26 April 2018
A Joint May and Corbyn Strategy?
Working together on the Customs Union?
By John Watson
Reading the newspapers, you would think that there was a division between neo-Remainers who wish to be part of the Customs Union and extreme Brexiteers to whom the idea is anathema. Actually it’s all nonsense. Everyone would like to be in the Customs Union with goods passing tariff-free across the borders with other EU states. The difference lies in what people are prepared to pay for it.
Let’s go back to the referendum and the reasons why the majority of the British people voted to come out of the EU. It is a long time ago now, and the picture is a bit fuzzy anyway because different people were swayed by different arguments. However, high on the list of concerns was the free movement of people, possibly a threat to jobs, but, more significantly, something that contributed to social changes which voters believed to be unacceptably out of control. Then there was resentment at EU law and regulation, imposed from Brussels as part of a top-down system of government at variance with the British tradition. Also the centralising tendency of EU institutions, and particularly the European Court of Justice, which made people nervous as to what would be the next thing to come under the control of the Brussels bureaucracy. Were we on a train which we could not stop and which would ultimately destroy the way of life we cherished? On the economic side, people looked askance at the tariffs restricting imports from third world nations. Was the EU, as Mr Rees Mogg has suggested, a double scam under which our poor had to pay protected prices and the third world was denied income which it badly needed?
Some of us, and I was one of them, voted Remain on the basis that these issues could be best addressed from inside the EU, but the history of the institution was against us. In fact, had we won, we might well be regretting it now as French calls for further centralisation become more strident. Anyway, we didn’t win. The public don’t believe that the EU will reform and for all the above reasons, and others too, they voted “out”. Despite the haze of dishonest propaganda leading up to the poll, most people realised that Brexit would cost us money, at least in the short term, but still the majority were prepared to hazard prosperity to take back control.
It is surprising how often Remainers will say “Brexit will be expensive” as if that was in some way unexpected. Of course it will be, and coming out of the Customs Union will increase that expense, few believing that an increase in trade with third parties will, in the foreseeable future, compensate us for the damage to our EU marketplace. It is for that reason that almost everyone would like to remain within the Customs Union if it did not mean sacrificing at least some of the things they hope Brexit will achieve. The question the politicians must be asked is not “would you like to be in the Customs Union?” but “are you prepared to accept the price which you believe the EU would exact as the price for membership?”
Of course, at this stage in the negotiation we do not know exactly what that price would be, but there are clear differences in what politicians would regard as acceptable. A free trader like Mr Rees Mogg might say that the price of not being able to enter into our own tariff agreements with third-party countries was itself too high. Most people would put up with that, but many would not accept freedom of movement or an on-going role for the European Court of Justice. That, after all, is why they voted for Brexit in the first place.
Now let us put ourselves in the Government’s shoes and look at it as a negotiating matter. Mrs May’s stance is that we should come out of the Customs Union but that presumably means that she expects the price for remaining within it to be more than she would willingly pay. The first step must be to test what that price really is.
Readers who have dealt in Eastern street markets will know how you test price. You look at the carpet which you would like to acquire and the trader, spotting your interest, will come out with a price far higher than that which he would really expect to accept. You smile, comment to your companion about how it would clash with your curtains and move on. Then the price begins to come down. You smile and shake your head, but at the same time leaving the impression that there is a level at which you would be interested. When you get to the corner of the street you hear someone running behind you and it is a boy from the stall with a “special price”. You look at him and hesitate but then shake your head and walk on. He catches you up again with a slightly lower price and it is only when he does not appear that you realise that you must be very close to the lowest price which the trader will accept.
Now supposing that the UK negotiators believe that remaining in the Customs Union would be a good thing if we can achieve a sufficiently low price. What should they do? Why, play the same two-handed game. Shake their heads and walk away dismissing the possibility but, at the same time, leave the EU with the impression that at a lower price a deal might be done.
Look now at the government’s position. They are shaking their heads with a will and saying that they are not interested in the Customs Union. At the same time, however, the EU sees the Labour Party and others putting pressure on the Government to stay in the Customs Union and that must make them think that a Customs Union deal is possible if they can find an acceptable price.
The Union may not be as valuable to the EU as it is to the UK, but it is valuable nonetheless. Ask the German car manufacturers. Ask other EU exporters who would like to keep our 67 million consumers in their market place. There is pressure on the EU to keep the UK in the Customs Union if it can and the encouraging noises from parliament and the Labour party increase that pressure. Perhaps a dropping in the price will be the result. You begin to wonder whether Mrs May and Mr Corbyn arranged the negotiating strategy between them.
