Theresa May took questions in the House of Commons for three hours on Thursday. Amid the onslaught of hostility, I admired her grit and resolve. “This is the best Brexit deal for Britain,” she said repeatedly, parrying criticism from MPs of all parties, Leavers and Remainers alike.
Yet, for all her qualities, the Prime Minister is selling a false prospectus. This “deal” is merely a draft. And, as May squanders Britain’s bargaining chips – agreeing to pay £39bn up front, failing to prepare for and present “no deal” as a viable alternative – Brussels will turn the screw and the terms will get worse.
It is vital to remember May’s 585-page “withdrawal document” relates almost entirely to the transition period, due to last from next March until the end of 2020 – and, more likely, much longer. The core of this UK-EU negotiation – the “long-term relationship” – has barely been addressed.
So May is proposing to take Britain out of the EU, putting us beyond the point of no return, while accepting an agreement under which the EU holds all the cards. For, if we accept this deal, the UK’s ability to extricate itself from the EU’s legal-political orbit lays entirely in the hands of Brussels.
As a sovereign nation that has invoked Article 50, Britain currently has the legal right to leave the EU’s main constructs – namely the single market and the customs union.
But if we sign a treaty embodying this ghastly “backstop arrangement”, we must keep following EU rules on external tariffs and customs, plus wide-ranging “level playing field” measures. This binding legal obligation continues as the EU changes such rules in the future, even to the UK’s commercial detriment. And, unlike now, we’d have no vote or veto.
Under May’s “deal” then, EU diktat would suppress Britain’s ability to become more competitive. There would be no scope to shape regulations relating to economic sectors – financial services, bioscience, many forms of tech and advanced manufacturing – in which we excel. New trade deals with the US, China, India and other major economies – another major benefit of Brexit – would be impossible.
And, to be clear, we can only escape May’s proposed agreement with EU permission. “The [exit] mechanism does require mutual consent,” May admitted to the Commons, under intense questioning. Such backstop servitude could be tempered, she argued, or even avoided if the UK cuts a long term free-trade agreement with the EU once we’ve left. Such a notion is naive in the extreme.
For if we sign May’s deal, the EU has both the power, and incentive, to keep Britain locked in to a deeply disadvantageous arrangement – one involving a far greater sovereignty loss than EU membership itself – for as long as possible.
Even arch Remainers worry about May’s utter capitulation. For, if she leads the country into this trap, the true callousness of the Eurocrats – their absolute determination to crush UK wishes to run our own affairs, visibly punishing Britain pour encourager les autres who might also want to leave – would be exposed.
What’s happening is a very clumsy thinly-veiled attempt to keep Britain permanently in the EU’s customs union. The notion that we can leave the EU, while staying in the customs union – an idea we will soon, no doubt, be sold – is nonsense. The 1957 Treaty of Rome was a customs union. It is the bedrock on which the present-day EU sits. Being in the customs union, with no say in the rules, makes no sense.
What’s more, it brings serious economic downsides. Such arguments are rarely heard, being unknown to much of the political commentariat. But they’re no less true for that. Inside the customs union, the UK must charge rather high tariffs, at rates set by Brussels, on various exports from outside the EU. British shoppers then pay more for imports from around the world, particularly food, clothing and shoes – as prices include tariffs that protect uncompetitive producers in other EU states.
No less than 80pc of these tariff revenues then go to Brussels – billions of pounds each year. And because Britain trades more with non-EU countries than other EU members, we pay an unfairly high share of the EU’s combined tariff revenues.
The customs union protects many EU-based corporations from global competition – which is why big business lobby groups like it. But it’s bad for consumers. And the EU’s tariff burden is disproportionately shouldered by the UK – particularly our poorer households.
Customs union membership stops Britain striking trade deals with non-EU countries – that is, over four fifths of the world economy. This is a big disadvantage, given our deep cultural and historic links with a wide variety of nations.
With the global centre of gravity shifting east, it’s vital for our future prosperity that Britain engages more with the world’s most populous markets. The EU’s protectionist instincts are a big hindrance.
Outside the customs union we’re outside the EU’s trade deals – often presented as a huge sacrifice. Yet, over the sixty years since the EU was founded, Brussels has failed to strike a free-trade agreement with the US – our biggest single trading partner. There is no EU deal with China or India, accounting for a third of the global population and the emerging engines of global growth – and no prospect of one, given the EU’s insularity and the often conflicting agenda of multiple member states.
The EU’s operational trade deals cover less than 10pc of the global economy. Nations acting alone – like Switzerland, Singapore and South Korea – have secured trade deals with much wider scope and Britain can too.
The “supply chain” argument is wildly overstated – the UK imports countless “just in time” components from the US and elsewhere with no problem. And while I well understand Irish border sensitivities, a technical solution involving “behind the border” checks and no new infrastructure is entirely possible – as evidenced by officials and independent experts to several Parliamentary select committees.
The UK must scrap May’s “deal”, abandon attempts at a halfway house Brexit and use our money and the credible threat of “no deal” to lock in a “standstill” post-Brexit transition period. Then we go hammer and tong to strike the wide-ranging UK-EU free-trade agreement Brussels has confirmed is still on the table. It is not too late. On the contrary, most of this negotiation has yet to begin.
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