tag:theconversation.com,2011:/global/topics/liam-fox-29801/articlesLiam Fox – The Conversation2018-01-09T17:13:04Ztag:theconversation.com,2011:article/898182018-01-09T17:13:04Z2018-01-09T17:13:04ZNo Liam Fox, the UK should not join TPP – here’s what priorities should be<p>During a new year trip to China, the UK’s international trade secretary Liam Fox <a href="http://www.bbc.co.uk/news/uk-politics-42552877">signalled</a> that after Brexit the UK could sign up to Pacific free trade zone, the Trans-Pacific Partnership. If Britain joined this club of 11 nations, whose members include Japan, Australia, Canada and Mexico, it would be the first country from outside the “region” to do so. </p>
<p>Fox later clarified that the UK would first have to see what reconstituted TPP agreement emerged following <a href="https://www.brookings.edu/blog/unpacked/2017/03/24/trump-withdrawing-from-the-trans-pacific-partnership/">America’s departure</a> last year, but stressed it would be “foolish” to rule membership out. He may have kept his job in the <a href="https://theconversation.com/is-that-it-how-theresa-may-fumbled-her-cabinet-reshuffle-89877">cabinet reshuffle</a>, but his blasé approach always makes me think he understands trade deals about as well as David Davis <a href="https://voxpoliticalonline.com/2017/11/28/tory-liars-suggest-mps-cant-be-trusted-with-brexit-impact-assessments-so-what-they-dont-exist/">understands</a> Brexit sectoral impact assessments – which is not much. </p>
<p>Whether joining TPP would be economically desirable is questionable, but first some practical considerations. Since there is already an agreed TPP text of close to 5,000 pages, it’s doubtful whether London would get any say over any final deal. Signing up would essentially be on a “take it or leave it” basis, which may not be smart. </p>
<p>The agreement extends far beyond trade to other topics including the environment and labour standards. A UK government could find hard these to accept, fearing the prospect of fellow members not implementing them as diligently as the UK did.</p>
<p>The overall deal is not in any case finalised, since several participants have unresolved issues – Canada <a href="http://www.cbc.ca/news/politics/tpp-apec-summit-talks-1.4396984">is worried</a> about protections for cultural industries, for example; Vietnam <a href="https://www.newsroom.co.nz/2017/11/11/59680/new-tpp-text-brings-change-outstanding-issues">wants</a> a longer timescale to implement labour standards. </p>
<p>And following America’s withdrawal under Donald Trump, the dominant country in the region, though not formally a party to the TPP, can now be expected to be China. This suggests any final text would have to take account of China’s interests and expectations (though China is also pursuing its own regional trade deal, the RCEP, or <a href="http://asean.org/?static_post=rcep-regional-comprehensive-economic-partnership">Regional Comprehensive Economic Partnership</a>). Would it really make sense for the UK to be party to this? I’m sceptical.</p>
<p>Finally, of course, the UK is not a Pacific nation. Would the existing TPP nations really want to widen out the proposed deal to include a country like the UK – if so, where do you then set the boundary?</p>
<h2>Whither UK trade</h2>
<p>This raises the wider question of what trade set up would be best for the UK post-Brexit. The answer, unquestionably, is a good deal with the EU and a deal with the US. No other deal comes close in terms of the shares/volumes of British trade – as this <a href="http://stat.wto.org/CountryProfiles/GB_e.htm">World Trade Organisation (WTO) summary</a> makes clear. </p>
<p>The charts below show that the EU is miles out in front as the UK’s leading trade partner. The US and China are both important for goods trade, but the US is far more important for UK services: the UK exports 62% of its services to the EU and the US and relies on them for 68% of imported services. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=615&fit=crop&dpr=1 600w, https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=615&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=615&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=773&fit=crop&dpr=1 754w, https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=773&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=773&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">WTO 2016 figures.</span>
<span class="attribution"><a class="source" href="http://stat.wto.org/CountryProfiles/GB_e.htm">WTO</a></span>
</figcaption>
</figure>
<p>Now that negotiations over phase one of the Brexit agreement have <a href="http://www.telegraph.co.uk/news/2017/12/08/brexit-divorce-deal-agreement-full-read-report-published-phase/">concluded</a> with the EU, we will see whether a trade deal emerges this year. It will likely be a much tougher negotiation than what we have seen already. As for America, despite President Trump’s <a href="https://www.ft.com/content/15cdec38-63b5-11e7-8526-7b38dcaef614">initial enthusiasm</a> a deal will not be easy. </p>
