EU Referendum

Brexit: confusion and muddle


There is currently very little sign that May will travel to next week's emergency European Council with the coherent plan the EU says will be necessary to grant the UK a further delay to Brexit, which is currently scheduled to happen on Friday. So says the Guardian, telling us nothing we didn't know already.

As to the May/Corbyn talks, shadow business secretary, Rebecca Long-Bailey, who has been part of the Labour delegation, says the mood of the talks had been "quite a positive and hopeful one", but little has been achieved.

But then, this is Rebecca Long-Bailey, who confided in Andrew Marr about her party's ambitions for a customs union. It's important, she said, "to state that the reason we're calling for a customs union is to protect vital supply chains. Manufacturing particularly. So we can have that frictionless trade".

That, three years into the Brexit process, is the best a senior Labour MP can manage, one who is a key member of the party's team – someone who believes that a customs union can deliver "frictionless trade".

But, on the other side of the divide, there is Andrea Leadsom, and things there are not much better. Asked by Andrew Marr what her reaction would be to the prime minister agreeing a customs union deal with the Labour Party, she said:
I think the Prime Minister's proposal is an excellent proposal and it has a customs arrangement within it to ensure completely tariff-free and non-tariff barrier free customs arrangements for agrifoods and industrialised goods. So that is a type of customs arrangement.
Both sides are talking gibberish. The idea that "frictionless trade" is a consequence of a customs union is absurd, yet Leadsom's assertion that a "customs arrangement" – whatever that actually means - can ensure "completely tariff-free and non-tariff barrier free customs arrangements for agrifoods and industrialised goods" is just not in the real world.

The elimination of the non-tariff barriers comes with a regulatory union, otherwise known as the Single Market – something entirely distinct from anything directly to do with customs, and something which, under normal circumstances, brings with it freedom of movement.

But if that is confusing enough, Leadsom goes on to say that, "Jeremy Corbyn originally said he wanted a customs union with no free movement and with the ability to negotiate our own free trade deals". Now that, she adds, is "what the Prime Minister's own customs arrangement offers".

There is no linear relationship between the claims, and no way of tying together the terms being used. They are jumbled together in a way that defies coherence and speaks of nothing but the most profound intellectual confusion.

To this, there is no remedy – not the slightest chance of any improvement. In August 2015, I wrote a blogpost entitled "the naming of parts", alluding to the poem by Henry Reed on the ritual of learning the parts of a rifle, one of the first steps in marking the transition from callow civilian to soldier.

But, I wrote, this is a ritual that applies to every trade and profession – one of learning its special vocabulary, knowledge of which distinguishes the practitioner from the outsider. Clarity and precision in the use of words, I asserted, was vital. Sloppy use of vocabulary leads to confusion and muddle.

At the time, I was writing about migration but the sentiment is every bit as appropriate to Brexit. And here we are in the depths of a political crisis where the principal actors don't even understand the basic vocabulary, or mean the same things when they use the same words. This can do nothing but spread confusion and muddle.

One would not have thought that the politicians – to say nothing of the hacks – could make such a mess of this, but it seems that their capacity to get it wrong is unlimited.

Yet, for a thing such as a customs union, the concept is remarkably simple. As defined, it is a trade agreement where the parties agree to remove tariffs and quantitative restrictions between themselves, and apply a common external tariff, so that all members apply the same tariffs to third countries.

The customs union, therefore, deals exclusively with tariffs and quantitative restrictions (quotas). It has no impact on regulatory standards and does not in any way relate to customs procedures, or define parameters for customs cooperation, which is an altogether different thing.

That anyone should even have to think of clarifying such issues at this late stage of the Brexit process illustrates just what a dire position we are in. I was writing about this on the blog in October 2016, and even by then the issues should have been settled.

It gets even worse when the customs union is elided with trade policy and the ability to conclude free trade agreements. For instance, it is widely held – for instance, by issue-illiterates such as Liam Halligan - that membership of the EU's customs union is what prevents us from making separate trade deals with third countries.

This, of course, is not the case. The provisions which prevent this relate to Articles 206-207 TFEU, which define the Common Commercial Policy (CCP), and Article 3 which makes it an exclusive EU competence. These Articles, and not the customs union, gives the EU exclusive powers to make trade deals on behalf of members.

In theory, and indeed practice, there is nothing to stop members of a customs union making their trade deals with non-members, where agreements relate to non-tariff matters, and flanking policies – as is the case with Mercosur.

There can even be allowances made for separate tariff deals. When a member imports goods at a rate lower than the external tariff, on re-export to a member, the difference between the two is added by the destination country. For made-up goods, rules of origin may apply.

But there are further complications in considering the difference between membership of the EU's customs union, and a customs union with the EU. Outside the EU, the UK cannot be a member of the customs union, which amongst other things requires 80 percent of tariff income collected by members to be remitted to the EU budget.

We can only become members of a separately negotiated customs union, which would be a distinct agreement between the EU and the UK. How this would be financed would be a matter to be negotiated between the parties. Most likely, each party would bear its own costs.

For the UK, the downside of customs union membership is that it would tie us into the common external tariff, which would restrict our flexibility to make tariff deals with other third countries – depending on the nature of the agreement we had with the EU. This might also have a long-term impact on our foreign policy.

For the most part, though, customs unions are an antiquated form of agreement that long-predate the WTO and were primarily used as a precursor to political integration. That was the great attraction for the EEC, which saw it as the first step in the creation of a United States of Europe.

There is, therefore, enormous political symbolism in being members of a customs union with the EU. Turkey and the EU negotiated a customs union which came into force in 1995, essentially as a pre-accession measure to signal its determination to join the EU.

For the UK, it is an entirely unnecessary measure. By agreeing even a conventional free trade agreement, we can eliminate tariffs, and unilaterally adopting the EU's WTO schedules – which we have done – has the effect of a customs union without the formality of a treaty.

In all senses, the customs union is a complete red herring, which is what I was writing in The Times in December 2016. Yet, one way or another, the political classes seem obsessed with the concept – even if most don't know what it means or entails – and have wasted a colossal amount of time and energy in pursuing it.

If we want frictionless trade, of course, we have to look to the Single Market, which is an entirely separate legal entity. And yet, not only do so many politicians fail to understand the concept of the customs union, they readily confuse it with the Single Market – as seems to be the case with Rebecca Long-Bailey.

There is no excuse for this, and the inability of politicians (and, indeed, the media) to master the basics is contemptible. Their failures represent a colossal dereliction of duty and are responsible for much of the situation in which we find ourselves. And yet, to this day, is there any one of them who shows the slightest bit of shame?