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Abu Dhabi, UAEFriday 22 June 2018

UK government to counter Labour support for Brexit customs union

Liam Fox will argue that remaining in a customs union would limit Britain’s ability to agree future free trade deals

Anti-Brexit demonstrators protest with flags during a snow flurry outside the Houses of Parliament. Jack Taylor/Getty Images
Anti-Brexit demonstrators protest with flags during a snow flurry outside the Houses of Parliament. Jack Taylor/Getty Images

Britain’s international trade secretary Liam Fox will use a speech Tuesday to criticise staying in a customs union with the EU following Brexit, a day after the opposition Labour Party announced a policy shift in favour of the move.

Mr Fox will argue that remaining in a customs union would limit Britain’s ability to agree future free trade deals and hand Brussels “considerable control of the UK’s external trade policy”, according to advance excerpts of his speech.

“As rule takers, without any say in how the rules were made, we would be in a worse position than we are today,” he will say.

“It would be a complete sell-out of Britain’s national interests.”

In an extraordinary move for a Conservative minister, Mr Fox will attack business groups that have tentatively backed Mr Corbyn.

“We cannot allow the practices and patterns of the past to constrain the opportunities of the future,” he will say in a speech at Bloomberg in London. “Our approach should not be premised on simply identifying how much of our current relationship we want to keep, but what we need to prosper in a rapidly changing global environment.”

His address will come after Labour leader Jeremy Corbyn called Monday for a new post-Brexit customs union with the EU that could force prime minister Theresa May to reverse her stubborn opposition to the idea.

Just days before a keynote speech by Mrs May on the future trading relationship with the European Union, the opposition leader drew a clear line between Labour’s policy and that of the government.

“Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe,” he said in Coventry, central England.

Mr Corbyn added this would also “help avoid any need whatsoever for a hard border in Northern Ireland”, where the prospect of a return of customs checks has prompted concern about the fragile peace in the province.

His commitment puts the veteran left-winger in the unusual position of aligning with the Confederation of British Industry, the country’s big business lobby.

Britain is currently part of the EU’s customs union, which has a common external tariff on imports, allowing goods to move freely inside the area.

Mr Fox will argue that maintaining a customs union would prevent Britain from setting the rules in sectors of its economy, handicapping free trade deals with non-EU countries.

“The inevitable price of trying to negotiate with one arm tied behind our back is that we would become less attractive to potential trade partners and forfeit many of the opportunities that would otherwise be available to us,” he will add.

However, Mr Corbyn argued any future EU customs agreement would “need to ensure the UK has a say in future trade deals”, adding Britain should not become a “mere rule-taker”.

He stressed Labour’s priority was protecting people’s jobs and living standards.

Citing the example of integrated supply chains in the car industry, he argued that it “makes no sense” for Britain to turn its back on “tariff-free trading rules that have served us well”.

Labour’s position ups the pressure on Mrs May ahead of a major speech on Friday and drew an immediately sharp response from leading eurosceptics in her Conservative party.

“Corbyn’s Brexit plan would leave the UK a colony of the EU – unable to take back control of our borders or our trade policy,” foreign secretary Boris Johnson said on Twitter.

Referring to the trade talks in Brussels which are due to start in April, he added that the speech was a “white flag from Labour before talks even begin”.

The prime minister’s spokesman was unequivocal about Mrs May’s position, saying: “The government will not be joining a customs union.

“We want to have the freedom to sign our own trade deals and to reach out into the world.”

But a group of Conservative rebel MPs disagree and have tabled an amendment to a draft bill going through parliament calling for a new customs union.

Mr Corbyn made an appeal Monday to “MPs of all parties, prepared to put the people’s interests before ideological fantasies” to join his position.

The Conservatives only have a slim majority in the House of Commons, thanks to support from Northern Ireland’s Democratic Unionists (DUP).

DUP lawmaker Sammy Wilson accused Mr Corbyn of a “blatant attempt to bring down the government”.

Some members of Corbyn’s own party are also unhappy, suggesting that maintaining close ties with the EU is a betrayal of the 2016 vote for Brexit.

“It’s the latest wheeze by the well-oiled machine in this country to undo the referendum,” eurosceptic Labour MP Frank Field told the Daily Telegraph.