<p>Deals with India and China might also be attractive, as large and growing trade partners. I am also not against separate free trade deals with Australia and New Zealand, for instance, though we cannot really claim these will transform the British economy. The trade involved is just too little: <a href="https://visual.ons.gov.uk/uk-trade-partners/">barely</a> 1% of UK trade between them. </p>
<p>Meanwhile, the UK government is currently putting a <a href="https://www.ft.com/content/15cdec38-63b5-11e7-8526-7b38dcaef614">Trade Bill</a> through parliament, mainly to replicate all the trade deals and economic partnerships to which the UK is a party by being an EU member state. This is sensible, but there will be <a href="https://www.ft.com/content/15cdec38-63b5-11e7-8526-7b38dcaef614">major hurdles</a>:</p>
<ul>
<li>The UK can’t just unilaterally declare a replicated trade deal with anyone. There needs to be some discussion with the countries in question. It may be quick and easy or could take years – who frankly knows?</li>
<li>The original EU deals’ clauses on rules of origin, which govern where the components of products can come from, cannot just be written over into a new UK deal. Unlike rules on, say, product standards or food safety, they have implications for third countries – you might not, for example, want to allow Jamaican exports preferential access to the UK if that enabled Chinese steel to come through Jamaica and enter the market without paying a tariff. Settling these might well entail tripartite discussion involving the UK, the EU27, and the other trade partner. Again, not straightforward.</li>
<li>Likewise for some products, notably in food and agriculture, the existing EU agreements provide for quotas. Would the UK abandon these, set its own, or expect to use a share of the existing EU quota? This too is difficult to settle without discussions with the EU27.</li>
<li>To replicate an EU deal where there are multiple partners – for example the <a href="http://ec.europa.eu/trade/policy/countries-and-regions/regions/caribbean/index_en.htm">EU-CARIFORUM</a> agreement with 15 Caribbean partners – the UK would need to hold discussions with each partner and/or the group representing them.</li>
<li>Trade agreements need ratified by all parties, then registered with the WTO. If an arrangement is not properly registered, then under <a href="https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm">WTO rules</a> the UK must offer the same favourable tariffs to all other WTO members.</li>
</ul>
<p>In short, never mind a TPP deal: establishing a post-Brexit trading framework for the UK will involve a huge amount of work, much of which is only getting started. By a large margin, the initial priorities must be a good trade agreement with the EU, preferably including major services, and a deal with the US. </p>
<p>For the rest of the world, including the 11 countries in the TPP, we can get by for quite a while by trading on standard WTO terms. For most sectors this is not a terrible model, as existing tariff rates are generally pretty low nowadays. In short, Liam Fox needs to stop flying unrealistic kites and get his priorities right.</p><img src="https://counter.theconversation.com/content/89818/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul Hare had a paid consultancy project with the UK government in 2017 related to corruption interventions, and was an EU adviser to the Turks and Caicos Islands 2014-16. He will this year be part of an unfunded research project in Vietnam looking at economic policy. The views expressed in this article are not relevant to any of these projects. </span></em></p>The two things UK must do to survive Brexit.Paul Hare, Professor Emeritus, Heriot-Watt UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/818602017-08-01T09:21:41Z2017-08-01T09:21:41ZBrexit and the sin of originalism: the past should not define the future<p>An alleged <a href="https://www.ft.com/content/a5a6381e-6d3e-11e7-bfeb-33fe0c5b7eaa?mhq5j=e1">rift</a> has emerged between Philip Hammond, the British chancellor of the exchequer, and his cabinet colleague Liam Fox, the international trade secretary, over a key Brexit issue. While Hammond seems to think European citizens could still be allowed to move freely into the UK during the transition period between the end of Brexit negotiations and the UK’s full separation from the EU, Fox thinks not. </p>
<p>Downing Street has sought to clarify the position by stating that free movement will end in 2019 – though it remains unclear whether that’s possible. </p>
<p>The spat reveals a deeper philosophical conflict over how Brexit policy should be conducted by the government. For some ministers, a successful Brexit is one that limits negative consequences for the UK economy. For others, like Fox, it’s more important to “keep faith” with the referendum decision itself.</p>
<p>The issue of free movement is one dramatisation of the conflict. Another is what role to give to the European Court of Justice in the future Brexit settlement. This decision may also fall victim to an imperative to hold true to one of the defining themes of the Leave campaign. Prime Minister Theresa May herself echoed the mantras of that campaign in her <a href="https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech">Lancaster House speech</a> in January when she declared “we will take back control over our laws and bring an end to the jurisdiction of the European Court of Justice in Britain”.</p>
