LeaveHQ, 16/08/2017  

In talking of the EU Customs Union, today's government paper is an exercise in deceit. The substantive provisions are, in effect, seeking Single Market equivalence - although the Single Market is not mentioned anywhere. There is a refusal to acknowledge that the UK on leaving assumes formal "third country" status with the EU, for which rules are defined. This has profound implications for the UK, on the Irish border especially. 

Troublingly, there is an assumption that the EU will waive these rules and thus remove the need for customs checks at the borders. This is, in effect, a back door attempt to restore Single Market status to the UK, something the EU has already said it will not allow. The Government's paper, therefore is fantasy. It is pushing for a scenario which cannot happen and has already been ruled out by the EU.

As we have been at pains to point out, the customs union is barely relevant to border controls. Everything depends on customs cooperation, a major feature of which is regulatory harmonisation and mutual recognition on conformity assessment. Without this there is no possibility of frictionless customs. 

As to staying in the customs union, thankfully a consensus is finally emerging that we cannot stay in it. It is a treaty mechanism of the EU and if you leave the EU, you leave the customs union. It is that simple. As to what replaces it, and for how long, is another matter entirely. 

We would argue that the entire issue of the customs union is a red herring. To achieve the maximum possible free movement of goods we need mainly concern ourselves with matters of the single market. Most of the customs issues are resolved by articles nine and ten of the EEA agreement

Article 10 says "Customs duties on imports and exports, and any charges having equivalent effect, shall be prohibited between the Contracting Parties. Without prejudice to the arrangements set out in Protocol 5, this shall also apply to customs duties of a fiscal nature".

The customs union is only really an issue due to the concerns about rules of origin, but that brings us to Article 9 which says "With a view to developing the results achieved in this Agreement, the Contracting Parties will continue their efforts in order further to improve and simplify all aspects of rules of origin and to increase cooperation in customs matters".

Since the UK is likely to maintain existing tariff schedules, for the mid-term at least, there are ways of resolving such issues without any real penalty and all of this could be tied up in a UK specific protocol in the EEA agreement. A separate customs agreement is not necessary. 

While this would considerably limit the scope for trading with tariffs, the UK could still negotiate its own trade agreements with other countries on services, investments, regulations, e-commerce, food, and agriculture. We'd be out of the common commercial policy which is what actually matters to us. 

The only thing that would remain in the EU's control would be tariffs but since the EU always negotiate these tariffs down to zero, the only rational reason to reject alignment is if UK wants to impose protectionist tariffs against non-EU countries. This is not what any of us voted for. 

In effect the government has completely misread the purpose of the customs union, perhaps deliberately as a smokescreen. This could be a charade designed to scapegoat the "obstructive " EU and then jump off the cliff - to disastrous effect. 

At best the government's position paper is largely a decoy. It is completely out of sequence with ongoing negotiations, and if anything this is for domestic purposes, submitted to the EU so it can be taken as an official government position rather than the daily noise of speculation. 

Encouragingly, the document has already been eviscerated on Twitter, and though the media is still behind the curve, along with our politicians, even if there is some disagreement on terminology, nobody is convinced that this is a serious proposition. That, we suppose, is progress. 

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