Theresa May has made herself clear (again) today. The UK will leave the Customs Union; indeed, it will not even be in a Customs Union with the EU. Kwasi Kwarteng also made himself clear on the Today programme, claiming that there are no real benefits to belonging to such a customs union; that if we have to pay tariffs, they will only average 3%; that supply chains don’t need that kind of frictionless trade; and that we can sort out the Irish border electronically.
Which is all great…except that it won’t work in practice. The Brextremists continue to whistle in the wind, dismiss hard facts and expert opinions and hope that if they shut their eyes and concentrate very very very hard, the real world will disappear and Brexit nirvana will open up before them in all its glory. Unfortunately, their bitter enemy – the truth – is about to hit them rather hard in the flank.
The problem with their assertions are legion, but let’s start with today’s nonsense. Firstly, whatever the average tariff may end up being, on certain items it will be high if not negotiated away eg. on foodstuffs and clothing; and with a massive 10% on automotive sales, which may not sound much but could easily take UK-made cars from being the cheapest in their class in an EU market to being the most expensive.
Then there is the claim that supply chains don’t need frictionless trade. That’s just bizarre. Most complicated pieces of equipment made in the UK source components widely from across the EU with the result that, outside a Customs Union, a manufacturer may pay tariffs importing parts and then again when exporting finished products, with a big loss of competitiveness being the result. Nobody who isn’t an ideologically motivated Brextremist believes that won’t have a deeply detrimental impact on British industry.
To make matters far worse, however, nearly all free trade agreements exclude “services” – things like banking, accountancy, advertising, tourism, films – those industries which make up 70% of the UK economy. There’s no prospect of any free trade deal including those areas of the economy – they just don’t and our rivals on the Continent will make sure they don;t in our case too.
Indeed, while the Brexiteers continue to assert that the EU will give us a deal with all the benefits of membership without any of the costs, the evidence from the first round of negotiations is completely the opposite; the UK had to give ground on everything!
…and if you think the EU is tough, let’s remember that those supposedly wonderful free trade deals we’ll secure by leaving the customs union will be negotiated with India, China and Donald Trump. Think that’s easy??
And finally, on Ireland, who is the government kidding? All they have done so far is to kick the can down the road – a real solution to the conundrum of no hard border but no customs union remains nowhere in sight!