Customs and Borders

Stewart Hosie Excerpts

Thursday 26th April 2018 Commons Chamber

[Yvette Cooper]

I completely agree; I think that that is immensely important. It brings me back to what I said about our sense of responsibility. It is no good our pretending to be in a parallel universe when all the things that we might want to be true simply are not. We must face up to the world as it is, and to our responsibility and the consequences of any decisions that we make in the House for a process to build peace that has been going on for so many years. We are only the custodians of that process, and we must not be the ones who put it in jeopardy.

Another crucial point is that even if all that technology were possible—even if it were possible to solve all those problems at the border—it would not remove the need for rules of origin checks if we were not party to the common external tariff. It would not remove the bureaucratic burdens that would be imposed on manufacturing businesses every time they changed ingredients or components, because those ingredients and components will be subject to different external tariffs if we are outside a customs union, and the businesses will then have to account for their origins. That is why even new technology, however fabulous and whizzy it becomes in the years ahead, cannot solve the wider problem of what will happen if we have no customs union.

The second argument advanced by those who object to the customs union is that being outside will be worth it, because the benefits of not having a common external tariff and being able to have our own new trade agreements are somehow better than the benefits of being in the customs union. The problem is that the evidence—the Government’s own EU exit analysis, and the findings of the National Institute of Economic and Social Research—shows that the potential benefits of new trade treaties with far-flung countries, even if they could be created quickly, will still be outweighed by the losses resulting from the rules of origin checks and the friction at the border.

[Stewart Hosie (Dundee East) (SNP)]

When members of the Treasury Committee were in the United States, we were told one thing consistently by almost everyone we spoke to, namely that when it came to negotiating the new, alternative free trade agreements in which those in favour of Brexit put all their stock, the UK would have to put everything on the table and the US would have to put nothing on the table. Does that not lie at the heart of this issue? Our position will be substantially weakened, and nothing that the United Kingdom can negotiate will compensate for the losses that it is likely to suffer.

[Yvette Cooper]

The hon. Gentleman is right. Other Members will have more evidence and experience than I when it comes to all the detailed arguments, but if we are a smaller market offering to trade, we will be in a weaker position to get a good deal than if we are part of a larger argument in that trade negotiation. Trade deals can take a long time, regardless of the best intentions. There can also be winners and losers, which means that even in this country it may take us a long time to agree on whether new trade agreements are right or wrong.

For example, consumers might want to enjoy more and cheaper New Zealand lamb, but Welsh farmers might take a different view. Industry might be able to get cheaper Chinese steel, but what about the consequences for the British steel industry? If the price of a US trade deal is lower environmental standards or giving US private healthcare companies access to, and the right to aggressively compete for, contracts in our NHS, many of us will want nothing at all to do with that. The truth is that any trade agreement will be complicated to agree in this place, never mind with countries across the world.

Moreover, as the CBI has pointed out, we can increase our international trade—and our EU trade—while still in a customs union with the EU and without having to spend years negotiating complex new treaties. As the CBI points out, Germany currently sells four times as much as we do to China. We should be trying to make the most of those opportunities.

Research by the National Institute of Economic and Social Research shows that the overall trade increase from possible future agreements with the USA, Canada, Australia and New Zealand would amount to less than 3% of our current trade. Are we really going to rip up all the benefits of what we have in a customs union for the sake of a 3% increase that will not be sufficient to balance what we will lose?