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24 November 2017

Leaving the customs union is another reminder that Brexit is being negotiated in the interests of the Conservative Party

The freedom to strike trade deals appeals only to the Brexit elite.

By Stephen Bush

On average, charity parachute jumps cost the National Health Service 14 times more in servicing the injuries the luckless parachutist incurs than they raise in sponsorship.

Leaving the customs union has a similar effect. The United Kingdom loses, at a stroke, every existing trade deal it has as part of the European Union, including the coming deals with Canada and Japan, and in theory gains the right to strike as many trade deals as it wants.

The trouble is that although it’s in everyone’s interest to continue trading on the same terms as before, in each case, the other negotiating country will need to replace its lost trade with the United Kingdom a lot less than we will. So no country acting rationally will simply copy and paste the existing arrangements they had with the UK as a member of the European Union to the UK as a solitary free-trading nation.

The problem with trade agreements is that they are unpopular and attract a great deal of political resistance, which is why they take so long to negotiate. (This is true across the developed world.) Even the good bits will create some losers. (For example, any trade deal with New Zealand, Argentina or the United States will involve opening up British supermarkets to more food from these countries. Good news for the price of food for British shoppers. Bad news for farmers.)

And as the Conservatives ought to have learnt this week, scare stories about their contents can (and will) do as much damage as what’s really in them.

It is also hard to sustain the case that the freedom to strike trade deals was a particular driver of the referendum vote. Every serious analysis suggests that the major causes of a Leave vote were (a) the desire to control immigration and end the free movement of labour, (b) scepticism about globalisation in general, and (c) the desire for more money for public services.

The freedom of leaving the customs union is a mirage, as domestic resistance to trade deals is so high that the benefits take decades to be realised, if they even are at all. The cost, however, is a loss of existing trade and a hard border, either in the Irish Sea or on the island of Ireland.

Nonetheless, because the extreme minority of Leavers who want to strike their own trade deals are concentrated in and around Westminster, that – rather than any of the reasons why most people backed Brexit – is driving the British approach.