<p>As a means of charting a course for the UK out of the EU, Fox and the prime minister are guilty of the sin of “originalism”.</p>
<p>“Originalism” is a concept that often crops up in the US. It refers to a belief that the Supreme Court’s sole function is to keep faith with the literal text of the constitution as it was written. The meaning of the constitution in 2017 should be the same as that intended by the original framers of the constitution back in 1787.</p>
<p>It’s an approach associated with a conservative right in the US. The aim is to ensure that an unelected judiciary does not extend legal rights such as access to abortion under the guise of interpreting the text of the constitution in light of changing times and circumstances.</p>
<p>Similarly, debates within the Christian church about recognising same-sex relationships get mired in a conflict between those who weaponise the text of the Bible as an unyielding and unchanged set of rules and others for whom the text is the beginning of a process of constant discovery of what it means to follow a particular faith.</p>
<h2>Brexit orginalism</h2>
<p>Now originalism is being practised as part of the Brexit debate. The difference, though, is that the Brexit schism is not based on the contested reading of a particular historical text. Instead, it centres on the interpretation of a historical event – the referendum held in June 2016. </p>
<p>Fox and various other figures have adopted the view that the government should not only implement the referendum result but also to “keep faith” with the reasons and rationales which apparently led voters to reject continuing EU membership. </p>
<p>But originalism is selective in its readings of the past. That the US constitution allowed its citizens not just to keep and bear arms but also keep slaves gets forgotten when it comes to trying to talk sense about gun control. The Bible’s list of abominations is deployed to deplore homosexuality, yet practices such as tattoos, long hair and eating seafood slip through the net.</p>
<p>In the context of Brexit, Fox picks control over borders as his article of faith. Meanwhile, he conveniently ignores that many voters also wanted Brexit to be a means of taking back control over trade.</p>
<p>In the week that <a href="https://www.theguardian.com/world/2017/jul/08/theresa-may-in-bid-to-boost-post-brexit-trade-with-g20-meetings">President Trump signalled</a> that the US and the UK might do a quick trade deal, Fox seemed remarkably relaxed about the idea that the UK might be forced to accept <a href="https://www.theguardian.com/commentisfree/2017/jul/25/chlorinated-chicken-trade-britain-us-food-standards-globalisation">chlorine-washed chickens</a> as part of a post-Brexit trade deal. Some Leave voters may have wanted the UK to have greater freedom to strike its own trade deals including with the US, but others were anxious about the effects of an increasingly globalised economy on their employment prospects. Fox’s originalism is just as selective as any other form.</p>
<p>Originalism is also an abandonment of judgement and responsibility. Politicians – government ministers and the Labour opposition – are behaving as if they have no choice but to give effect to a mandate enshrined and encoded in the referendum result regardless of whether there is any clarity as to the original intent of voters or of the consequences of implementing such an intention.</p>
<p>It’s time for politicians to drop the originalist pretence of keeping faith with the country. They should instead do the one thing the British system of parliamentary democracy is supposed to do – empower the representatives of the people to make decisions and to be accountable for them.</p>
<p>Brexit is a choice made in time and through time. It is a process that began with the referendum but doesn’t have to end there. Instead the prime minister faces a choice. Either she allows Brexit to be defined by an originalist and selective interpretation of the June 2016 referendum or she takes the June 2017 election as an instruction to govern in the country’s best interests. She must choose whether to be defined by the past or to define the future.</p><img src="https://counter.theconversation.com/content/81860/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kenneth Armstrong is the author of 'Brexit Time: Leaving the EU – Why, How and When?' (Cambridge University Press).</span></em></p>Liam Fox insists on keeping faith with the referendum decision. But that is preventing ministers from adapting to an evolving situation.Kenneth Armstrong, Professor of European Law and Director of the Centre for European Legal Studies, University of CambridgeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/668572016-10-11T12:05:12Z2016-10-11T12:05:12ZThe Conservative party and business have fallen in and out of love for decades<p>Given the potential impact of a so-called “hard Brexit” on bottom lines, as well as the less-than-friendly tone of recent ministerial and prime ministerial interventions, it’s hardly surprising that relations between the British government and business have been <a href="https://theconversation.com/market-jitters-and-brexit-uncertainty-magnifies-the-chance-of-a-flash-crash-66699">pretty strained</a> lately.</p>
