Trade the immoral Customs Union for fruitful deals that benefit the developing world

 
Brian Monteith
LIBYA-DAILYLIFE-ORANGES
The EU has raised its tariff on importing oranges fivefold, to 16 per cent (Source: Getty)

It has been another good week for those people who are trying to make the best out of Brexit, irrespective of how they voted in the referendum.

There shall, of course, always be bad news stories that Brexit will be blamed for – just like back in the eighties when Thatcher used to be blamed for everything from mouldy British Rail sandwiches to Britain’s inclement weather.

The truth will out, however, and when we look back we will see how today’s feint hearts or mendacious minds either threw in the towel or worked against the nation’s best commercial interests.

Read more: JOBS! Trump tweets about "very big and exciting" trade deal with UK

The Brexit dynamic in Britain has changed, probably irrevocably, and that means it must change in the EU negotiations too. For just as Theresa May’s dismal performance in the General Election weakened her team’s credibility in negotiating the best possible Brexit, so must this week’s commitment from Jeremy Corbyn’s Labour party – to fully and unequivocally support the UK leaving the Single Market and Customs Union – strengthen her hand.

The EU negotiators are no fools and can see this. That is why they and their evaporating band of Remainers are getting ever more desperate with their scaremongering, leaking, and last ditch attempts to push UK membership of their Single Market and Customs Union.

When you read or hear comments such as “extreme hard Brexit” or “chaotic Brexit” – the equivalent of turning the volume up to 11 – then you know Remainers are running out of ideas and resolve.

Exporting poverty

Why has Labour become such a strong advocate of leaving the Customs Union?

First, both millennial liberal progressives and out-and-out lefties are at last awakening to the fact that the Customs Union exports poverty to Africa and the rest of the developing world. It does this by erecting punitive tariff barriers that discourage trade and ensure penury for agricultural workers, from South Africa to Morocco.

The EU has increased its number of Customs Union tariffs by 1,494, to 12,691 since 2009, and last year raised its tariff on importing oranges fivefold from 3.2 per cent to 16 per cent – specifically to protect Spanish fruit by pricing out of the market South African oranges, first taken to the Cape by the Dutch back in 1654.

Likewise, the EU’s tariffs on importing raw products such as coffee beans are kept intentionally low so that they can easily enter our market, but tariffs on roasted coffee are set punitively higher so that the added value is achieved in the EU. This is how Germany makes more money from coffee processing than the whole of Africa makes from exporting its beans.

Beyond this growing Western guilt for how we suppress life-supporting trade with the poorest countries, the Labour party has also recognised that the only way we can create “a Brexit for jobs” is to establish free trade deals. This is what Liam Fox and Boris Johnson are so busy working on, sweet-talking with 37 countries to put us to the front of their trade negotiation queues. Those deals would be illegal under Customs Union arrangements, as we need the flexibility to reduce or abolish our tariffs.

High spirits

Take the sale of whisky and other spirits. They are not especially labour intensive – but the packaging, marketing and distribution is. India is the largest market in the world for whisky, drinking almost half of the world’s consumption, a staggering 1.5bn litres compared to second placed US with 462m litres. Yet our Scotch has only a two per cent share of Indian volume.

A target for a UK-Indian trade deal will be to reduce or abolish the eye-watering 150 per cent Indian import tariff on whisky, probably in return for easing access for Indian doctors and engineers to come to Britain. Surely a win-win for the UK?

Not only will mothballed distilleries be brought back to life – the spin-off employment and accompanying tax revenues will benefit the UK exchequer.

Trade works two ways, and we would also be able to abolish our tariffs on importing sports footwear (16.9 per cent) or tomato ketchup (10.2 per cent), helping British companies and lowering our bills.

Instead of trying to stay in the Single Market and its Customs Union, people in the City need to ask these questions: what do we want from Brexit that will give us a competitive advantage, and how do we get it?

We also need to ask who is undermining our negotiating position and weakening our case – and how can we stop their pointless self-harm, and get them to join us in getting the best deal – so we all benefit.

Read more: Why did the chicken cross the Atlantic? Because of Brexit

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Related articles