I’ve long had a nagging suspicion that Liam Fox has the unrewarding task of setting up a fiefdom that exists only to scrapped as a bargaining chip in the great brexit unwinding. Customs Unions are dangerous beasts, but they don’t do much damage – sovereignty wise – in and of themselves.
That is if we are to consider Customs Unions as separate from Single Markets.
But you can’t consider them separately and the problem comes from the necessity for regulatory alignment behind the barrier, because we’re talking non-tariff barriers here. But if you’re happy to have regulatory alignment on Goods two things fall out: 1. You don’t have much to offer third parties in the realms of trade agreements, and, 2. You aren’t losing much by going the whole hog and being in an EU Customs Unions… for Goods.
Britain is a Services based economy, and to a much larger degree than most european countries we are a Services exporting country, but Services has never really featured in the EU. Either internally, as a corporeal and fully fledged internal market, or as a feature of external relations via trade agreements. Germany, principally – but one among many – taking a very possessive view of Services regulations, and this has severely stunted any move to make a real Services market. An attempt to create a Services passport died in 2012 with Cameron’s “No, No, No!”.
Back to Liam and his heavy burden in the wake of Salzburg: Yeah, they’not so keen on a common rule book with a cumbersome customs arrangement that permits british FTA’s and complex systems for collecting each others tariffs. Where to go from here? Have a common rule book for Good, and as per Chequers keep Services out of the ambit of the European Union. Then, have a Customs Union with the EU… for Goods. What does this achieve?
It achieves three things:
- It preserves the sovereignty of Parliament for an enormous swath of the UK Law, where there is less to be gained from being part of the EEA (because a Services market is nascent at best). What sovereignty it gives away to the EU it has already sold the pass on via the Common Rule Book for Goods, and this is largely determined by the likes of UNECE anyway.
- It allows the UK to make Services based Trade Agreements, and lets not forget there are about a billion new middle class being added every decade. Once they’ve bought their BMW from the Germans, they’re going to want to think about Insurance, Legal Services, Finance, etc. Trade agreements of the like that we’ll never get via the EU!
- It allows a ‘total package’ for Goods which keeps us in all the EU trade agreements, the Single market, and dedramatises sticky issues like NI. Thus bringing the backstop back to only those things necessary for the All Island Economy and the GFA. Sanitory, Phyto-Sanitory, etc. Oh, and it ditches all that complexity around varying tariff regimes that pleased precisely nobody.
Would the EU prefer the UK to break and go for EFTA/EEA? Sure, why wouldn’t you want to keep a leash on a strategic competitor! Might it be possible to negotiate an exemption from ECJ jurisdiction on key strategic Services industries within the EEA? Like, financial and legal services, which are european industries that the UK absolutely dominates and would be daft to give up (not much love lost for the anglo-saxon model). Well, its possible, but I wouldn’t want to bet on it in the current climate!
So, full alignment in Goods in both regulation and trade, and a rather more limited remit for Liam. Just a thought.