<p>But underlying some of the coverage of their spat is the assumption that capital and the Conservative Party shouldn’t ever fall out with each other. Since the latter is so obviously the political wing of the former, the argument runs, any disagreement between them must spell something pretty serious.</p>
<p>Well, maybe – but only up to a point. Although business funds and favours the Tories, the relationship between them is not, nor has it ever been, one of master and servant. If wealth creators and Conservative politicians are squabbling right now, it’s not the first time, and it won’t be the last.</p>
<h2>Pressure points</h2>
<p>Liam Fox, one of the government’s three Brexiteers, recently got into trouble for <a href="http://www.bbc.co.uk/news/uk-politics-37324491">suggesting</a> British businessmen were too fond of knocking off early on a Friday and heading for the golf course. But he’s by no means the first Tory trade spokesman to take such a jaded view of the very people whose vested interests the Conservative Party is supposedly pre-programmed to promote. Nor, indeed, is he the first to discover that the feeling is sometimes mutual.</p>
<p><a href="https://www.theguardian.com/uk/2002/feb/25/falklands.world3">John Nott</a>, perhaps best remembered as Margaret Thatcher’s defence secretary during the Falklands, was previously her shadow trade spokesman. This was a role which, he recalls in his memoirs, required him “to get around the country persuading businessmen that the Tory party had their interests at heart”. That effort, he noted, often turned out to be a dialogue of the deaf:</p>
<blockquote>
<p>Every gathering followed a predictable pattern: the shadow minister made his speech and then a vulgar, tanked-up businessman launched an attack on politicians generally, the Tory Party and its leader … It is extraordinary that businessmen, who often crave some input into government, so often exclude themselves from the whole process by their ignorance of the necessary compromises and realities of political life.</p>
</blockquote>
<p>Thatcher herself was well aware of the problem, although, given her forceful style, hardly best-placed to do much about it. The president of the CBI, responding to a private letter she’d written him just after taking over from Ted Heath – who, as the man who abolished retail price maintenance and the coiner of the phrase “the unacceptable face of capitalism” enjoyed more than a few run-ins with business over the years – confessed that “contacts between the Conservative Party and industry are not as close as they would wish”.</p>
<p>But Thatcher’s efforts to remedy the situation seem to have backfired, at least judging from a letter written by one of her shadow ministers to another: the “big industrialists” he met were fed up of being lectured by Mrs T, he confided. Indeed, “one had said: I would not mind being treated as a schoolboy if only she would put me in the 6th form. But I do mind being put in the 4th”.</p>
<p>The atmosphere clearly improved after Thatcher entered Number Ten. But that doesn’t mean we should swallow the idea that her governments were simply about translating business’s wishlists into policy. Many of the flagship policies (privatisation, trade union reform, the slashing of subsidies, pension changes) we now associate with those governments, rather than being urged upon the politicians by the business community, provoked either little initial interest or else a degree of nervousness and even pushback.</p>
<h2>Friends or aquaintances?</h2>
<p>The fact that the relationship between the Conservative party and business isn’t quite as symbiotic as is sometimes assumed might owe something to the fact that business people have never dominated the ranks of the parliamentary party. Even if they’ve been active in local associations, they don’t often turn their hand to politics – and the results are mixed when they do. One would probably have to go back to Ernest Marples to find a businessman who really made a direct difference to government policy. Even that <a href="http://www.conservativehome.com/thecolumnists/2014/03/from-lewis_baston-ernie-marples-yes-a-rogue-but-he-brightened-up-the-1950s-and-he-made-things-happen.html">didn’t exactly end well</a>.</p>
<p>True, businessmen have done rather better and rather more for the party as fundraisers. The late <a href="https://en.wikipedia.org/wiki/Alistair_McAlpine,_Baron_McAlpine_of_West_Green">Alistair McAlpine</a>, who raised millions for Maggie in the 70s and 80s, is probably the stand out example.</p>
