Brexit: The Customs Challenge (European Union Committee Report)

Lord Kerr of Kinlochard Excerpts

Monday 1st April 2019 Lords Chamber

[Lord Kerr of Kinlochard (CB)]

I will make a small and typically unpolemical point in the gap. This admirable report says at paragraph 17:

“The UK Government has repeatedly ruled out entering into a customs union with the EU on the grounds that this would tie the UK to the EU’s Common Commercial Policy”.


That statement is true, but what the Government say, as reported in that statement, is not true. The customs union and the common commercial policy are completely separate in the treaty. They are legally distinct. The example of Turkey shows that you can have a customs union with the EU without having the EU running your trade policy. The Turks are outside the common commercial policy. Customs union means no tariffs between you and your partners and common tariffs against the rest of the world. It does not mean that the Commission would be negotiating for us with the rest of the world. It does not mean that we would benefit from existing EU free trade agreements. It does not mean that any new EU trade agreements would apply to us.

We know all that; why am I saying it? It is because next door in the other place, the issue of a customs union, as the noble Lord, Lord Taverne, said, is being talked about right now. Do not get me wrong: I still believe that Brexit plus customs union is a complete disaster and a dreadful thing to do, but it would be wrong to argue against a customs union on the grounds that it ties you to the EU’s trade policy, because it absolutely does not, even though the Government have frequently said that it does. We would be entirely free in the areas of services, intellectual property, public procurement, regulatory barriers and data. The only area where we would be bound by the EU’s decisions would be on the level of tariffs in goods—a relatively small proportion of world trade now.

I repeat: do not get me wrong—it is still a very dangerous way to go. However, when the House of Commons considers the customs union amendment written into the Trade Bill, it would be good if the Government, when they took a view on it, took a view on the merits of a customs union. We said nothing in our amendment this time to the Trade Bill or last time in the withdrawal Bill about losing our ability to do trade deals around the world or acceding to the common commercial policy, which is a completely separate question. The question of a customs union should be addressed solely on its merits.