Will Cameron suspend collective responsibility over the EU?

If Ken Clarke is free to put the europhile case, eurosceptics will want to be able to argue for withdrawal.

After Michael Heseltine's intervention at the weekend, today it's the turn of the europhiles' other big beast, Ken Clarke, to offer his two penn'orth on the Europe debate. In an interview with the FT, the former Justice Secretary, who now attends cabinet as a minister without portfolio, warns that David Cameron's plan to hold a referendum on a "new EU settlement" for Britain could unintentionally lead to withdrawal. He notes:

All referenda are a bit of a gamble. I don’t think we can take a Yes vote for granted.

I think one of the problems is, because so much of the media is overwhelmingly eurosceptic, no one has really campaigned very vigorously for the case for British leadership in the European Union for probably a decade or more.

The problem for Cameron is that the gap between what Tory MPs want from a renegotiation (see the list of demands issued by the Fresh Start group today) and what he can deliver is so great that he has set himself up for failure. As a result, he will find it harder to persuade his party and the public that Britain should remain in the EU when a referendum is held.

Elsewhere in the interview, Clarke, who has warned Cameron against seeking to use the eurozone crisis to repatriate powers from Brussels, bluntly compares those who support withdrawal to the "hangers and floggers" who demanded a referendum on capital punishment in the 1970s. "If you realise you’re doomed in parliament you demand a referendum – that’s what the hangers and floggers used to do," he says.

One issue that Clarke's fusillades against euroscepticism raise is whether collective ministerial responsibility applies to him. His plan to share a platform with Peter Mandelson to argue for full British engagement with the EU suggests not. In response, we can expect eurosceptics to ask whether those ministers who privately favour withdrawal should also be free to put their case.

As I noted earlier this week, the last time Britain held a referendum on the EU in 1975, Harold Wilson took the unusual step of suspending collective cabinet responsibility (as Cameron has over the boundary changes bill) in order to allow his ministers to support either side in the campaign. Seven Labour cabinet ministers - Benn, Barbara Castle, Michael Foot, William Ross, Peter Shore John Silkin, Eric Varley - went on to unsuccessfully argue for withdrawal from the EEC (the vote was 67-33 in favour of membership). In this week's Spectator, James Forsyth reported that there are "at least nine Cabinet members" who would be inclined to vote "out" in a referendum if Cameron only proves able to secure minor concessions such as the exemption of the NHS from the Working Time Directive

We're a long way off from a referendum but expect Cameron to be asked as early as Friday whether he would allow Conservative cabinet ministers to campaign for exit.

Ken Clarke, who attends cabinet as a minister without portfolio, has argued that Britain should not seek to repatriate powers from the EU. Photograph: Getty Images.

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.