<p>But, as is the case for Labour and the unions, despite what the Conservatives’ opponents routinely allege, it’s never been – and never will be – simply a case of he who pays the piper calls the tune. Politics, like life, is just more complicated than that. This is partly because it’s more than a superstructural reflection of an economic base and partly because business is not some monolith composed of firms with one identical, unchanging interest.</p>
<p>Ironically, Brexit illustrates pretty much all of the above. Yes, business lobbied both Tory and Labour governments to join Europe and, <a href="http://www.historyextra.com/article/international-history/1975-referendum">overwhelmingly, backed staying in ahead of the 1975 referendum</a>. By 2016, however, a Conservative PM had decided to risk a second referendum even though the majority of firms still probably preferred the certainty of remaining.</p>
<p>The campaign itself, however, suggested there was significantly more business support for leaving than there had been 40 years previously. And now the decision has been made (and sterling has reacted accordingly), some firms seem relatively relaxed about it, while others are beginning to panic.</p>
<p>None of this of course means that the Conservatives no longer listen to business. Nor does it mean they no longer worry about being business-friendly. They do: look at their u-turn on <a href="https://www.theguardian.com/uk-news/2016/oct/09/plan-to-force-firms-to-reveal-foreign-staff-numbers-abandoned">naming and shaming</a> firms employing foreigners.</p>
<p>But the Conservatives never have and never will simply do business’s bidding. They produce and implement policies so as to promote what they themselves conceive to be the best interests of business. And they will continue to do that even if it means occasionally provoking disquiet or even squeals of protest from a section of society that ultimately will continue to back them unless and until it has somewhere else to go. And given the current state of Her Majesty’s Opposition, that seems unlikely any time soon.</p><img src="https://counter.theconversation.com/content/66857/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tim Bale does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Tories aren’t always in the mood to do business’s bidding.Tim Bale, Professor of Politics, Queen Mary University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/665242016-10-06T10:26:13Z2016-10-06T10:26:13ZExplainer: what’s the difference between ‘hard’ and ‘soft’ Brexit?<figure><img src="https://images.theconversation.com/files/140584/original/image-20161005-20132-1kadii6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>Britain’s prime minister, Theresa May, has been keen to reiterate that <a href="https://theconversation.com/so-what-does-brexit-mean-64980">“Brexit means Brexit”</a>. But, despite her insistence, at least two types of Brexit are being discussed: “hard” and “soft”. They relate to the type of deal that the UK negotiates with the EU. A significant reason for the delay in triggering the Article 50 process of withdrawal is to give the government time to work out what deal it wants and what position to take in its negotiations with the EU over leaving.</p>
<p>The battle lines have been drawn between those in government who want a clean or “hard” exit and those who want to preserve, above all else, membership in the EU’s single market – a “soft” exit. Between these two broad positions there can be a variety of differences, but they lean in one or the other direction. </p>
<h2>The case for ‘soft’</h2>
<p>The soft Brexit position is predicated on the assumption that leaving the EU’s single market <a href="https://theconversation.com/brexit-100-days-on-and-wheres-the-economic-armageddon-66300">will cause a painful shock</a> to the British economy, both for exporting manufactured goods, as well as financial and banking services. Norway is a member of the single market but not an EU member, and makes financial contributions to the EU budget. </p>
<p>The argument by soft Brexit supporters is that outside of the single market, British goods and services may not be as competitive as they are within it today. This is because within the single market and customs union there are no additional levies on British goods traded with the EU; outside they are subject to World Trade Organisation rules which would allow the EU to place extra costs on British goods.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/140708/original/image-20161006-14726-1mf77us.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/140708/original/image-20161006-14726-1mf77us.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/140708/original/image-20161006-14726-1mf77us.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/140708/original/image-20161006-14726-1mf77us.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/140708/original/image-20161006-14726-1mf77us.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/140708/original/image-20161006-14726-1mf77us.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/140708/original/image-20161006-14726-1mf77us.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Freedom of movement is a package deal.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>This argument may also reflect a feeling that the British economy is still in a fragile state after the financial crisis. But the soft option increasingly looks untenable <a href="https://theconversation.com/why-the-norway-model-is-a-flawed-blueprint-for-brexit-64404">for several reasons</a>. Above all, the EU insists that membership of its single market <a href="https://theconversation.com/what-the-eus-rules-on-free-movement-allow-all-its-citizens-to-do-62186">includes all four freedoms of movement</a>: capital, goods, services and people. </p>
