Opinion: Why Labour’s Customs Union Plan is Utter Lunacy

Harry Clynch February 27, 2018 0
Opinion: Why Labour’s Customs Union Plan is Utter Lunacy

Jeremy Corbyn announced his intention to reverse his party’s policy on Brexit yesterday, by committing to permanent membership of a customs union. Meanwhile, his policy of leaving the single market, so as to take back control of immigration levels, remains untouched. All in all, this amounts to utter lunacy.

Tying the United Kingdom to a customs union deprives our country of one of the greatest prizes leaving the European Union has to offer: global free trade. After all, membership of some form of customs union will inevitably mean handing 100% control of our trade policy to the European Commission, which, ignoring the principle of national independence for one moment, has proven itself to be completely incompetent at striking free trade deals. The conflicting interests of its member states, many of which are protectionist in nature, make FTAs with some of the world’s largest, and emerging, economies very difficult to achieve.

A case in point, amongst many, here is when a free trade deal with India – a country with which the UK shares deep, historical, cultural ties, as well as one of the economic powerhouses of the future – was blocked because a relatively small group of Italian textile manufactures feared the competition. A free-trading UK – an historically maritime, global nation with historic links all over the world – breaking free from a protectionist group, which does not always have our country’s interests at heart, could do so much better. Corbyn’s reversal reveals a deep sense of defeatism and a lack of belief in this country’s ability to survive, and indeed thrive, as an independent nation.

Not only this, but continued membership of a customs union would mean we would be obliged to impose the EU’s damaging Common External Tariff. This therefore means increasing the cost of essentials – food, clothes and footwear – from goods imported from outside the EU, something which is particularly damaging for the poorest members of society, who spend a proportionally larger percentage of their income on these essentials. In staying in a customs union, we would be relinquishing the opportunity to set these tariffs at zero and thereby go a long way to improve our country’s living standards. Furthermore, looking at the national economy more generally, the UK has always been penalised the most by this damaging tariff, usually being the only – or at most one of two – country to export more outside the EU to other member states. We, more than anybody, suffer from a system designed, through protectionism, to encourage trade between member states. As a country which, owing to our global history and our maritime nature, has always had its sight further afield than merely the European continent, it makes no sense to bind ourselves to a customs union which prevents us from enriching our trading ties across the globe.

Furthermore, tying ourselves to a EU customs union whilst also leaving the single market amounts to suicide. After all, economically, the whole point of leaving the EU, and leaving the customs union and single market, is orientating the UK towards those emerging markets of the world from which the vast majority of this century’s growth will come. This means distancing ourselves somewhat from the EU, ideally achieving free trade via a FTA rather than complete membership of the single market. However, the success of this process depends on leaving the customs union. How are we to take advantage of those emerging markets if we are prevented from striking our own FTAs with them? Labour’s position is essentially to distance the UK from the European market, while also restraining its ability to look further afield. Leaving the single market while simultaneously staying in the customs union is a lose-lose situation. It makes absolutely no sense.

None of us needed reminding of Labour’s economic incompetence. But it has been displayed to us in a staggering display of ineptitude. Leaving the single market, while not being in a position to take advantage of other markets around the world, paralyses the UK economically and would be a disastrous result for this country. The Labour Party – and especially potential Tory rebels – should bear this in mind. It would be the worst of all worlds.

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