While Juncker preaches control and protectionism, the UK is still madly trying to please Brussels

Graeme Leach
Theressa May Attends Her First EU Council Meeting As British Prime Minister
Is this really a regime the UK is willing to bend over backwards for? (Source: Getty)

There is so much going on around Brexit, it is easy to lose track of important developments.

One recent development in particular has received way too little attention.

At the end of August, the government released its thoughts on a future customs model that purported to achieve the Holy Grail of Brexit, namely free and frictionless trade.

Read more: The EU always reaches for more Europe

First, UK exports to the EU would be tariff free. Second, the UK would not be part of the EU’s protectionist common external tariff (CET), and would therefore be free to pursue an independent trade policy to negotiate free trade agreements.

Essentially the UK would mirror the EU’s requirements for imports from the rest of the world where their final destination was the EU. The UK would be a border agent for the EU, collecting the CET on EU destined goods at a UK border entry point, but operating ITS own post-Brexit WTO tariff schedule for goods destined for the UK.

These goods would ultimately pay a UK tariff, while those destined onward for the EU would pay the EU’s CET at the UK border.

So would the government’s proposal achieve free and frictionless trade? Surely such a model should appeal to those such as myself, who are making the case for zero tariffs on UK imports post Brexit?

After all, even if the government is not advocating unilateral free trade now, the potential for an independent UK tariff schedule means zero tariffs would still be possible.

Or would it?

Genuine free traders should be alarmed, not encouraged, by the government’s proposals. They bear all the hallmarks of an EU-leaning Whitehall bureaucracy intent on trying to hoodwink ministers and the general public.

Trade policy is being formulated with all eyes on the producer, not the consumer. The Holy Grail of Brexit for Whitehall is zero tariffs on UK exports to the EU, not zero tariffs on UK imports from everywhere.

As yet undesigned, unbuilt and untested tracking systems would be required to make sure that goods declared for the UK are really destined for the UK, and not the continent of Europe.

There would need to be a tracking system checking all those American chlorinated chickens stayed in the UK. Tracking all the goods in all the containers would be an impossible task, given that 95-99 per cent of containers currently pass without inspection.

Tracking raises a more fundamental problem. EU customs procedures require all countries to operate all tariff and non-tariff procedures in the same way.

The UK would not only be collecting the EU’s CET and enforcing its tariff rate quotas, alongside its own tariff schedule. It would have to enforce the EU’s non-tariff rules as well. UK officials would have to police both regimes.

These tariff and non-tariff challenges would almost certainly create an in-built bias in the customs system to converge on EU requirements.

One way around some of these problems, suggested in the paper, is that UK destined goods could also pay the CET on arrival, and then claim back the difference between the higher EU and lower UK tariff.

But this is hardly evidence of the UK taking back control. Imagine Liam Fox telling an American or Australian trade negotiator that they would have to pay the CET and then claim back a refund. That’s a complete non-starter.

Yesterday, we heard the EU Commission president Jean-Claude Juncker lay out an authoritarian vision for a United States of Europe, complete with extra taxes, a tightened grip on nations’ financial decisions, and additional penalties for members who don’t toe the Brussels line.

Is this really a regime the UK is willing to bend over backwards for, alienating other countries in the process?

Read more: What Juncker doesn’t want you to know about the EU

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.

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