As the United Kingdom leaves the European Union, there is debate as to whether the UK should remain in the EU Customs Union (or in a bilateral customs union with the EU, which I believe is almost the same in practice), or leave so that it can negotiate its own trade treaties. I can understand the arguments in favour of the UK leaving the EU Common Market if it does not want to guarantee the EU Four Freedoms, and I can see some people dislike the European Court of Justice having power to enforce EU law in the UK. But I don't understand the customs union bit. Presumably, a larger block like the EU should be able to negotiate better terms with other parties than a single country like the UK; both because it has more leverage, and because it has more access to experienced and skilled negotiators. But what could be the advantages for the UK to negotiate its own trade treaties, outside of the EU Customs Union?
-
11They can negotiate their treaties focus on what they are more interested or what they want. On the other side, the EU searchs for treaties focus on the common group and sometimes that can be negative or not the best for the UK alone. If at the end is worth it or better is questionable– IvanSep 26, 2017 at 11:20
-
1Related: politics.stackexchange.com/questions/19987/…– SJuan76Sep 26, 2017 at 11:48
-
1Access to imports is the most important part of trade, the part that will make citizens wealthier - people to export to is a second order effect. The EU insists that members must apply tariffs and quotas to imports from outside the EU, thereby making all EU citizens poorer. The UK (and indeed any country) doesn't really need trade treaties at all, just "anything you want to sell here must meet our laws". The politically driven insistence on obstructing trade comes from the concentrated interests of businesses looking for protection from competition at the expense of domestic consumers.– Grimm The OpinerSep 26, 2017 at 14:49
-
1@Ivan Exactly. Smaller countries can have more clout when the trade deal is larger. It can harm larger countries because their leverage is partially used up in getting things the smaller EU counties want out of the deal. (Imagine if you were negotiating to buy shrimp for your small restaurant and your shrimp deal was part of a much larger shrimp deal for large restaurants too. Your small restaurant might get a much better price in this big deal. But the higher cost of delivery to the small restaurants will be factored into everyone's price, possibly harming the larger restaurants.)– David SchwartzSep 26, 2017 at 19:07
-
And remember that the UK is 16% of the EU by GDP, but it doesn't get nearly a 16% share of the seats at the decision-making tables.– Michael KaySep 27, 2017 at 7:57
3 Answers
The problem is that the EU has to satisfy demands from all member states. In particular, the UK isn't as protective as a few other member states. The EU may have been setting unreasonable tariffs to protect some non-UK industry, and in exchange got a worse deal in return. The UK on its own can make a deal that only needs to take into account British industry.
A similar situation exists in reverse. The UK only needs to negotiate access to other markets for goods produced in the UK; UK exports are only a subset of EU exports.
As an example, the EU as a whole exports a wide variety of foods. Food is an important discussion point on trade treaties, as many countries want to protect domestic agriculture. The EU may need to make concessions elsewhere in order to placate EU farmers. But the UK exports almost no food. In fact, the new British trade treaties may open up the British market for food imports, leaving EU farmers to compete with farmers from around the world on the British market. This might lead to lower food prices in British supermarkets.
-
9A good example of this might be wine. The UK has a negligible wine industry and so might offer to import wine from, say, Chile, at no tariff in exchange for Chile putting no tariff on UK biotechnology products. EU states like France and Italy are very protective of their wine industries and are unlikely to be very welcoming of wine from outside the EU. Sep 26, 2017 at 14:37
-
16@OscarBravo: Tariffs on wine (and most other goods) are not that high nowadays. For instance the tariff on import of Australian wine to the EU is between about 1.3% and 2.2% of the retail price. A more significant issue is non-tariff barriers (eg. harmonising standards and regulation), which accounts for much of the complexity of modern free trade agreements. In this area, the UK's lack of specialist expertise and experienced negotiators will be a serious drawback. Sep 26, 2017 at 14:52
-
@RoyalCanadianBandit this is obviously distinction without a difference. I can make compliance so hard that it is bigger block to imports than 30% tariff. Because consumers pay the price of compliance. Sep 26, 2017 at 19:25
-
There are plenty of other examples: Oranges for example - UK gains nothing from import tariffs on oranges, and might be able to negotiate better terms elsewhere. Mar 14, 2019 at 12:09
Any time one is part of a group, then the goals and outcomes of any individual are subject to consensus and compromise even before a negotiation starts.
An individual negotiating will always have their own priorities exclusively paramount from their side of the table.
The trade-off is that, while I might only have my considerations from my side of the negotiation, I'd lack the leverage that I might have, as part of a larger group, to extract concessions for my considerations
The perception is that by negotiating trade deals individually, the deal can be tailored to the individual country.
Another advantage for very large economies is that they have a very strong negotiating position compared to smaller ones. Post-Brexit, the UK will be desperate to do deals quickly to make up for the loss of access to the EEA, so countries like China and the US are in very strong positions to force the UK to accept terms because of the huge imbalance. Failure to do a deal will hurt the smaller economy far more than the larger one, if the larger one even feels it.
Another example is the US withdrawal from TPP. They are now trying to do individual deals with countries like Japan, and Japan in particular is trying to resist any deal and stall for time because it doesn't want to accept the terms that the US is trying to dictate. When it was a large group of countries negotiating it was difficult for the US to make demands like lowering beef tariffs, but when it is just the US and Japan and the US can use other areas of trade as bargaining chips, it becomes much harder for Japan to resist.
