve a Free-Trade-Agreement with the EU. ‘Best Endeavours’ is something that is determined by the European Court of Justice. So essentially it means we are committing to a Free Trade Agreement with the EU and they determine if we are negotiating fairly – in other words, in line with their requirements – otherwise we have to keep negotiating until they are happy.

The EU’s requirements are for a ‘level playing field’, as outlined in the treaty. Essentially this means that we can’t diverge with our own regulations. Which essentially means that exporters from outside the EU who want to supply goods to the UK will have the same trade barriers in place, preventing them from doing so, as they do currently.

So why would they open their markets to us, if they can’t get improved terms when exporting their products to us?

Well obviously they wouldn’t.

But surely if we have a Free Trade Agreement we can set our own tariffs for International Trade? 

Well. No. The required Free Trade Agreement with the EU would mean we couldn’t charge EU exporters any tariffs and, due to the ‘level playing field’ it would be in the EU’s control to decide if we could levy tariffs (duties – a form of taxes) different to the EU’s with other countries around the world.

And even if the EU did let us set different external tariffs, the fact that we had no tariffs raised against EU exporters for any goods at all would make it far less attractive, in many cases, for others around the world to want to do deals with us…

All in all it’s a nonsense. It means a Customs Union in all but name but with the added very minor disadvantage of a customs border – although of course that would be rendered pointless and therefore would probably be dismantled in due course..

And then we would be back to square one.

Which is of course the whole point.

And that is why all the EU Leaders; Barnier, Tusk, Junckers etc all think its such a great deal.

So. To return to the original question; When is a Customs Union not a Customs Union?

Answer: When you don’t call it a Customs Union but to all intents and purposes it essentially is..

NOTE:

Clause 77 of the Revised Political Declaration commits us to common standards, ‘applicable in the Union and the United Kingdom AT THE END OF THE TRANSITION PERIOD in the areas of state aid, competition, social and employment 14 standards, environment, climate change, and RELEVANT TAX MATTERS.’

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/840231/Revised_Political_Declaration.pdf

Produced with legal help – many thanks!

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