The UK government has produced a list of half-wishes in a document entitled “future partnership paper”, which envisions a custom union of some sort, for a period lasting a certain amount of time with the EU, post exit, as a way to create stability. Not everyone is impressed.
The document ‘Future Customs Arrangements: a future partnership paper,’ was unveiled by the UK government this week. The UK government said it “seeks a new customs arrangement that facilitates the freest and most frictionless trade possible in goods between the UK and the EU, and allows the UK to forge new trade relationships with its partners in Europe and around the world.”
Here is the rub, what the UK government does not envisage is the UK staying part of the single market, because for one thing, in a single market you have the same tariffs and trade arrangements with countries outside of the union. And, to remind you, the UK says it wants “to forge new trade relationships with its partners in Europe and around the world.”
So, for example, Nicola Sturgeon, says the document marks a return to the “have your cake and eat it” negotiating stance. Others, for example, Guy Verhofsdadt, the EU parliament’s official Brexit negotiator, described one aspect of the government plans, namely an invisible border between Northern Ireland and Ireland as “fantasy.”
A customs union means that while goods can be transported from one country to another free of tariffs, they are subjected to checks as they cross borders, to confirm that the goods in question do indeed originate in the exporting country, and were not imported from outside of the region. For example, the EU imposes tariffs on garlic imported to the region. If the UK agreed a trade deal with a non-EU country for tariff free import of garlic, it would not then be able to sell that garlic into the EU, the customs checks are designed to ensure this does not happen. But the UK government’s document talks about using technology to streamline this process.
For example, it could embed radio frequency identification devices, that are such a key part of the internet of things, into all products that are subject to trade. In this way, we would have a history of that product, from point of creation.
Or, as was suggested here yesterday, blockchain technology could be used as a means for recording customs data.
But while technology can provide a fix, such solutions may miss the point.
A customs union is not the single market – which entails much closer trading arrangements, including freedom of goods, services, capital and labour. If the UK could find a way to apply technology to make customs checks unnecessary, this does not mean the EU would not want to impose checks, anyway.
A single market also means all goods and services produced across all countries that are members, have to be subject to the same regulations.
But it does seem the main motivation of people who voted Brexit was to free the UK from regulations set in Brussels, and remove freedom of people.
So, the UK’s custom union document is vague on detail – full of wishes and aspirations, but missing concrete proposals.
Alistair Campbell said he had never seen a document with so many abstract nouns.
Yet, the Brexit Secretary David Davis seems to see this as a strength, and boasted in an interview of “constructive ambiguity.”
Entrepreneurs are unequivocal about Brexit. They want certainty. In an interview with Fresh Business Thinking, EJ Packe, Managing Director of The Supper Club, and a judge at this year’s NatWest Great British Entrepreneur Awards said: “Entrepreneurs have a funny way of dealing with challenges and overcoming them but they need to know what the actual challenge is and then they can work with it and plan with it.” And that takes us to Brexit, she said: “we need lines in the sand.”
Ian Merricks, Managing Partner of White Horse Capital and also a judge at this year’s NatWest Great British Entrepreneur Awards, had something similar to say: “We are a resilient nation,” he told Fresh Business Thinking. “For entrepreneurs and investors, their daily job is to deal with challenges and hurdles. Brexit isn’t the issue, uncertainty is.”
Brexit is causing uncertainty, now we are told that a document full of abstract nouns and formed from constructive ambiguity can create this certainty?
Is that right? To voice your own view, check out this survey from Smith & Williamson.