THE BLOG
09/03/2018 10:07 GMT | Updated 09/03/2018 10:07 GMT

A New Customs Union And Close Relationship With The Single Market Are Vital For A Jobs-First Brexit

We want trade to continue in as frictionless a manner as possible - the Conservatives are all over the place

Robert Ingelhart via Getty Images

Last week, Jeremy Corbyn announced that a Labour government would seek to conclude a new customs agreement with the European Union that would allow for trade to continue between the UK and the EU on more or less the same terms, would largely address question marks over the Northern Irish border and would give the UK a say on future trade deals.

The UK’s trade with the EU accounts for 44% of our total exports (£229billion). A further 16% of our exports go to those 70 or so countries which are party to some form of a trade agreement with the EU including South Korea, Norway, and Switzerland. In short, the majority of our trade is with the EU and countries with whom the EU has a trade agreement.

The EU is, of course, the largest trading bloc in the world. It is inconceivable that any trade agreement that the UK might be able to conclude with countries outside the EU would make up for the potential loss of trade once we leave.

The Trade Bill currently passing through Parliament is designed to allow for the government to conclude what it calls the roll-over of existing EU trade agreements with countries including South Korea and Chile with minimal parliamentary scrutiny. The government have repeatedly attempted to spin the Trade Bill as a simple matter. In fact the UK will have to conclude new agreements which may well be significantly different to existing arrangements. Undoubtedly, South Korea, Chile and the other countries involved, may well want an agreement with the UK after we leave the EU. The question is, however: why would these countries want to agree to the same terms as we currently enjoy as EU members?

It is increasingly clear that they may not. Trade negotiations are arduous and tough. Many of the government’s preferred trade partners openly refer to their opposite numbers as adversaries. Everybody is out for the best they can get and every opportunity to take a little more and give a little less will be capitalised upon. We already know that some of these countries, such as South Korea and Chile, have already told the EU that they want to revise terms of their existing deals once the UK has left. Other countries have publicly called for changes to their trade with the UK after Brexit, calling for divergence from EU standards or liberalisation of tariff rate quotas. They don’t want the same terms as before. They want better terms. What it will come down to is who has the upper hand and the benefit of experience in trade talks.

The issue of the roll-over of existing trade agreements brings us back to the announcement by Jeremy Corbyn of Labour’s intention for the UK to form a new customs union with the EU. A benefit of being party to such a new bespoke customs union with the EU would be that existing trade agreements could be “rolled-over” with minimal changes. Disruption to trade (such as changes to rules of origin requirements and diagonal cumulation) would also be avoided.

Labour’s suggested approach would see us bidding alongside the EU in new trade agreements. The EU would be enhanced by having the strength of the world’s sixth largest economy, joining it in negotiations and we would be strengthened by negotiating alongside the largest trading bloc in the world.

Our approach would also remove the necessity for customs checkpoints and the necessary infrastructure that would accompany them on roads between Northern Ireland and the Republic of Ireland. Avoiding a hard border is widely seen as essential to maintaining the terms of the Good Friday Agreement.

We are leaving the EU but we have to put jobs and the economy first. That’s why being in a new customs union and having a close relationship with the Single Market are important. Our approach recognises that the EU is the largest market in the world and that we are stronger in future trade negotiations alongside it. We want trade to continue in as frictionless a manner as possible and in a way that is beneficial to our economy and to our businesses. The Conservatives are all over the place with many wanting a race to the bottom and cuts in rights, while being quite prepared to sacrifice the future prosperity of our country for a political dogma, which benefits a tiny handful of speculators and spivs.

Bill Esterson is the Labour MP for Sefton Central and shadow minister for international trade