BrexitCentral: Why Labour should embrace free trade and campaign to stay out of the EU Customs Union

Labour Party policy on Brexit is precariously balanced. Many party members and MPs would love nothing less than to reverse Brexit completely. At the same time, the party knows it is unlikely to regain power without winning back the many working-class voters who voted to leave the EU.

As a result, and perhaps understandably, the leadership strategy has been one of studied ambiguity – pledging to their Brexiteer voters that they will respect the referendum result, whilst hinting to their Remainer activists at the possibility of staying in the Customs Union and Single Market.

At some point, the party will have to take some firmer decisions and there is currently an ongoing and very loud campaign to persuade the leadership to commit to remaining part of a customs union with the EU.

It would be an odd tactic for a progressive party. The point of the Customs Union is that every country is forced to impose the same tariffs on imports from countries outside the EU, supposedly with the intention of protecting domestic companies.

An obvious downside of remaining in the Customs Union would be to prevent the UK developing better trade deals with non-EU countries, many of whom are in the fastest growing parts of the world. But at least as important for Labour should be that it is consumers who, quite literally, pay the price through high-tariff items such as food, clothing and footwear being made expensive.

Unsurprisingly, big business tend to like an approach which forces prices up for their competitors and protects them from new entrants. Protectionism also reduces the incentives for firms to invest in productivity improvements, meaning wages can all too easily stagnate. Prospective Labour voters have surely noted that the CBI, that arch-lobbyist for the interests of big corporates, is leading the charge for the UK to stay in the Customs Union.

It is natural to worry about the effect of imports on domestic industries, but leaving the Customs Union would not mean the UK has to remove all tariffs, only that we can decide what is in the best interest of our industry, workers and consumers. For example, imported trainers currently attract a tariff of 17%, despite it being a product for which there is only a tiny UK manufacturing industry. The main effect is to push up prices of trainers for hard-working families. Similarly, the sight of Spanish orange producers lobbying for continued punishing tariffs on African oranges and lemons leaves a sour taste in the mouth.

To read David Paton’s piece for BrexitCentral in full, click here.

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