<p>Politically, it is <a href="https://www.theguardian.com/politics/2016/oct/02/brexit-theresa-may-prioritises-immigration-curbs-over-free-movement">highly unlikely</a> that the UK’s Conservative government is going to continue to allow the free movement of people from other EU member states into the UK, especially after immigration was highlighted as a red line for many in the Conservative Party – including members, voters and many MPs. </p>
<p>Plus, a soft Brexit would undermine the Leave campaign promise to “take back control” of law-making from Brussels, as the UK would still remain subject to regulations and other legislation concerning single market issues, but without any formal say in the decision making (the Norway situation). This would be a step backwards in terms of parliamentary sovereignty. </p>
<p>Finally, the European Court of Justice would still preside over jurisprudence that affected UK legislation, another step away from Leave promises.</p>
<h2>Hard Brexit</h2>
<p>Those advocating a hard Brexit argue that the UK has a glorious future completely shorn of any links with the EU. Prominent in this camp are the Leave campaigners that are now government ministers with a role in the Brexit negotiations, such as the new international trade secretary, Liam Fox. He <a href="https://www.theguardian.com/politics/2016/sep/29/liam-fox-looks-to-wto-in-hint-at-hard-brexit-stance">hailed Brexit</a> as an opportunity for Britain to become an independent member of the WTO. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/140705/original/image-20161006-14745-k4asan.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/140705/original/image-20161006-14745-k4asan.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/140705/original/image-20161006-14745-k4asan.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/140705/original/image-20161006-14745-k4asan.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/140705/original/image-20161006-14745-k4asan.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/140705/original/image-20161006-14745-k4asan.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/140705/original/image-20161006-14745-k4asan.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">No softie: Liam Fox.</span>
<span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/Liam_Fox#/media/File:Rt_Hon_Dr_Liam_Fox_MP_(4799289920).jpg">Chatham House</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<p>If the UK leaves its membership of the EU single market, the alternative would probably be a trading relationship based on WTO rules. These allow for a degree of tariff restrictions, and then later some type of free trade agreement between the UK and EU (the new Canada-EU trade agreement is held up as a model). Hard Brexit supporters argue that the single market with its attendant responsibilities is too high a price to pay for access. Besides, for such supporters, the free movement of people is a political non-starter. </p>
<p>To a certain extent, the soft and hard Brexit perspectives reflect differences in opinion over how resilient the British economy will be outside of the EU’s single market. Soft Brexit is based on a pessimistic view of how well it will fare and how reliant it is on financial services. Comments by multinational corporations that a hard Brexit may cause them to curb their future investment in the UK is proof enough for soft Brexiteers that the risks of leaving the single market are too high. </p>
<p>The hard Brexiteers are more optimistic. They believe that after a short-term wobble, the UK economy – the fifth largest in the world they quickly point out – will establish a new and competitive position in global trade. Politically, at least, the pendulum appears to be swinging towards the hard side.</p><img src="https://counter.theconversation.com/content/66524/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert Ladrech received funding from the UK Economic and Social Research Council. </span></em></p>The new battle lines on how to leave the EU have been drawn.Robert Ladrech, Professor of European Politics, Keele UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/631792016-07-28T10:58:49Z2016-07-28T10:58:49ZShould the UK remain in the EU customs union after Brexit?<p>The UK government is currently considering what relationship it should seek to negotiate with the EU after Brexit. One option on the table is continued participation in the EU’s customs union, but Liam Fox, the new trade secretary, <a href="https://next.ft.com/content/e87614da-533a-11e6-befd-2fc0c26b3c60">is urging</a> the prime minister, Theresa May, to pull the UK out of it. </p>
