With this week marking one year until Britain officially leaves the EU, HuffPost is running a series of blogs answering big questions still left unanswered about our Brexit future. Today, Conservative MP Bernard Jenkin and Labour MP Heidi Alexander write on whether Britain might yet stay in the Single Market. Follow the series on #BrexitFuture
The pro-customs union/single market case is built on the false premise that a country’s prosperity is dependent upon the elimination of customs frontiers with countries with whom it conducts its trade. However, this is far from the most important factor. It is also not necessary to be a very large country, or part of a large trade bloc, in order to be prosperous. Many very small states export a far higher proportion of their GDP across customs frontiers. Switzerland’s exports are worth 66% of its GDP, and South Korea’s 42%. Neither Switzerland nor South Korea are in any kind of customs union (unless you include Switzerland’s with Liechtenstein), so they achieve their high standards of living by trading across traditional customs frontiers. In fact, according to EU figures, Switzerland’s exports to the EU are worth 36% of its GDP, and it is not even part of the European Economic Area. The UK is far less dependent upon trade with the EU, with exports to the EU worth only 12% of GDP. UK exports to the EU are also declining, whereas our exports to the rest of the world are growing.
Other small trading countries include Singapore, whose exports are worth 172% of GDP, and Hong Kong, whose exports are 187%, because they import and export such large volumes. But neither is part of a customs union.
Control over your own laws offers far greater opportunities to develop your economy and export than the removal of customs checks when trading with other countries. The cost of customs processes are low and are also declining in comparison with other costs such as anti-competitive regulation and behind-the-border barriers to trade. We gain the opportunity to focus on those in trade negotiations, alongside investment in science and technology, educating our people, ensuring flexible labour markets and a competitive tax regime. So much of the debate about leaving the EU lacks this perspective.
How we educate our people, how we regulate our economy and control spending and taxation, the flexibility of our labour market, and investment in infrastructure, science and technology are far more important to our prosperity than trade agreements. Domestic government policies have a much bigger impact on economic performance than whether the UK is inside or outside a customs union with the EU. It is far more significant that the UK’s departure from the EU will give us greater flexibility, more responsibility and more accountability over how we manage our economy as we will regain the ability to set our own tariff schedules, decide our own regulatory standards and choose how they should be applied.
Remaining a member of the EU single market or in a customs union would mean we fail to take back control over our laws, our borders, our money and our freedom to make trade deals with non-EU countries. This would leave the UK in the worst of all worlds, bound by the EU but unable to influence its decisions.
Even if we just remain part of a customs union, much of the above still applies, and the loss of control for so little gain is not worth it. Former EU Commissioner and Remain voter Lord Jonathan Hill, told the House of Lords in January that:
“….it would make no sense at all for a service-based economy such as ours to be bound by rules over which we had no influence … how could we in all seriousness subcontract all rulemaking to someone else? If, as I believe, we will have to choose, we must surely place a greater priority on being able to shape our own future than on preserving the status quo, particularly when technological innovation is itself going to change the status quo, whatever we decide on Brexit.”
Jeremy Corbyn has cynically shifted a totally illogical position, pretending that we can set our own rules within a customs union. This is simply dishonest. The EU has consistently said “no cherry-picking” and that no country can have the benefits of the single market or customs union without accepting all the obligations. The UK would be forced to implement EU directives and regulations, preventing us from setting our own regulatory standards and deciding how they should be applied. We would be bound by free movement of people, one of the touchstone issues in the EU referendum. And we would have to continue making payments into the EU’s annual budget. All this would betray the majority who voted Leave. Polling has shown that the biggest single reason voters supported Leave was “The principle that decisions about the UK should be taken in the UK”. Parliament cannot now choose to deliver ‘Brexit in name only’ in the hope that voters don’t notice.
This also makes the best economic sense. In a context in which the EU commission itself expects 90% of global economic growth over the next 10-15 years to be generated outside EU, ‘Brexit in name only’ would mean giving up serious opportunities for the UK’s long-term economic growth.
Bernard Jenkin is the Conservative MP for Harwich and North Essex