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In a Customs Union?
07 Jul, 2018

That would still be a hard Brexit

OK, there is no clear definition of “hard” or “soft”. But in my book unless there is freedom of movement it’s a Hard Brexit says London4Europe Committee member and former HM Treasury senior civil servant Michael Romberg.

Former UK envoy (and at one point my line manager in HM Treasury) Ivan Rogers, in an interesting speech on 23 May 2018, discusses the possibility of the EU after all agreeing to the UK’s Northern Ireland backstop as a permanent solution for the UK: in the customs union, in the single market for goods, some budget contributions, some ECJ powers; but no freedom of movement.

The Evening Standard of 3 May 2018 reports former education secretary Nicky Morgan talking about a customs union and saying that the Conservative Chief Whip could not get the numbers to push a hard Brexit through Parliament. She is not alone in seeing achievement of a customs union as bringing about “a soft Brexit”.

There is no definition of Hard and Soft Brexits. So one cannot say whether she is right or wrong to use the phrase.

But there is a real risk of complacency. Many Remainers would think that if something called a soft Brexit had been achieved the further fight for Remain would not be worth having. The more so as the only significant policy dividing Labour from the Conservatives is that Labour supports some sort of customs union with the EU and many people are desperate to see Labour as the good guys of Brexit. (That said, let’s be clear: Labour's current customs union proposal is a fantasy that would not be acceptable to the EU and whose purpose is more to embarrass the Government than to advance the debate.)

Freedom is at the heart of the EU

I suggest that the key policy that would make Brexit soft is freedom of movement.

After all, what is wrong with Brexit? It is that we leave the great European peace project, the project that supports democracy and individual freedom, the project that brings individuals and countries closer together. It also supports greater prosperity, but that is a means to an end. The Schumann declaration started with “World Peace”. That is really what the EU is about.

Freedom of movement is at the heart of it. It is what allows individuals to live, work, look for jobs, retire, study, marry, set up businesses anywhere across this great and diverse continent without having to obtain the permission of an immigration officer. And along with those rights go the practical rules that make it work, from reciprocal healthcare to a ban on roaming charges.

So, no freedom of movement, no soft Brexit.

A customs union would facilitate trade

A customs union prevents tariffs and the transaction costs connected with rules of origin; so that helps trade, but not much. Even for goods a customs union is not as important for trade benefits as membership of the Single Market. A customs union would not do much for services

Anyway, it is hard to separate goods and services in an advanced economy. Aero engine manufacturers make their money on contracts for repairs and maintenance. Car manufacturers make money on finance deals. And is it going to be easy to say to a customer: “buy our machine, if it goes wrong we’ll send out a technician to you just as soon as s/he can get a visa”?

A customs union would be a necessary but not sufficient condition to prevent a hard border between Northern Ireland and the Republic. It would not be enough to prevent border checks or trade disruption – you also need the certainty of adhering to single market rules for that.

A customs union would not do much for peace, freedom, democracy, or bringing countries and people closer together.

So a Brexit with no freedom of movement but a customs union would be less economically damaging than a Brexit outside a customs union. But it would still be a hard Brexit, at any rate in my book.

Remain is the answer

London4Europe stands for Remain. Any time spent urging a soft Brexit just undercuts our message. If we do leave, then the transition period will allow plenty of time to argue for a soft Brexit.

But if you are going to work now for a soft Brexit, make sure it is one that supports what the EU and our EU membership is all about. A soft Brexit requires freedom of movement.

We need to justify freedom of movement explicitly, not talk only about the economic benefits of the single market or present freedom of movement as a regrettable price to be paid for that.

So I ask you not to lead wavering Remainers into complacency by calling membership of a customs union a soft Brexit.



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