Cameron plans his own back-room deal with the DUP

But Ken Clarke warns: “It’s not the way to run a modern sophisticated society.”

David Cameron is fond of denouncing the "secret back-room deals" that he claims electoral reform would encourage. But, if we're to believe today's Telegraph, a back-room deal with the right-wing Democratic Unionist Party is exactly what Cameron is planning in the event of a hung parliament.

The Conservatives have already established a formal alliance with the Ulster Unionist Party, but after a recent opinion poll in the Belfast Telegraph suggested that the party will struggle to win more than a couple of seats (it has no MPs at present) the Tories have been forced to look elsewhere.

The DUP, currently the fourth largest party in the Commons, could be expected to deliver an extra nine or ten seats for Cameron. But there will be a price and the DUP is demanding that, at the very least, the Tories cancel £200m worth of cuts to Northern Ireland's public sector.

One Tory who, with typical frankness, has already expressed his dismay at the possibility of such a back-room deal is Ken Clarke. In an interview with politics.co.uk he said: "What we're plainly headed for would be a great deal of squabbling, with small parties given disproportionate influence, trying to manoeuvre advantages for themselves before they allow a Conservative government to get on with the job."

He added:

If I have to sit and talk to three or four other groups . . . in the end you can always do a deal with an Ulsterman, but it's not the way to run a modern sophisticated society [our emphasis].

That Cameron may finally be reduced to doing just that again exposes the falseness of the Tory leader's claim that the first-past-the-post system guarantees "strong government".

But more seriously, if Cameron gets into bed with the DUP as well as the Ulster Unionists, how can he ever hope to act as an honest broker in Northern Ireland?

 

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George Eaton is political editor of the New Statesman.

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What is the EU customs union and will Brexit make us leave?

International trade secretary Liam Fox's job makes more sense if we leave the customs union. 

Brexiteers and Remoaners alike have spent the winter months talking of leaving the "customs union", and how this should be weighed up against the benefits of controlling immigration. But what does it actually mean, and how is it different from the EU single market?

Imagine a medieval town, with a busy marketplace where traders are buying and selling wares. Now imagine that the town is also protected by a city wall, with guards ready to slap charges on any outside traders who want to come in. That's how the customs union works.  

In essence, a customs union is an agreement between countries not to impose tariffs on imports from within the club, and at the same time impose common tariffs on goods coming in from outsiders. In other words, the countries decide to trade collectively with each other, and bargain collectively with everyone else. 

The EU isn't the only customs union, or even the first in Europe. In the 19th century, German-speaking states organised the Zollverein, or German Customs Union, which in turn paved the way for the unification of Germany. Other customs unions today include the Eurasian Economic Union of central Asian states and Russia. The EU also has a customs union with Turkey.

What is special about the EU customs union is the level of co-operation, with member states sharing commercial policies, and the size. So how would leaving it affect the UK post-Brexit?

The EU customs union in practice

The EU, acting on behalf of the UK and other member states, has negotiated trade deals with countries around the world which take years to complete. The EU is still mired in talks to try to pull off the controversial Transatlantic Trade and Investment Partnership (TTIP) with the US, and a similar EU-Japan trade deal. These two deals alone would cover a third of all EU trade.

The point of these deals is to make it easier for the EU's exporters to sell abroad, keep imports relatively cheap and at the same time protect the member states' own businesses and consumers as much as possible. 

The rules of the customs union require member states to let the EU negotiate on their behalf, rather than trying to cut their own deals. In theory, if the UK walks away from the customs union, we walk away from all these trade deals, but we also get a chance to strike our own. 

What are the UK's options?

The UK could perhaps come to an agreement with the EU where it continues to remain inside the customs union. But some analysts believe that door has already shut. 

One of Theresa May’s first acts as Prime Minister was to appoint Liam Fox, the Brexiteer, as the secretary of state for international trade. Why would she appoint him, so the logic goes, if there were no international trade deals to talk about? And Fox can only do this if the UK is outside the customs union. 

(Conversely, former Lib Dem leader Nick Clegg argues May will realise the customs union is too valuable and Fox will be gone within two years).

Fox has himself said the UK should leave the customs union but later seemed to backtrack, saying it is "important to have continuity in trade".

If the UK does leave the customs union, it will have the freedom to negotiate, but will it fare better or worse than the EU bloc?

On the one hand, the UK, as a single voice, can make speedy decisions, whereas the EU has a lengthy consultative process (the Belgian region of Wallonia recently blocked the entire EU-Canada trade deal). Incoming US President Donald Trump has already said he will try to come to a deal quickly

On the other, the UK economy is far smaller, and trade negotiators may discover they have far less leverage acting alone. 

Unintended consequences

There is also the question of the UK’s membership of the World Trade Organisation, which is currently governed by its membership of the customs union. According to the Institute for Government: “Many countries will want to be clear about the UK’s membership of the WTO before they open negotiations.”

And then there is the question of policing trade outside of the customs union. For example, if it was significantly cheaper to import goods from China into Ireland, a customs union member, than Northern Ireland, a smuggling network might emerge.

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.