The Telegraph: The customs union is a protectionist racket

So, Theresa May wants an Article 50 extension beyond the end of this week. And, the signs are that Brussels will demand that any delay beyond April 12 lasts at least a year.

Our hapless Prime Minister also wants a “termination clause” allowing Britain to leave the European Union on May 22, the day before European elections are contested – if she can agree a deal with Jeremy Corbyn, so her Withdrawal Agreement clears Parliament with Labour votes.

The price of Corbyn’s agreement, it seems, is that the UK stays in the customs union, or some close variant. May will then have overseen a “Brexit in name only” that eschews the advantages of leaving the EU, yields total control of the UK’s trade policy to other nations, and pays Brussels £39bn for the privilege.

She’ll have also bestowed credibility on Corbyn, undermining the Tories’ main argument for keeping this Magic Grandpa Marxist out of office. History won’t treat her kindly – and deservedly so.

The customs union is enshrined in the 1957 Treaty of Rome, the EU’s legal bedrock. The EU is, in essence, a customs union. Being inside, but nominally outside the EU – as so many power-crazed MPs now demand – is the worst of all worlds.

The UK would then be ensnared within EU tariff structures, but with no say ­– like Turkey. EU members would control utterly the trade policy of the world’s fifth-largest economy, determining what goods can enter our country.

Plus, we’d be forced to keep sending billions of pounds each year to Brussels, on top of the “divorce bill”. How is that “taking back control of our law, borders and money”?

The customs union puts a tariff wall around all member states, imposing charges on goods imported from the rest of the world. This Common External Tariff (CET) makes imports of clothing, food and footwear, in particular, more expensive – items on which poorer households spend heavily.

So British shoppers pay more to protect inefficient producers elsewhere in the EU, shielding them from global competition. The CET on clothing is about 12pc, while on shoes from leading Asian suppliers it is up to 60pc.

EU tariffs also make food more expensive – outside the customs union, grocery bills could fall by a fifth, according to the Policy Exchange think tank.

Under EU rules, 80pc of tariff revenues collected in the UK each year go directly to Brussels – £18bn over the last eight years. Poor UK households paying over the odds for non-EU imports have footed much of that bill.

Customs union membership, we’re told, means Britain benefits from the EU’s “60-plus” free-trade agreements with other nations. But less than half these are in force – and most are with minnows and microstates. All the EU’s operational trade deals combined cover less than a tenth of the global economy.

The EU is bad at striking trade deals – Oliver Letwin is absolutely wrong to argue otherwise. Member states’ interests often conflict – and the French always dig their heels in on agriculture. That’s why there is no EU free trade agreement with the US, or China, India, Brazil and Indonesia – the coming economic superpowers.

Britain has more chance of securing valuable agreements with big nations negotiating alone – as Switzerland did with China in 2014. We can cut deals favouring sectors where we’re strong, like services, not skewed towards French and German interests, as EU deals often are.

We’re a services giant – the world’s second-largest producer – which is why sizeable nations with EU trade agreements, such as South Korea and Mexico, want bespoke post-Brexit trade deals with the UK that are only possible if we leave the customs union.

Outside the EU but in the customs union, the UK will be forced to open its markets to nations with which the EU has trade deals, but their markets won’t be open to us. So, when striking trade agreements, the EU will inevitably barter access to the UK’s huge market to secure markets for French and German goods, but not for services – in which Britain excels.

The UK will be powerless to prevent this – and hindered in striking our own trade deals, as access to our market will have already been given away. This reality, obvious to anyone with an open mind and moderate intelligence, is apparently beyond the understanding of the majority of our MPs.

Big business lobbies groups want Britain to stay in the customs union as they care more about protecting incumbent, inefficient corporations from global competition than they do about democracy. Leaving, in contrast, would boost the UK’s smaller, dynamic firms, with new trade agreements helping them export to the world’s fastest-growing Eastern markets.

Freed from paying tariffs on global imports, consumers would also benefit, seeing further price falls as Britain acting alone strikes deals with the world’s fastest-growing economies, deals the protectionist EU has failed to clinch despite 60 years of trying.

We don’t need the customs union to protect UK manufacturing supply chains – that’s a scare story. More goods cross the US – Canada border each year than the EU-UK border, with no delays – and with no customs union.

The idea that only the customs union can save Northern Ireland from renewed conflict is also alarmist nonsense. Practical low-key border solutions exist – as the Irish government is now being forced to admit.

The UK economy is holding up – despite the chronic uncertainty caused by May’s endless bungling. The International Monetary Fund predicts growth of 1.5pc this year, higher than Germany, with unemployment at a record low.

But a long extension, which the EU wants and will insist on, in the hope the UK’s pro-Remain political and media class reverses Brexit entirely, will cause serious business angst.

The customs union is a protectionist racket, bad for consumers and bad for our economic future. While the EU accounted for 40pc of the global economy when we joined in 1973, it will be just 15pc when we leave.

Of dubious merit now, customs union membership makes even less sense outside the EU. That’s why pro-Leave MPs must hold their nose and finally back May’s tarnished deal, if they get another chance, getting Brexit legally over the line, with a chance to spring ourselves from the backstop trap later.

The alternative is that May and Corbyn combine to lock us in a disastrous no-say customs union for good.

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