Why Britain needs to leave the Customs Union

28 Aug 2017

Donald Trump’s former Communications Chief, the infamous Anthony Scaramucci, told BBC Newsnight a few weeks ago that  there will "100%" be a UK/US trade deal. Indeed, leaving the Customs Union means that after 2019 the UK can sign free trade deals around the world without EU interference.


But how likely is there to be no UK/EU free trade deal? This is up to the European Union.


The Secretary of State for International Trade, Liam Fox, has rightly said that this negotiation should be the easiest in history as both sides should want free trade to continue. 


It is the only negotiation in history that will increase trade barriers, despite businesses on both sides wanting free and easy trade. Such barriers could cost the EU thousands of jobs as Britain has a huge trade deficit with the European Union. At the moment, Britain trades billions with China and the United States without free trade deals, and in accordance with WTO rules. Therefore, moving to this model with the EU is not a bad idea at all.


“Access to” and “membership of” the single market are terms sometimes used interchangeably but mean very different things. All twenty-eight EU countries are full members of the single market, which enables them to trade with one another based on four freedoms: free movement of goods, services, capital and people.


The European Economic Area (EEA), on the other hand, is the name of the open and free internal market between the EU and Norway, Iceland, and Liechtenstein.


The EEA agreement grants these three countries near-full access to the European single market. In return, they are subject to obligations from EU legislation in relevant areas and must accept free movement of people.


But what does the UK want, and what will it gain?


Instead of its current membership, a new trading relationship containing elements of the single market would be ideal.


There has been much talk of an interim deal between the UK and the EU before the final terms are agreed. Those in favour of the plan say it would avoid the 'cliff edge' scenario which could see tariffs imposed on businesses as soon as the UK leaves the EU. Such an interim deal would thereby prevent a shock to the economy.


This seems to be accepted by Mrs May, who has spoken of the need to allow businesses and government the time to adapt to the new arrangements. But, not everyone is convinced this is necessary, and some Conservative MPs want the UK to leave the EU before negotiating the terms. 


Yet, the are some Remainers who believe that the best option for the UK is to have a permanent transitional agreement whereby, in proxy, we remain within the EU, on the basis of compromise. This would be a disaster for democracy and would stab the 17.4 million Brexit voters in the back.


Leaving the Customs Union allows Britain to sign as many free trade deals around the world as it wants. There are already many countries who want such a deal, including the biggest economy in the world and our greatest ally: the United States.


The EU is a protectionist block. It doesn’t allow cheaper goods to be imported and undercut EU businesses. However, agriculture - the industry that is the most protected - has little to no bearing on Britain. The EU protects its own interests, but most of the time those interests do not align with Britain’s. By removing these protectionist blocks to trade, consumers will see cheaper imported goods, boosting demand and growing the economy.



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