Thread by @pmdfoster

It's time to talk about the Customs Union....

Should we stay, or should we go? My latest here

telegraph.co.uk/politics/2018/…

1/Thread

It is clear that the government is anxious to not rule out remaining in 'a' Customs Union - while sticking mantra UK will leave 'the' Customs Union.

Hammond, Liddington, Mel Stride to house have all danced round issue.

telegraph.co.uk/politics/2018/… /2

And today CBI @CBItweets boss @cbicarolyn has pulled the plug out of the grenade by arguing UK should stay in a Customs union... read it here. /3

cbi.org.uk/news/evidence-…

She makes points about advantage of staying in a CU

- avoid 12-page form
- VAT registration
- Rules of Origin declarations

It doesn't solve everything - since a lot of checks are about regulation - but it's a significant start to reducing the headaches. /4

Of course the Brexiteers - who see leaving the CU and Common External Tariff as essential to a new UK trade policy - are up in arms.

Boris Johnson says it is 'nonsense' and will mean “no new free trade deals, no new export opportunities, and no leading role in the WTO”. /5

It is a view echoed by Jacob Rees Mogg and the European Research Group he now chairs which issued a report last weekend warning that leaving the CU was essential to an independent trade policy.

Not everyone agrees - certainly no in HM Treasury.... /6

The treasury argues that UK, if it have associate membership of a Customs Union that gives UK access to markets opened by EU Free Trade Deals could be free to negotiate bilaterally on services and investment which are much more important to the UK economy.

/6

Even HMT officials admit, tho, it's not clear how realistic this would be - given that offering goods access to developed world market is the lever by which developed countries demand access to emerging markets' services sectors.

But then... /7

....they equally argue that Liam Fox, Boris and Co have no better near-term alternative.

Given UK need to rollover existing FTAs to stand still; or to open agriculture to win US FTA; or visas for Indian FTA, say,....can Boris and co really argue against a 'lily pad' approach?/8

Here we reach the crunch point for Brexiteers as alluded to by @cbicarolyn today: there "may come a day" when the economics of divergence add up - but it is not now.

The implication is that Brexiteers should be careful of what they wish for.

/9

The internal argument, even from some Brexiteers, is that if the issue is pushed too hard, and Brexit is economically punitive and chaotic, the public support for divergence will be lost forever. /10

Will this argument hold? It is very much in play as @CER_Grant noted over the weekend....

External Tweet loading...
If nothing shows, it may have been deleted
by @CER_Grant view original on Twitter

/11

Because the Brexiteers have a problem here.

If they force clarity on the issue, then the CBI, the Road Hauliers, the EEF Manufacturers will all put flesh on the bones of the decision.

That means customs bays, peaked gaps and border posts. No more fudge. /12

Take a look at this evidence from Eurostar, for example, about real world consequences of leaving. h/t @mattholehouse

data.parliament.uk/writtenevidenc…

The usual 'project fear' response will be used, but when the rubber gets this close to the road, people and businesses will expect concrete details; they will be closer to costing divergence - and wanting to know what the mitigation will be. /14

If you read the attacks on the CBI they contain lots of invective, wishful thinking and high-level principles (about free trade), not the nitty-gritty...which is where we are heading /15

express.co.uk/news/politics/…

brexitcentral.com/cbi-wrong-agai…

Which begs the question, in the battle between pragmatists and purists, do the purists really want the fight?

The didn't appear to have stomach in December on the bill, ECJ, Ireland.

But perhaps this is the issue where they really will go to battle? /15

Because as @LordRickettsP points out, to give on this, may be to give up on Brexit altogether.

External Tweet loading...
If nothing shows, it may have been deleted
by @LordRickettsP view original on Twitter

Hard Brexiteers are not wrong, it seems to me, that staying in 'a' Customs Union' would kill their vision of Brexit. /16

If they accept the pragmatist arguments, the purist Brexiteers give up the mechanism - divergence - by which they hope to achieve their goals.

It is hard to see remaining in CU as a stepping stone to greater independence. /17

This might be why - as @SamuelMarcLowe noted to me last week, the EU is not averse to the idea of the UK staying in, under the right conditions. /18

telegraph.co.uk/politics/2018/…

But these are massive, philosophical choices.

A British government is about to actively put barriers to trade with the market that takes 43% of its exports, accounting for 12% of GDP.

Whatever your views, that carries short-term costs. /19

The EU intends to make the choices as clear-cut as possible.

If the UK wants to preserve right to diverge on, say AI, FinTech and all that future stuff, the immediate costs will be high.

It is not clear if there really is a halfway house. Brexit always gets so binary.

END/20

Addendum: and all of that above, is not to forget Ireland.

If CU issue is forced, not fudged - ie May gives absolute clarity on leaving - the Ireland issue is instantly reignited. Which of course may ultimately yet prove EU's lever.

Am off to lie down.