Richard North, 19/04/2018  
 


I wrote yesterday that the bulk of MPs we encounter seem to be the most ignorant people on the planet, unable even to master the basics and prey to just about every myth and falsehood on Brexit that it is possible to imagine.

To these, we must now add the Lords, many of whom seem unable to understand what a customs union is, 348 of whom have voted to call on the Government to "explore" the possibility of remaining in (or joining) one – with 225 against. And the reason why many voted for the proposition was the mistaken belief that a customs union will remove customs checks - even to the extent that this will resolve the Irish border question.

Supposedly this is one of largest votes in history of the Lords and is being styled as a "crushing defeat" for the government. It is, of course, no such thing. The anodyne wording of the amendment to the European Union (Withdrawal) Bill simply calls upon the Government to consider the prospect of staying in a union. It does not actually require any executive action. The government, therefore, can (and will) go through the motions and then, having done precisely nothing, will move on.

This makes the whole charade a crass distraction from the business of government – signalling an epidemic of cretinism in our legislature, the like of which we have rarely if ever seen. It's almost as if an evil alien power has descended on Westminster and sucked the IQs out of their Lordships, leaving them with the deductive powers of five-year-olds.

Leader in the nursery stakes in the Lord's debate was Lord Kerr of Kinlochard, imbued with the stupidity which has infected the place.

Amazingly, after all this time, the man is clueless, arguing that it is not possible to "maintain an open border with no checks and no infrastructure if the UK leaves the Customs Union". And thus, he asserts, he workable solution to the Irish border conundrum is a customs union. The man thus blathers:
Even if cross-border trade is tariff free, as I hope and believe it will be, rules of origin, phytosanitary and other checks will require a hard border. They will make that inevitable unless we have a customs union. A customs union is not in itself a sufficient condition for an open or soft border - there will still have to be a degree of regulatory alignment, particularly in the agricultural sector - but it is a necessary condition for an open border.
This is madness beyond peradventure. The simplest of reality checks calls out the errors. A customs union does not in any way eliminate border, as we see with the borders between Turkey and EU Member States.

On the other hand, the nearest thing we have to frictionless borders between member and non-member states is on the crossings between Sweden and Norway – both participants in the Single Market, but with Norway firmly outside the customs union.

Affecting the brains of these hapless people is the simplest of flaws – the naïve belief that because it is called a "customs union", such an agreement deals with border checks – and will eliminate most of them. They are unable to distinguish between this concept and the entirely separate idea of "customs cooperation", and then the further concept of the Single Market.

All a customs union does is remove tariffs and quantitative restrictions (quotas) between members, and superimpose a common external tariff so that all members levy the same tariffs on goods from outside imported into the customs area.

Just supposing you wanted to maintain tariffs between members (and quantitative restrictions), these could be managed administratively, without border checks. The processes for tariffs are quite simple.

The consigner of goods must fill in a customs declaration, which can be posted into the system electronically before the goods even start moving. On receipt of the goods (i.e., once they have arrived at their destination), the consignee must pay whatever tariff is due – either directly to the carrier or via an electronic account, which is settled periodically.

Fraud and evasion can be policed "beyond the border" and only in exceptional circumstances is there any need for checks on the border.

On the other hand, you do not need a customs union to secure tariff-free trade. As with the EEA Agreement and any number of free trade agreements, there exist arrangements were no tariffs are charged, in either direction. The only thing missing is the common external tariff, the absence of which means that rules of origin may apply (if there are significant external tariffs). But again, these can be sorted administratively, without the need for border checks.

In short, policing tariffs does not require border checks and you do not need a customs union to remove tariffs.

Crucially though, even the most comprehensive of customs unions – with absolutely no tariffs - does not remove border checks, as indeed the European Union experience adequately demonstrates.

Beyond tariffs, there is a galaxy of border controls, all devised to deal with "non-tariff barriers", which have nothing to do with a customs union. To eliminate checks, you need cooperation on customs procedures and a Single Market (the former being part of the latter).

Thus, if you want frictionless trade (i.e., the absence of border checks), forget about a customs union. It is, as we have written so often, a red herring - a complete irrelevance. If you want more detail, you can find it here.

When it comes to Brexit, only in the event of a catastrophic breakdown in relations is it anticipated that tariffs will be re-imposed on trade between the UK and the EU. And while Rules of Origin might cause minor administrative difficulties, the problems are vastly overstated – and can be eliminated completely if the UK voluntarily harmonises its external tariffs with those of the EU (which will happen anyway when we adopt the EU's tariff schedules).

Thus, the only mechanism that we need concern ourselves with, in order to ensure frictionless trade, is the Single Market. And, outside EU membership, there is only one way of securing participation – through the Efta/EEA route.

As to the workings if the EEA in respect of Efta states, the land border between Norway and Sweden is not entirely frictionless. But many of the border checks currently carried out are a matter of choice – arising from the policing of alcohol and tobacco duties, for instance.

I have pointed out many times that the EEA Agreement is infinitely flexible. The structure readily allows for country-specific sub-agreements to suit local circumstances. A modified EEA Agreement, entirely within the scope of the treaty, with enhanced cross-border cooperation, could deliver free movement of goods across the Irish border – or so close that the no one would notice the difference.

And such principles have been known for years. There is no case whatsoever for staying in the EU's Customs Union (not that we can), and none for negotiating a new agreement. This will not give us frictionless trade. Participation in a modified EEA agreement, through Efta, will give us what we need.

Yet, the ennobled cretins yesterday obsessed about a customs union, mentioning it in their facile debate 125 times – against a mere fifteen mentions of the single market. The obsession has the hallmarks of mental illness – a psychic epidemic. Their lordships are not well.

The trouble is that this psychic epidemic has spread to the Commons. Indeed, it may even have started there. And the fourth estate is thoroughly infected, trotting out the annals of stupidity without not the slightest engagement of brain cells.

Meanwhile, distant from the noise and fury of the imbeciles in Westminster, the negotiations in Brussels go on. Donald Tusk reiterated yesterday that there would be no withdrawal agreement without settlement of the Irish question, but of any developments in the talks, there has been no news.

Yet events in Brussels have far greater importance than anything the baying hounds of Westminster can deliver. Nothing they did yesterday brings us any closer to a resolution of a problem that has the potential to collapse the talks. How interesting it is, therefore, that the legacy media should concentrate on the noise and fury. And so the epidemic spreads.






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