‘Soft’ Brexit means vassal status for Britain

By February 6, 2018February 18th, 2021No Comments


Martin Howe

There was a rational argument for staying in the EU, and accepting its rules and its common customs tariffs while being able to vote on them and exercise some degree of influence. The British people rejected that argument. There is a rational argument for leaving the EU, and then taking advantage of our new freedom from the EU’s rules and regulations and customs tariffs.

There is no rational argument for leaving the EU, thereby giving up all rights to take part in its decision making, and then still being bound by its laws and rules across our entire domestic economy, and, if we were to stay inside the Customs Union, across the whole of our trade with the world as well. Yet this is what is misleadingly called a “soft” Brexit which somehow will be “better for jobs” or “better for the economy” than a so-called “hard” Brexit.

Yet there is no evidence at all for these widely repeated assertions about jobs and the economy. What is surprising is the sheer scale of the ignorance which prevails among business leaders who should know better and many media commentators about the actual legal mechanics involved and the consequences if the UK were to stay inside these EU constructs without being an EU member.

This ignorance has allowed a total myth to be propagated. That myth is that it would be economically better for the UK to stay inside the customs union and/or the single market, and that it is only pointless ideology or an obsession with curbing immigration at all costs which accounts for the Government’s rejection of these options.

This myth does not withstand a moment’s serious scrutiny and analysis. Post-exit membership of the EU internal market and of the customs union would put us in a limbo-land where we would be rule-takers, bound by huge restrictions on our economic and political freedom of action according to rules on which we would no longer have a vote, and which are likely to be altered seriously to our disadvantage as time goes on.

Since we would no longer have a vote on the internal market rules on financial services, we would be powerless to prevent them being changed even further to the detriment of the City and our other major financial centres such as Edinburgh. There would be no barrier against the EU adopting protectionist rules designed to hamper the City, in furtherance of a misguided protectionist desire to bolster financial services within the Eurozone. And as a non-voting member of the internal market, we would be obliged to implement those rules whether we liked it or not.

More widely, we would be totally prevented from undertaking supply-side reforms of the regulatory burdens imposed on our domestic economy and international trade by the EU internal market rules. We would be required to submit to our laws being automatically overturned by rulings of the EFTA court which simply shadows the ECJ.

Customs union membership would oblige us to continue to charge high tariffs on types of goods where we have no UK industry to protect, for the sole advantage of producers in EU states. British consumers would pay the cost of the tariffs through higher prices, but we would have to continue to hand over to Brussels 80% of the tariffs borne by our consumers. Even more catastrophically, customs union membership would totally prevent us from entering into trade agreements with non-EU countries who now represent an over 55% (and growing) share of our export markets.

On the other side of the ledger, the supposed economic advantages of customs union and internal market membership are grossly oversold. Tariff-free trade between the UK and the EU can continue after Brexit under a free trade agreement which preserves our ability to decide on our own levels of external tariffs and to reach trade agreements with non-EU countries. Modern “friction-free” and “virtual border” customs arrangements can ease the flow of goods at the Channel ports and avoid the need for physical customs posts on the Northern Ireland land border. And mutual recognition of standards based on a starting point where we are in line with the EU internal market rules can ease the flow of goods and services between us and the EU after Brexit.

The idea that single market membership would somehow be easier to negotiate than a free trade agreement is another total myth. If the UK wanted to belong to the single market after EU exit, we would need to apply to join the European Economic Area Agreement as a non-EC member. In order to join the EEA we would need the consent of 30 states (the EU members plus Norway, Iceland and Liechtenstein), all of whom would need to ratify the necessary treaty changes in accordance with their respective national constitutional requirements. This is actually a bigger barrier than what is needed to secure agreement to a free trade agreement with the EU.

The reality is that there is no “soft Brexit”. It does not exist as a serious or credible option. Half-way house arrangements in which we are subject to EU rules but have no say in setting them are the worst of all worlds, which would continue to subject us to all the disadvantages of EU membership but not give us the freedom and opportunities of leaving the EU in shaping our laws, controlling our borders and taking advantage of global trading opportunities. The only softness is in the heads of the people who advocate such half-baked and ill-thought out notions.

When fully examined, the overwhelming economic and constitutional drawbacks of the limbo-lands of post-Brexit customs union and internal market membership are glaringly apparent. It is vital that the real consequences of these choices should be fully understood.