Brexit’s ‘flextension’ means that the government and Labour opposition, as well as parliament, have bought some time to find a way out of the crisis. The parliamentary indicative votes, backstop provisions and Labour proposal all suggest that a customs union is the frontrunner as a basis for future UK-EU relations. Yet there appears to be a degree of confusion about what staying in a customs union could mean for UK trade policy. Some, mainly hard Brexiteers, have suggested that it would prevent the UK from doing its own trade deals. This is highly misleading: even in a customs union, the UK could still negotiate trade deals covering a significant number of policy areas such as services and intellectual property rules. It is therefore crucial for trade justice issues like workers’ rights, environmental policy and industrial strategy that we fully understand the implications of what appears to be the most likely destination for the UK.
A customs union, in its most basic form, is in fact a relatively minimal form of trade co-operation. It only affects trade in goods: it typically removes all tariffs and quantitative restrictions between member countries and applies common external tariffs to goods coming from outside the union. Indeed customs unions vary in their design to suit their member countries: for example, the EU’s customs union with Turkey doesn’t cover agricultural goods.
The benefit of a customs union for the UK would be to retain at least some degree of frictionless trade which goes some way to resolving issues at the Northern Ireland border. This would to some extent shape the kinds of customs union the UK would require and is reflected in the current backstop proposal, however there would still be some flexibility about the exact form a customs union could take. The customs union doesn’t necessarily cover regulations and standards (ie, part of what is referred to in trade-speak as ‘non-tariff barriers to trade’), which affect everything from food to car parts, and further discussion would be needed to agree an approach.
