The Government’s cabinet met last week to see if it could come up with a solution to the problem of the customs union.  This is one of the sticking points in the negotiations with the EU. The customs union has been described as a ‘protectionist racket’ because it protects inefficient European producers, especially farmers, against more efficient producers in other countries.

If we stay in the current union, we will have to accept all the rules and regulations surrounding trade with the bloc, we will have to accept free movement of people – which means unlimited immigration – and we would have to accept the judgements of the European Court of Justice.  The outcome is Brexit in name only – we would become a vassal state of the EU, forced to obey all its laws and regulations but unable to have a say in them.

This is obviously unacceptable to we Brexiteers.

It has been argued that the UK is cutting off its nose to spite its face and point out that the EU consists of 27 other countries and 500 million people.  Should we really stop trading with them? The question is academic. Would French wine producers really obey a ruling that it must stop selling us wine? Would Mercedes-Benz and other car manufacturers agree not to export any of their cars to the UK?  They’d be up in arms about it!

The Commonwealth, with which the EU has prohibited us from trading, consists of 53 member states and an estimated 2.5billion people – almost a third of the population of the planet.  It had a Gross Domestic Product of nearly $10.5trillion in 2014 so is a market ripe for our products and services, if only the EU would agree. But it won’t for as long as we are a member of the bloc.  Until we leave we can trade only with the EU. And we have a massive trade deficit with the Single Market. We spend nearly 5% more of our money with the EU than they spend with us. The problem is that EU countries simply can’t afford to stop trading with us.

The main reason Barnier wants to stop us trading freely with the rest of the world is that he is concerned – and rightly so – that we will thrive when we are free of the customs union, the single market, the ECJ and all the rules and regulations that constrain us at the moment.  Not only will we stop paying the billions of pounds we currently pay to the EU, but we will be able to make new laws about what we import which will apply to our new customers throughout the world.

But what would be acceptable to everyone if we withdrew from the customs union?  The PM’s initial idea was for a new ‘customs arrangement’ – but that would still leave us thoroughly tied to the EU.  At last week’s meeting, the newly-appointed Home Secretary Sajid Javid, who was thought to be pro-EU, tipped the balance against this idea and the suggestion was binned.  The move upset the Prime Minister, who was reported as being astonished that she had lost the vote.

So far all suggestions that have been made by the government have been met with a decisive “Non!” from EU chief negotiator Michel Barnier, who is pressing for the UK to stay in the EU’s customs union and therefore the EU as a whole.  He thinks this is one way to achieve that aim.

So how do we trade with the rest of the world, and the EU if they’d like to trade with us, without staying in the customs union in a compromise that suits Barnier?  That is the big question now posed to withdrawal negotiators and it looks like a question that is impossible to solve, considering Barnier’s intransigence.

We also have to consider the Irish question.  The DUP, which Mrs May relies upon in the House of Commons, is dead against any kind of what has become known as a ‘hard border’, with customs posts, identity checks and goods being inspected.  Politicians in the Irish republic are also against a ‘hard border’ and it was reported that the EU has given the republic the authority to scupper the talks if they end in anything other than a customs union.  If this is accurate, this ‘solution’ is unacceptable to the British people. What will May do about that?

And if that weren’t enough, the House of Lords has chimed in with a similar decision, so if the Prime Minister makes a choice to have a hard border, she will be fought from every direction.

A possibility that has been discussed is a New Customs Union, which entails the UK collecting tariffs and taxes from exporters who bring goods into this country and handing the cash over to Brussels.  This has a benefit in that allows goods to be freely traded between the EU and the UK but again, we would have to obey all the rules of the single market and agree to the jurisdiction of the ECJ. This week’s meeting heard from a group of MPs, led by Jacob Rees-Mogg, that a the prospect of a New Customs Union is not acceptable and the British people would not accept such a scheme, whether or not the EU would allow it.

Barnier has already rejected it and has instructed the UK government to think again.  His latest edict is to say that the UK ‘needs to come up with a solution’ to the problem, having rejected all the solutions already mooted.  

An alternative is emerging, that of Maximum Facilitation – otherwise known as Max Fac.  Using technology that is available today, checks on goods can be made well before they reach our borders, thus obviating the need for customs posts.  Customs declarations and duty fees could be paid even before the goods are loaded onto lorries in readiness to cross the border and technology again could check the contents of the vehicles crossing between the EU and the UK.

Such technology needs time to set up and some observers are concerned that there simply isn’t enough time to make the decision to go down this route and then get everything in place for Brexit day next year. And if Barnier is determined to keep us in the EU by hook or by crook, he’ll reject that as well.

The question still remains and it looks like it will not be solved unless there is goodwill on all sides  – and we know how much Barnier has of that!

 

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