Greg speaking out against Labour's policy of remaining in a Customs Union

Hansard, 27 March 2019, EU: Withdrawal and Future Relationship (Motions)

Greg Hands (Chelsea and Fulham): It is always a pleasure to follow the hon. Member for Wirral South (Alison McGovern). I am going to speak on the perhaps narrow but extremely important topic of the customs union. I will speak specifically against motions (J), in the name of my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), and (K), in the name of the Leader of the Opposition, and what I believe to be the seriously defective proposal of a customs union with the European Union while we would not have a seat at the table.

I have given this question a great deal of consideration over the last almost three years, particularly in my two years spent at the Department for International Trade in charge of trade policy. A customs union has its superficial temptations. Obviously, it keeps trade close, although, it is worth pointing out, not necessarily frictionless; we would need the single market as well for that. It avoids having to agree to free movement, it may not need financial contributions, and clearly, it is likely to provide short-term relief for industrial supply chains, but it would be a historic mistake.

Customs unions have been successful in history, but essentially, for countries going in the opposite direction—for countries coming together into a political union. Look at the history of the Zollverein in Germany in the 19th century, which was all part of the process of German unification. Look at the partial customs union, in the name of the European Coal and Steel Community in 1947 or 1949—I forget which—which was a precursor to the EEC and the treaty of Rome. However, we are heading in the opposite direction. This is the wrong compromise, and a customs union would give short-term relief at the cost of long-term pain and a democratic deficit that would grow and grow over the years. I have written articles about this, notably today in The Times Red Box.

Our trade policy would end up being set by others and that would be a historic mistake. I will give four or five quick examples of where this would have a really serious impact on this country. Tariff policy, for example, would be set by the European Union to protect its ​products from others coming in and it would not be set in the interests of the UK, which are likely to be different. For example, in the current trade dispute between the United States and the European Union, there are punitive tariffs on bourbon coming into this country. Let us say that there is a future trade dispute between the EU and the US involving Scotch whisky. Obviously, that is not produced in the European Union and there would be no incentive for the EU in that customs union to seek to defend Scotch whisky.

On trade agreements, we have talked before about the Turkey trap. Essentially, if the EU entered into a trade agreement with a third country and the UK were in a customs union, we would have to offer access to our markets but we would not get the reciprocal access to that country in return. That would be a massive democratic deficit. It amazes me that it is the official Labour policy to do this. I remember well the disputes around the Transatlantic Trade and Investment Partnership. The biggest objections to TTIP came from the Labour side. Now we have a situation where trade policy will be determined by others without even a UK seat at the table. If Labour thought at the time, when we had a seat at the table, that TTIP would lead to US private healthcare companies gaining access to the NHS, what will it be like when we do not have a seat at the table? But that is the official Labour policy.

On trade remedies, I am amazed that the hon. Member for Stoke-on-Trent Central (Gareth Snell) has put his name to one of these motions. It is absolutely incredible. Trade remedies would be conducted by the EU, not this country. They are currently conducted by the EU, but we have a seat at the Trade Council—I was at that seat for a long time—and participate in trade remedies to defend our products. There is no guarantee—in fact, it is highly unlikely—that the EU would do the same, particularly for a product not produced in the EU. When it comes to doing WTO-compliant studies of products, we can guarantee that the studies that would take priority would be those defending the interests of EU members, not those of non-members. I find it amazing.

Finally, on trade preferences and access to the developing world, I find it staggering that the Labour party is proposing ceding control over trade preferences to Brussels without the UK having a seat at the table. That would be unacceptable to my constituents and, I believe, to theirs.