<p>When it comes to world trade law, there are clear distinctions between a free trade area and a customs union. Under the <a href="https://www.wto.org/english/res_e/booksp_e/analytic_index_e/gatt1994_09_e.htm">law</a> of the World Trade Organisation (WTO), a free trade area means that substantially all of the barriers to trade in goods (there is no WTO equivalent for services) between the countries in the area have been abolished. A customs union goes a step further: the countries concerned not only abolish substantially all barriers to trade in goods, they also have the same rules for trading with the outside world. </p>
<h2>Free trade area vs customs union</h2>
<p>As a practical example, Canada, the US and Mexico have a free trade deal, known as <a href="https://ustr.gov/trade-agreements/free-trade-agreements/north-american-free-trade-agreement-nafta">NAFTA</a>. But the US embargoes trade with Cuba, whereas Canada and Mexico trade with that country. Mexico signed a trade deal with the EU years ago; Canada has <a href="http://ec.europa.eu/trade/policy/in-focus/ceta/">just agreed one</a>; and the US is still negotiating one, the <a href="https://theconversation.com/uk/topics/ttip">Transatlantic Trade and Investment Partnership</a>.</p>
<p>On the other hand, the EU is a customs union. This means its members, including the UK, cannot sign separate trade agreements with countries such as India or China. It is, however, possible for the UK to sign a more general type of commercial “trade deal”, such as selling aircraft to India. </p>
<p>Around the world, free trade areas are more popular than customs unions. But states still do sign customs unions, because having common rules on trade with the outside world simplifies the trade between members of the customs union. </p>
<p>For example, in the NAFTA free trade area, when goods are shipped from Canada to the US, American officials must perform a number of checks. They must check to see whether they are actually Canadian goods (which can enter tariff-free), Cuban goods (in principle banned), or goods from any other country (which are subject to a tariff). Whether a good is Canadian or not depends on complex “rules of origin”, which set out how much of a car (and thousands of other products) must be produced in Canada for it to be called Canadian. </p>
<p>On the other hand, if products from China or Brazil are shipped through EU countries, such as from Rotterdam to Harwich, there is no need to carry out such checks. This is because the products would have been treated exactly the same way when they entered any EU country. </p>
<h2>Stay or go?</h2>
<p>When Britain triggers <a href="https://theconversation.com/what-is-article-50-the-law-that-governs-exiting-the-eu-and-how-does-it-work-60262">Article 50 of the EU treaty</a> to leave the EU, it does not necessarily have to leave the customs union. The EU has signed customs union agreements with some micro-states such as San Marino, as well as with Turkey. So the UK could ask to retain participation in the European customs union if it wants to.</p>
<p>Leaving would have both pros and cons for the UK. On the one hand, it would mean that the UK could sign free trade deals with more countries – although not everyone sees the appeal of such deals. On the other hand, it would mean <a href="https://theconversation.com/the-unforeseen-cost-of-brexit-customs-62864">extra paperwork</a> for British exporters to the EU to prove that their product is fully “made in Britain”.</p>
<p>There is a particular issue with Northern Ireland, too. If the UK leaves the EU customs union, in principle there would need to be checks at the border between Northern Ireland and the Republic of Ireland, because they would no longer be applying the same law on trade with the outside world. If there weren’t checks, and the UK had a future free trade deal with China that was different to EU-China’s trade relationship, Chinese products could be shipped to Northern Ireland and then cross the border into the EU tariff-free, circumventing the EU rules. </p>
<p>In theory, it’s possible for Northern Ireland alone to remain part of the EU customs union – but that would mean creating economic barriers between its six counties and the rest of the UK. <a href="http://www.eureferendum.com/blogview.aspx?blogno=86001">Another approach</a> is to adapt an agreement that the EU already has with Switzerland (not in the EU, or the EU customs union) which sets out special procedures to facilitate trade despite the different trade rules with the outside world. That would mean the UK continuing to apply some of the EU’s customs law, however. </p>
<p>Time will tell which approach the UK government prefers – and whether the EU will agree to its requests.</p><img src="https://counter.theconversation.com/content/63179/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steve Peers does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The difference between a customs union and a free trade area – explained.Steve Peers, Professor of Law, University of EssexLicensed as Creative Commons – attribution, no derivatives.