The question of the UK’s post-Brexit relationship to the EU customs union has become the focal point for the deepest crisis the Tory Party has ever faced: a crisis which is driving all the contradictions of Brexit to breaking point.
Never before in its long history has a Tory government been so weak and divided. At every turn it faces rebellion from its large and influential hard Brexit wing, from its minority faction of Remainers, and from the DUP - all of whom have different and incompatible priorities when it comes to Brexit.
After the rejection of her “customs partnership” by hard Brexit Tories, Theresa May now faces a trio of crises: a possible defeat in Parliament over the UK’s membership of the customs union; the threat of a Eurosceptic uprising within her own party; and to cap it all off, an EU council meeting in June at which her Irish counterpart will likely demand a comprehensive proposal on the question of the Irish border.
Fiction of frictionless border
In December, Mrs May managed to stave off a crisis by coming to an agreement with the EU, under which the North and South of Ireland would maintain “regulatory alignment” in the event that no other means of avoiding a physical border were found.
Almost immediately after this was announced, however, the DUP made it clear that it would not accept any deal which involves “any form of regulatory divergence which separates Northern Ireland economically or politically from the rest of the United Kingdom”.
Now, with pressure mounting from all sides, May must deliver a proposal which simultaneously takes the whole of the UK out of the EU customs union and single market, whilst avoiding the need for any form of visible border either across Ireland or in the Irish Sea. Such intractable problems call for “magical thinking”, and thus the ill-fated “customs partnership” was born.
May’s plan was that the UK would collect tariffs on goods crossing the Irish border which are destined for the EU without any need for infrastructure on the border itself, whilst being free to set different tariffs on goods destined for the UK.
This is not without its problems, however. First, there is the tiny snag that the “ambitious and untested” technology required to put the plan into practice does not in fact exist. And second, the slightly bigger snag: that unless the UK maintains “regulatory alignment” with the single market, physical border checks would likely be necessary with or without this technology.
Suspicious that this would simply end up seeing the UK into a customs union by the back door, the hard Brexiteers went on the attack.
The European Research Group of 60 Tory MPs, led by Jacob Rees-Mogg, submitted a 30-page memorandum to the Prime Minister, demanding that she abandon her “undeliverable” project of a customs partnership. Sensing an opportunity for self-promotion, Boris Johnson has also come out publicly to decry the plan as a “crazy system”, which would leave the UK “locked in the tractor beam of Brussels”.
Unfortunately for May, her other options are even worse. The preferred option of the hard Brexiteers, of “maximum facilitation”, would not avoid a physical border in Ireland; it would “soften” it, using technology and trusted traders schemes to reduce infrastructure and disruption to a minimum. The likelihood that either the EU or the majority of the House of Commons would accept this is vanishingly low.
May’s entire policy since Article 50 was invoked last year has been to kick the can down the road whilst trying to lull all sides with soothing tales of “a new and better model”, of a “Global Britain” and, of course, “a customs partnership”. But the reality of the situation is rapidly bringing matters to a head.
EU negotiators and heads of state, not least Ireland’s Leo Varadkar, are demanding that the UK finalises its proposal for solving the Irish border question before further negotiations can continue. This leaves the question of the UK’s post-Brexit transition hanging in mid-air, with less than a year to go before the UK crashes out of the EU on 29 March 2019.
Meanwhile, May’s business secretary, Greg Clark, has offered a sharp reminder of the interests of big business, stating that Toyota could choose to build a new plant outside the UK if any new barriers were to emerge between the EU and the UK. In fact, the uncertainty of the current situation alone could be enough to shift investment out of the UK.
Whether or not May pushes on with her customs partnership, she has in reality only two options: either a customs union in all but name, or a hard border in all but name.
The former would save her from a defeat in parliament, but would provoke a bloodbath in the Tory Party and even a fresh leadership contest. The latter, on the other hand, could keep her party together - but only at the expense of a humiliating defeat in parliament and fresh turmoil in the economy.
Ultimately, May’s paralysis is not accidental. It reflects the deep crisis of British capitalism and of its most trusted party. Every attempt to stabilise the situation and delay the inevitable has prepared the way for an even greater crisis further down the line. In or out of the customs union or single market, nothing May does will fundamentally change the situation.
A Corbyn government, carrying out the nationalisation of the commanding heights of the economy and socialist measures to guarantee a decent existence for all is the only way to break free from this infernal cycle. With the May government in such a pathetic state, an opportunity to make this a reality may come sooner than we think.