I’ve had a lot of emails asking my opinion on the Government's customs plan, so decided to post here on my own website – rather than the Daily Telegraph’s – so that my answers can be read for free.
Let’s review the situation..
1. We are absolutely, definitely leaving the EU! Relax. Article 50 is triggered; the domestic legislation is progressing nicely; civil servants are working hard to see it all through.
2. We always knew that once we left, we would seek a trade deal with the EU. This customs plan is it. Any trade deal we sign with anyone will come with pluses and minuses – and a lot of this plan is boilerplate for an international treaty. For instance, there is a rulebook for trade in goods that will set standards for both sides. If we deviate from that rulebook, yes, this will have “consequences” – but that makes perfect sense. If one side breaks from the agreed rules of any treaty, there are consequences. The issue is: what will those consequences be? That sort of detail is yet to be decided.
3. This custom plan covers goods only. That’s around 20 per cent of our economy. The rest, in theory, we can do with as we wish. And why wouldn’t you seek a goods treaty that will help our exporters to Europe (lots of jobs!)?
So, what’s the downside? For me, it’s not what’s in this deal but what could follow. Consider.
1. This is just Britain’s opening bid in the trade talks. This means more concessions could be made (think back to that bit about “consequences”) that will be designed to a) tie us into European structures and b) limit our ability to break from EU rules in a way that could make us more competitive. This is important: the EU is terrified of us becoming a low tax, low regulation country that just sucks up all the global investment.
2. Britain has a habit of giving the EU what it wants. We’ve committed to a big divorce payout, EU citizens’ rights, mutual defence and even some principles regarding the Irish border. Do you trust this UK negotiating team not to make more concessions? On their record thus far, I don’t.
3. The EU isn’t going to accept all of this anyway. Why? Partly because the customs plan doesn’t state how certain things are going to be done. Also because the EU does not want to divide up goods from services or capital or immigration.
4. And what I’m very worried about is the UK moving from these concessions on goods to a concession on services or immigration. Immigration is the big one. If we end up leaving the EU but agreeing to visa-free access to our labour market with special privileges for EU citizens, well, a lot of voters are going to conclude that they have been betrayed.
But is this deal as it stands a betrayal? Certainly not. It’s not a betrayal of the referendum result because we will be leaving the EU. What it doesn’t do is deliver the kind of Brexit that Conservative Party Brexiters want: a big bang of deregulation and free trade. But, quite frankly, I’m not sure many voters really want that either. For instance, this plan commits us to common standards on agriculture, which make a US trade deal difficult because what the US will want is access to our agriculture market, which necessitates lowering our standards. Would we really want to do that? Do we want to kill our family farms with cheap competition from the USA in exchange for Natwest winning the right to establish a few branches in Kansas? Nope. The Tory free trade position was always going to be a tough sell and Theresa May has effectively taken it off the table. In fact, this deal is rather close to Labour’s vision of Brexit – just don’t tell Jeremy Corbyn that it takes state aid to industry off the table too!
My issue isn’t with the customs plan as it stands but what it could become. I fear we are opening with an oddly weak hand. If this is what we end up with – out of the EU and with a goods deal with the EU – it’ll be fine by me. But what we must not, not, not wind up with is economically tethered to the EU. In such a scenario, a Norway-style option would be preferable.
Let’s review the situation..
1. We are absolutely, definitely leaving the EU! Relax. Article 50 is triggered; the domestic legislation is progressing nicely; civil servants are working hard to see it all through.
2. We always knew that once we left, we would seek a trade deal with the EU. This customs plan is it. Any trade deal we sign with anyone will come with pluses and minuses – and a lot of this plan is boilerplate for an international treaty. For instance, there is a rulebook for trade in goods that will set standards for both sides. If we deviate from that rulebook, yes, this will have “consequences” – but that makes perfect sense. If one side breaks from the agreed rules of any treaty, there are consequences. The issue is: what will those consequences be? That sort of detail is yet to be decided.
3. This custom plan covers goods only. That’s around 20 per cent of our economy. The rest, in theory, we can do with as we wish. And why wouldn’t you seek a goods treaty that will help our exporters to Europe (lots of jobs!)?
So, what’s the downside? For me, it’s not what’s in this deal but what could follow. Consider.
1. This is just Britain’s opening bid in the trade talks. This means more concessions could be made (think back to that bit about “consequences”) that will be designed to a) tie us into European structures and b) limit our ability to break from EU rules in a way that could make us more competitive. This is important: the EU is terrified of us becoming a low tax, low regulation country that just sucks up all the global investment.
2. Britain has a habit of giving the EU what it wants. We’ve committed to a big divorce payout, EU citizens’ rights, mutual defence and even some principles regarding the Irish border. Do you trust this UK negotiating team not to make more concessions? On their record thus far, I don’t.
3. The EU isn’t going to accept all of this anyway. Why? Partly because the customs plan doesn’t state how certain things are going to be done. Also because the EU does not want to divide up goods from services or capital or immigration.
4. And what I’m very worried about is the UK moving from these concessions on goods to a concession on services or immigration. Immigration is the big one. If we end up leaving the EU but agreeing to visa-free access to our labour market with special privileges for EU citizens, well, a lot of voters are going to conclude that they have been betrayed.
But is this deal as it stands a betrayal? Certainly not. It’s not a betrayal of the referendum result because we will be leaving the EU. What it doesn’t do is deliver the kind of Brexit that Conservative Party Brexiters want: a big bang of deregulation and free trade. But, quite frankly, I’m not sure many voters really want that either. For instance, this plan commits us to common standards on agriculture, which make a US trade deal difficult because what the US will want is access to our agriculture market, which necessitates lowering our standards. Would we really want to do that? Do we want to kill our family farms with cheap competition from the USA in exchange for Natwest winning the right to establish a few branches in Kansas? Nope. The Tory free trade position was always going to be a tough sell and Theresa May has effectively taken it off the table. In fact, this deal is rather close to Labour’s vision of Brexit – just don’t tell Jeremy Corbyn that it takes state aid to industry off the table too!
My issue isn’t with the customs plan as it stands but what it could become. I fear we are opening with an oddly weak hand. If this is what we end up with – out of the EU and with a goods deal with the EU – it’ll be fine by me. But what we must not, not, not wind up with is economically tethered to the EU. In such a scenario, a Norway-style option would be preferable.
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