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Henry Newman @HenryNewman
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A pre-dinner thread on the Customs Union, Customs Partnership and MaxFac options which I discussed this morning on @RidgeOnSunday
1) This never-ending circular discussion on customs union is painful. The question should have been settled during the referendum. When the leaders of Leave campiagn were talking about separate trade deals with US,Japan,China,Oz - they were talking of life outside a Customs Union
2) I watched back @michaelgove's iconic interview with Faisal Islam and he talks of "taking back control" of trade policy and someone deciding our trade with Britain's interests in mind not the EU28. No one can credibly watch that and think the plan was to stay in a customs union
3) During the referendum, we endlessly discussed whether leaving the EU could allow UK to boost trade with rest of world, reduce tariffs to help consumers, and so on. The assumption was clearly that we were out of a customs union. It was so obvious it wasn't stated.
4) You may think people misunderstood the arguments made then but that's fundamentally a critique of the democratic process. For what it's worth I don't recall any other political event in my life which got so many people arguing about policy.
5) Of course there are economic costs of leaving the Customs Union but much of those are a) dependent on our future relationship with the EU and b) concomitant with the costs of leaving the EU itself. Again this was all discussed for months during the referendum.
6) It is profoundly damaging to waste months & months - now nearly two years since Referendum - rehashing endlessly THE EXACT SAME POINTS. Part of fault for that lies with the Government for delaying crucial decisions on its preferred outcome for Brexit and not arguing its case
7) Part lies with those in Parliament & beyond who pay lip service to delivering the referendum result but in private are seeking to reverse it. Believe me I've heard it all when it's behind closed doors and off the record. And the EU27 are listening too
8) Then there's Brussels which is treating these negotiations in a more political than principled manner. @MichelBarnier pretends that not being in a customs union is the last step pushing us towards a Canada-style trade deal...
9) ...but this is misleading. Even those countries closest to the EU in the EFTA such as Norway or Switzerland are not in the or a customs union. Close trading countries like US+Canada or Oz+NZ have not formed customs unions. Instead they have sought to reduce friction on border.
10) So why are we here? There's the Irish border. Back in December both the UK and EU agreed that there was to be no hard border but also that UK was leaving Customs Union. Now the EU is saying that's not possible. If there is a contradiction why did EU agree it in December?
11) No one wants a hard border in N Ireland & both sides have made a political commitment to avoid one. Therefore a political solution will have to be found. There are no perfect precedents for this precisely because the decision not to have a hard border is political.
12) Last week the Brexit Cabinet rejected the Customs Partnership which Brussels had already called "magical thinking". Meanwhile Eurosceptics like @Jacob_Rees_Mogg called it "cretinous", Europhile Lord Kerr said it was a "dead parrot". Even the Govt says it's untested & unproven
13) Yet No10 I read and hear is determined to resurrect the corpse. 😱 This is surely misguided. If they pursue the Partnership they will be putting all their eggs in a broken basket. Dead parrots don't fly.
14) If No10 pushes for a Partnership V2 then inevitably the EU will string the UK along in the talks, before later saying sorry no. At which point the only alternative will be a Customs Union.
15) Some Brexiteers need to accept that leaving the EU is complex and demands just to walk away are impractical and unhelpful. @OpenEurope suggested that we may need a longer transition period in a customs union with the EU, beyond the standstill period ending in 2020
16) But we also argued that a long-term customs union with the EU is not suitable for the UK. And even if Parliament forces the Govt into asking Brussels for one, I can't see it being sustainable - it won't last long-term.
17) One of the biggest emerging risks for both sides is the negotiations don't settle relations. That they remain in flux, to be reopened in just a few years creating yet more uncertainty for the economy.
18) Far better to accept some friction on trade, pursue Maxfac & deliver that, than to go via the Partnership cul-de-sac to a customs union relationship which will unwind in due course necessitating further changes for business.
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