Labour MPs – Fox must show we would be better off by leaving the Customs Union

After the Conservative Party Conference suggested the Government was travelling in the direction of hard Brexit, Labour MPs have made clear that they won’t simply acquiesce in Parliament to the vision promoted by the three Brexiteer Ministers.

52 Labour MPs have challenged the Secretary of State for International Trade to demonstrate that the benefits of leaving the Customs Union are outweighed by the costs. In a letter to Liam Fox, signed by Keir Starmer, Alan Johnson, Liz Kendall, Tristam Hunt, Rachel Reeves, Jonathan Ashworth, and Grahame Morris, the Labour MPs demand that he ‘produce a rigorous and publicly available cost-benefit analysis’ before pursuing his ‘personal preference’ of leaving.

In a series of questions to Dr Fox, the Labour MPs demand clarity on our existing Free Trade Agreements through the EU; a list of and timetable for new trade deals; an analysis of the impact on different sectors; and an assessment of how much red tape UK businesses will be subject to.

In a letter organised by the Open Britain campaign, the Labour MPs write:

“We are deeply concerned that the Government appears set on a course towards a hard and harsh Brexit … abandoning British membership of the Single Market and leaving the EU’s Customs Union.

“These positions appear to be being adopted without any proper assessment of the economic impact such enormous decisions would have.

“Before we sleepwalk out of the Customs Union, we believe it is imperative that you are much more up front with Parliament and the public about the consequences of this decision.

“Unless you can materially demonstrate that we will be better off economically by leaving the Customs Union, it can only be concluded that you are being disingenuous about hypothetical future trade benefits and in denial about the real costs of your plans.

“A fantasy land of future trade deals is fine for Conference speeches but big decisions such as this should only be taken with a hard-headed assessment of the impact in the real world.”

Joe Carberry, co-Executive Director of Open Britain, added:

“The scale of the economic fallout from Brexit will be a direct consequence of the Government’s political decisions, which they must justify to the public.

“When billions of tax revenue is on the line, Liam Fox needs to provide hard evidence for leaving the Customs Union, not just warm words about distant hypothetical benefits.”

Notes

The full text of the letter is below.

Dear Liam,

After the Conservative Party conference, we are deeply concerned that the Government appears set on a course towards a hard and harsh Brexit. Your direction of travel is reportedly towards abandoning British membership of the Single Market and leaving the EU’s Customs Union.

These positions appear to be being adopted without any proper assessment of the economic impact such enormous decisions would have.

As Secretary of State for International Trade you have a unique insight into the issue of our membership of the Customs Union. It is clear that your own personal preference is for the UK to leave and begin negotiating new trade deals. The benefits of this have, however, already been called in to question. Trading in to the EU outside of the Customs Union would mean confronting more red tape, for example rules of origin regulations, as was so starkly highlighted recently by the Japanese Government. Both Australia and the United States have said that meaningful negotiations cannot start until UK-EU trade relations are settled, which could take many years. Furthermore, determining our role on the World Trade Organisation will be complex and could take years, and it is also unclear whether we will be able to adopt current EU Free Trade Agreements.

As a result, before we sleepwalk out of the Customs Union, we believe it is imperative that you are much more up front with Parliament and the public about the consequences of this decision.

If we were to stay within the Customs Union, we should be around the table shaping future trade deals. If we are to leave, this should be based on clear evidence.

If it is in our interests to leave the Customs Union, you should be able to produce a rigorous and publicly available cost-benefit analysis to justify doing so. This should include a proper assessment of the impact on our manufacturing, service and agriculture sectors and should answer the following questions:

  • Will the UK be able to retain access to all EU Free Trade Agreements on unchanged terms?
  • What new trade agreements does the Government expect to agree on leaving the Customs Union; and on what timetable are they expected to be completed?
  • What is the timescale for the expected economic gains the Government is projecting from these new trade deals? Which specific sectors will benefit through deals with which specific countries?
  • What assessment has been made of the costs of increased trade barriers for UK-based businesses exporting in to the EU?
  • Specifically, what is the Government’s estimate of the potential cost to UK exporters to the EU of complying with rules of origin regulations?

Unless you can materially demonstrate that we will be better off economically by leaving the Customs Union it can only be concluded that you are being disingenuous about hypothetical future trade benefits and in denial about the real costs of your plans. A fantasy land of future trade deals is fine for Conference speeches but big decisions such as this should only be taken with a hard-headed assessment of the impact in the real world.

Best wishes,

Rushanara Ali MP; Dave Anderson MP; Jonathan Ashworth MP; Ian Austin MP; Adrian Bailey MP; Roberta Blackman-Woods MP; Ben Bradshaw MP; Alan Campbell MP; Jenny Chapman MP; Ann Clwyd MP; Vernon Coaker MP; Ann Coffey MP; Stella Creasy MP; Alex Cunningham MP; Nic Dakin MP; Stephen Doughty MP; Jack Dromey MP; Julie Elliott MP; Bill Esterson MP; Paul Farrelly MP; Mike Gapes MP; Helen Goodman MP; Kate Green MP; Andrew Gwynne MP; David Hanson MP; Sharon Hodgson MP; George Howarth MP; Tristram Hunt MP; Alan Johnson MP; Diana Johnson MP; Graham Jones MP; Mike Kane MP; Liz Kendall MP; Peter Kyle MP; Shabana Mahmood MP; Kerry McCarthy MP; Pat McFadden MP; Ian Mearns MP; Ian Murray MP; Madeline Moon MP; Grahame Morris MP; Bridget Phillipson MP; Rachel Reeves MP; Virendra Sharma MP; Barry Sheerman MP; Ruth Smeeth MP; Nick Smith MP; Keir Starmer MP; Stephen Timms MP; Stephen Twigg MP; Chuka Umunna MP; Phil Wilson MP

It has been widely reported that Liam Fox’s preference is for the UK to leave the Customs Union but that the Cabinet is split on the issue. It is also accepted that Dr Fox cannot begin to formally negotiate trade deals with other countries until the UK has left the Customs Union:
http://www.thetimes.co.uk/article/cabinet-split-grows-amid-fears-over-trade-deals-and-lost-taxes-q0nqrbwtk
https://www.thesun.co.uk/news/1919730/battle-over-customs-union-will-see-philip-hammond-or-liam-fox-chief-quit-cabinet/
https://www.ft.com/content/e87614da-533a-11e6-befd-2fc0c26b3c60

The Prime Minister also hinted this week at the prospect of leaving the Customs Union by saying the Government was “starting to talk to countries around the world who want to do trade deals with us when we’re no longer members of the EU”:
http://www.express.co.uk/news/politics/717326/Theresa-May-confident-right-Brexit-deal-UK-countries-keen-trade-deals

As part of the Customs Union, the UK has trade deals already in place with over 50 countries:
http://www.cbi.org.uk/business-issues/uk-and-the-european-union/eu-business-facts/10-facts-about-eu-trade-deals-pdf/

The Japanese Government’s message to the UK: http://www.mofa.go.jp/files/000185466.pdf

The Australian Government’s view on negotiating a free trade deal with the UK:
http://www.theguardian.com/politics/2016/sep/07/no-free-trade-deal-until-brexit-settled-australian-minister-steven-ciobo

The United States Government’s view on negotiating a free trade deal with the UK:
https://www.theguardian.com/world/2016/sep/04/g20-theresa-may-warns-of-tough-times-for-uk-economy-after-brexit



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