May 20th 2018
After several weeks of cabinet in-fighting on the EU Customs Union, including a cabinet sub-committee defeat, Theresa May has largely got her way on her Customs Partnership scheme which stays close to the EU Customs Union while technically remaining outside it.
Her mantra now seems to be ‘Brexit means not quite Brexit’.
The idea is that the UK retains the EU’s Common Tariff Regime and (although it is rarely made clear) the EU’s regulatory regime, for imports from beyond the EU. Imports would have to be tracked to their destination (presumably in sealed containers) and those (the great majority) ending up in the UK could claim rebates if UK tariffs are different (this may be hardly worthwhile for many commodities).
To achieve the goal of hassle-free movement into the EU, including Ireland, the UK will probably have to continue to align all of its regulations with the EU. Watch out for an EU push to maintain the ECJ as re arbiter over trade disputes.
The PM claims that we will be free to negotiate new free-trade agreements across the world, but sticking close to EU regulations will constrain what is possible. Countries may feel that it is not worth the bother.
This regime will last from 2021 until further notice unless it is replaced by a negotiated free trade agreement and until customs technology is available for friction-free borders. This would be more credible if we were told what technology is involved or if there were any plans to put readily available border technology into operation.
Pro-Brexit Ministers are now very edgy but may find it hard to avoid further setbacks.
Our media appearances
On Wednesday Graham Gudgin appeared in one of the Irish Border features broadcast this week on BBC 2 Newsnight. You can watch here: https://www.bbc.co.uk/iplayer/episode/b0b3kn77/newsnight-16052018 (scroll through to the Irish Border feature about 30 minutes in). As usual only two minutes was used from a 30 minute interview. The main point made in the longer interview (an invisible border is possible) was ignored and the broadcast piece instead used a short statement taken out of context on a border in the Irish Sea.
Newsnight also interrupted Ruth Dudley Edwards making a similar point on Monday’s Newsnight. Evan Davies wrongly claimed that ‘trade experts’ (he presumably meant customs experts) disagreed that a hard border could be avoided. It later emerged that he had not seen the Policy Exchange report on the subject.
Graham’s Policy Exchange report on the Irish border issue is mentioned in Dominic Lawson’s opinion article in today’s Sunday Times https://www.thetimes.co.uk/edition/comment/careful-taoiseach-we-could-just-walk-away-f2f3d3nzw
Will The EU Survive by Michael James
Michael James argues that the European Union has failed to generate a European identity that would legitimise its drive to ever closer union, but it won’t or can’t renounce that drive. As a result it’s come to look like a power system devoted to self-aggrandisement and like a vehicle for the self-enrichment of career bureaucrats, for which it provides abundant opportunities, as international organisations tend to do. This article continues a theme begun on our website by Gwythian Prins who predicted that the all multi-cultural confederations bite the dust sooner or later under the weight of increasing complexity. https://briefingsforbrexit.com/eu-at-clear-risk-of-collapse-warns-major-new-report-by-gwythian-prins
The Limited Impact of the EU on UK Trade Costs
A piece of original research undertaken by a senior private sector economist for this website applies a standard method to measuring trade barriers. The results cast doubt on the notion that EU membership has a much bigger positive effect on UK-EU goods trade than might be generated by a free trade arrangement. While there is certainly evidence that the removal of tariffs in the 1970s had a significant impact, it is far from clear that there have been large effects either from the customs union element of the current relationship (which would largely relate to removing rules of origin requirements) or the single market element. And for services trade, the evidence of a big positive effect on UK-EU trade is very limited.
The site contains a summary of this work on the BLOG page and the full report on the REPORTS page.
A new post on our subscriber’s view section is:
‘Great Britain. A Square Peg in a Round Hole by David Lucas’.
David outlines his view that the empirical underpinnings of the British outlook on most aspects of life make us awkward members of the primarily rationalist EU. They really would be happier without us and they can then proceed to the Commission’s goal of greater political, social and economic unity without our rocking the boat. And we, too would be happier outside, supporting and co-operating with them in all possible ways – interested and associated, but not absorbed.
We have also been busy on Twitter https://twitter.com/briefing4brexit retweeting the daily events that bring Brexit to the fore in the National News.
The daily news summary of @BrexitCentral like this one are proving topical and helpful as events of the day are fast moving: https://brexitcentral.com/today/brexit-news-thursday-17-may/
Fraser Nelson @FraserNelson is always worth a read for news from the inside track: https://www.telegraph.co.uk/politics/2018/05/17/tory-leavers-dusting-plans-no-deal-brexit-andmichel-barnier/
We repeat this tweet in full from @JohnNemoBell who quoted the blog of the Conservative politician John Redwood. http://johnredwoodsdiary.com/2018/05/18/that-customs-union-again/
It summaries well the complexities of the Irish Border issue through to seeing a possible solution to it.
“How many more times do we need to explain the Customs issues to the media and to some of the Remain peers and MPs?
The government’s debate about the New Customs Partnership or Max Fac (Maximum Facilitation) is we read inclusive. There does seem to be general agreement there is no worked out model of a New Customs Partnership that everyone thinks will work, and certainly no buy in to the original concept from the EU. No 10 has denied rumours that the government now wants to extend transition. That would be a very bad idea.
I suggest the government leaves the NCP debate, and goes back to the basics of the negotiation. They tell us they have worked up a No Deal option and are prepared to leave without a deal next March, though they are very keen to have a deal. So the first requirement in any briefing of Ministers and in public statements should be to set out clearly how the system will work with No Deal as the base case. This is not difficult to do, as we know how we currently trade with the rest of the world under WTO rules and with the EU tariff schedule, and we know that works. Many so called complex supply chains need components from outside the EU and they come in just in time. We can then negotiate better terms with the rest of the world, reducing the tariff barriers that already exist. Any deal needs to be better than No Deal.
The government should then ask the EU if it wants a tariff free deal or not. Assuming it does we then do not need to put the extra customs line into electronic filings for EU goods in the way we currently do for non EU goods. The UK and EU can negotiate the exact terms quite quickly, as it can be based on Canada plus extra items that reflect our current arrangements for service access to each other’s markets.
If the EU does not want a free trade agreement with us then we end the idea of a Deal and ensure proper enforcement of the smooth border arrangements under the WTO Facilitation of Trade Agreement . We should agree a sensible way of dealing with detailed matters to ensure smooth flows of trade, which are much in the EU’s interest.”
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