But the issue goes further than free trade agreements, he said, pointing out that entering a customs union with the EU would affect the U.K.’s global tariff — the independent system of taxes and duty rates applied to goods imported from other countries. This would be a “huge diminution of the U.K.’s influence in the world to align or take the EU’s customs tariff,” Hands added.
Moreover, by signing up to a customs union, the U.K. would also lose its ability to erect its own trade defenses and be forced to implement EU measures like tariffs on steel and electric vehicles, Hands warned.
He also cautioned that closer alignment could complicate relations with the U.S., which has been critical of U.K. ambitions for closer alignment with the EU. “The U.S. is our single largest bilateral trading partner and I don’t think it would be in the U.K.’s interest to mess up that relationship.”
End of CPTPP membership
Liam Fox, a self-proclaimed “staunch euroskeptic” who served as trade secretary in the immediate aftermath of the referendum, between 2016 and 2019, said rejoining the EU or customs union would “mean an end to Britain’s independent trade policy and any strategy influence we have from membership of organizations such as [the Asia-Pacific trade bloc] CPTPP.”
“This vague language from Andy Burnham is all about keeping the Labour left quiet whatever the consequences,” Fox added. “Rejoining the EU would mean being part of Schengen with free movement of people and adoption of the Euro. If that is what Andy Burnham wants, let him make the case for it, stop his mealy-mouthed pandering to his own party and start acting like a real prime minister.”
A third former Tory trade minister — granted anonymity to speak frankly — told MTUK the risks to Britain’s new trade deals was “real” and would “undermine new relationships with some of the fastest growing middle-class economies in the world.”
“As the mature EU markets continue to be a smaller part of U.K. export opportunities, the prime minister should be focusing on supporting U.K. businesses to win export contracts where huge new markets exist,” the former minister argued.