Is a customs union really ‘the worst of both worlds’ for the UK when it comes to a Brexit deal?

As the UK gears up to leave the EU on Friday – again – Theresa May is locked in eleventh-hour talks with Labour to find a way through the Brexit impasse.

These talks have infuriated Tory Brexiteers, not least as the chatter in Westminster is fixed on the possibility of the prime minister softening to Jeremy Corbyn’s customs union demands, as a price for the support of his MPs.

Labour has long argued for a permanent customs union with the EU, which would abolish tariffs on trade between the bloc and the UK.

But Liam Fox, the international trade secretary, has written to Tory MPs warning them that signing up to such a plan would be the “worst of both worlds” for the UK.

One of Fox’s major concerns is that such an agreement could leave the UK “on the menu”, without any control or benefits.

In a customs union, countries are bound by a common external tariff on imports from other countries. In the EU this is known as the Common Customs Tariff (CTT).

Turkey, for example, is obliged to charge the same external tariff as the EU because it is in a customs union with the bloc. But because it is not a member state, it has no say on EU trade policy.

Fox fears the UK could be trapped in such an arrangement, leaving it unable to strike its own deals or to shape the EU’s deals.

He also warned the UK itself could be “traded” by the EU, as the bloc could sell access to British markets.

He said: “A customs union – where the UK was obliged to implement the common customs tariff – would allow the EU to negotiate access to UK markets as part of EU trade policy, irrespective of the interests or wishes of the UK.

“It will be able to offer full access to the world’s fifth biggest market as part of any EU offer, without the need to balance this access by negotiating on key UK offensive interests.”

Fox isn’t the only one who is concerned. Unlikely ally Jo Stephens, a Labour MP who backs the People’s Vote campaign, warned that a customs union deal could leave Britain poorer and disillusion Leave voters who feel it means Britain is a “rule taker”.

However it is worth noting that Turkey’s customs union is only a partial agreement, covering goods but not agriculture. Any agreement negotiated by the UK could look different.

Also, a customs union would not prevent the UK from striking deals on its crucial services sector. This includes financial services, which contributed more than £119bn to the UK economy in 2017.

As with all things Brexit, this row has political facets, as well as economic.

Fox’s department and his cabinet position depend on the UK actually being allowed to negotiate independent trade deals, which it cannot do at the moment as an EU member.

Being part of the bloc has its benefits as the economic clout of the EU gives weight to its negotiating hand. The recent EU-Japan agreement, for example, is the biggest in the world and accounts for nearly a third of global GDP.

But for Brexiteers, international trade is a totemic issue.

It provides an immediate, tangible change to the status quo, where, in this version of events, Britain breaks free of the bonds of the EU and strikes out alone, securing lucrative trade deals and showing the world it has not lost the buccaneering spirit that some supporters associate with British imperial power.

Boris Johnson, another prominent Eurosceptic, concentrated his energies on promoting the idea of a “global Britain” during his time at the Foreign Office.

After all, the Brexit process has nearly torn apart the main parties, hit Britain’s reputation on the world stage and done damage to trust in parliament, politicians and democracy.

The government is going to need something to show for it.

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