In, out, shake it all about: David Cameron in 2013, shortly before committing to an In-Out referendum. Photo: Getty Images
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The complacency of the Yes campaign may yet lead to a European exit

The In-Out referendum isn't a foregone conclusion - and complacy could win it for No.

In the climax of the general election campaign, Tony Blair made a strong case against holding an EU referendum. “Nationalism,” he said, “is a powerful sentiment. Let that genie out of the bottle and it is a Herculean task to put it back. Reason alone struggles.” 

He is right. Even if – as many predict – we vote to stay in ‘the club’ in 2016-17, the echoes of this referendum will continue for years afterwards. Furthermore, as long as the Eurozone remains unstable – which it will for at least a decade – the flame of Eurosceptism will keep burning and the possibility of ‘Brexit’ will linger.

Despite this there seems to be a growing complacency amongst pro-EU supporters that the referendum is a done deal. This is a complacency I hear all the time and at all levels: That when push comes to shove Brits will side with the stability of European membership as opposed to risking economic instability.

Talk to any pro-European politician or business leader and they will tell you - with a wry smile - that the electorate won’t, even can’t, leave Europe. Instead, they will remind you, the electorate will vote with their head, not their heart, when jobs are concerned.

I believe this view poses a greater threat than anything else to Britain’s ongoing relationship with Europe.

If history teaches us one thing, it is that there is nothing inevitable when nationalism is involved. People said Scotland would “inevitably” remain in the union when they voted in their referendum last year. And yes, unionists may have won that day –saved by the last minute interventions of a revved-up Gordon Brown – but, independence now seems more probable than ever.

It is an uncomfortable truth, but Euroscepticism was neither born overnight or with the birth of UKIP. Rather it is an emotional conclusion based on half a century of social turmoil which has forced many to question their place in the world.  For most, European membership is in turn intrinsically tied to immigration, perhaps the most sensitive issue for our country. 

Explaining their confidence, Europhiles tend to cite two facts. First, the idea that people voting in referendums stick with what they know, and secondly, a growing early lead for the Pro-Europeans in the opinion polls.

Both these arguments are shaky. The first is just factually wrong. Since 1846, separatists have won 51 independence referendums around the world. Yes Quebec and Scotland demonstrate voter prudence in national referendums, but people regularly vote en masse for un-tested ideas. Nor is it correct to assume that people see themselves better-off as EU members. For those working in domestic industries, like construction or trade, the threat of cheap migrant labour usually outweighs any benefit they feel from the free movement of goods across the European markets.

And what do the polls really tell us? Whilst the ‘stay-in’ camp commands a hefty 22 point lead at the moment, it was only as recently as 2012 that a majority wanted to leave the EU. Britons tend to be more pro-EU when they feel prosperous and more anti when times are hard. This is mirrored in the upswing in anti-EU support during the early 2000’s and 1980’s. Today, global economic recovery remains sluggish and UK living standards linger well behind 2008 levels. Furthermore there are complexities within the opinion polls. Although the ‘yes’ campaign currently has a comfortable lead in simple ‘leave or stay’ questions, when you ask voters whether they would stay in the EU on current terms, a majority would actually vote to leave (41%).

None of this is to say us pro-Europeans are not in a favourable position to win the referendum. Clearly there is a growing lead for the business focused, outward looking arguments the ‘Yes’ campaign is putting forward.

Instead it is a warning that unless we resoundingly defeat the ‘No’ camp’s ideology of anti-immigration and isolationism once and for all, Euro sceptism will live on well past 2017. In the long term, without addressing growing pro-EU complacency we may be sleep-walking into calamity.

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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.