All we’re set to lose if we leave the EU customs unions

17 November 2017

The European Parliament’s International Trade Committee recently held two important debates that illustrate what we are set to lose if we leave the EU customs union as well as the EU.

First we've heard from the European Commission a presentation of a report which reviews the implementation of the dozens of trade agreements the EU currently has in force across the world.

Unsurprisingly these trade deals have all led to a boost in EU exports, supporting local jobs and benefitting the economy. While questions must be raised as to which sectors or businesses have benefited most, and whether others may have actually been negatively affected by trade deals,  it is clear that the EU customs unions is delivering overall for its members. Leaving it would therefore not be without costs for the UK economy. In fact, according to the Treasury, a hard Brexit on WTO terms would cost the UK exchequer £45 billion – equivalent to five times the annual cost of GPs.

The Tory government is arguing that we could simply replace existing EU trade deals with new UK trade deals, but it’s hard to see how these could be any better. In fact, there are clear indications that they could be far worse. Crucially, it seems that our “special relationship” with the US would not shield us from the worst of the US trade agenda, including the menace of chlorinated chicken and US GMOs making their way to UK shops.

This is what the US trade chief made clear only a few days ago. TTIP, the EU-US trade negotiations actually came to a halt in part because the European Commission refused to give in to the US demands to relax EU food safety standards. Can we trust the Tories to do the same?

But the customs union is not just about ensuring strong trade flows in good times. It’s also about standing stronger together in bad times. The Trump administration is pursuing a much more aggressive trade agenda than its predecessor. We’re increasingly seeing punitive measures being imposed by the US on exports from the rest of the world, including Europe, to insulate its domestic market. In these troubled times the risk of escalating to a global trade war is very real, and it seems to me that standing  together in the largest trading block in the world offers better prospects to the UK economy than facing the US on our own.

Bombardier workers in Belfast can already appreciate this, as the US administration announced it will impose an 80% punitive tariffs on the aircraft built there, threating 4,000 jobs in the UK in the process. Such moves by the US are not unprecedented. Under the Bush administration,  the US had already attempted to block EU steel exports, primarily UK specialist steel. But the European Commission threatened to retaliate on Florida oranges. It worked: the US backed off and a trade war was avoided. The Commission can act again, but there’s a real question mark as to what the UK government is actually doing to save jobs in Belfast.

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