The study ‘Nothing to declare: A plan for UK-EU trade outside the Customs Union’ by Open Europe states the UK has to exit the customs union if it wants to be a truly “global Britain” with an independent trade policy.
It concluded: “Brexit means the UK must be able to shape its own trade policy. It can only do so outside of EUCU.”
The extensive report comes at a timely moment as Prime Minister Theresa May is poised to trigger Article 50 on Wednesday, which will fire the starting pistol on Brexit negotiations.
Open Europe has argued that the UK should entirely leave the EUCU
Mrs May has previously indicated that the UK could possibly find some half-way house position as an “associate member” and remaining a signatory to certain aspects of the union.
However, the report indicated that no half-in, half-out option would be better for Britain than being fully out.
It stated: “The UK should not seek a ‘half-in, half-out’ arrangement, which would be the worst of all worlds. The UK should leave EUCU entirely to maximise opportunities.”
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Brexit means the UK must be able to shape its own trade policy. It can only do so outside of EUCU
Open Europe report
It also concluded a comprehensive free trade agreement with the EU which maintains the benefits of a customs union is achievable in talks with Brussels.
The report did warn there would be costs to the UK of leaving the group but it added that these could be minimised and even offset by trade liberalisation with non-EU partners.
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It found most UK trade – 51.5 percent in 2015 – was with countries outside the EU and was also growing at a faster rated than EU trade.
Prime Minster Theresa May holds a cabinet meeting
In 2015, the US was the largest recipient of UK goods exports (16.6 per cent) but there was no free trade agreement (FTA) nor a customs union between the countries.
While Open Europe recommended Britain to leave the EUCU it also advocated customs co-operation between the UK and the EU.
The report by the Eurosceptic think tank stated: “The core trade-off is integration versus control. The more integrated the UK remains with the EU, the less control it will have over its trade policy.
President of the European Council Donald Tusk
“The best solution is for the UK to leave EUCU [the customs union] and conclude a comprehensive UK-EU FTA [free trade agreement] with full customs cooperation.
“This is in line with the direction of global trade negotiations, which now focus largely on non-tariff barriers – including customs.”
Open Europe policy analyst Aarti Shankar said: “We have looked at the evidence and at international examples, and conclude that leaving the EU’s customs union is the right decision for the UK.
Open Europe has advocated fully leaving the customs union
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“If the UK remained in the customs union after Brexit, it would not be able to meet the government’s ambition of conducting an independent trade policy and achieving a truly ‘Global Britain’.
“There is a trade-off between minimising disruption to UK-EU trade and ensuring the UK is able to shape its own trade policy post-Brexit.
“Any model that keeps the UK ‘half in’ the EU’s customs union would constrain its ability to strike trade deals across the world.”
Prime Minster Theresa May
The report comes as the chief executive of the UK Chamber of Shipping Guy Platten called for “pragmatism post-Brexit”.
He said that the opportunity for leaving the union was an “exciting one” but tempered his words by adding that “it is exciting only if it complements rather than replaces trade with our closest neighbours”.