Customs Union is a ‘wicked problem’

IN ECONOMICS, we often talk about a “wicked problem”.

Essentially, it is a problem difficult, even impossible, to solve because of contradictory information, a large number of options and its interconnectedness with other problems.

The current debate on the Customs Union is a pretty good example of this.

Continued membership of the EU Customs Union is a red line to many Brexiters, even though the issue, along with Single Market membership, was not on the ballot paper.

Continued membership would certainly go some way to solving the issue of the hard border in Ireland.

I say some way because even though the tariff problem would be solved there would still remain the problem of behind the border barriers, thus the need for regulatory alignment.

It would also ease the issue of cross-border trade within supply chains, though there would remain the thorny issue of services, especially financial, on which much of UK tax receipts depends.

In addition, being outside the EU but within the Customs Union would mean accepting the Common External Tariff with no influence on it.

We would also lie outside the trade arrangements that the EU has struck extra EU countries as far as our exports are concerned.

What incentive would these countries have to extend the deals to the UK?

Exiting the Customs Union would also be beset with problems. The spectre of a hard border in Ireland would remerge.

Negotiating new trade deals would not be easy and would take a long time. Services would be a major issue. What use would a trade deal with Australia and New Zealand be to manufactures relying on JIT? In trade, distance often matters.

In other words, the problem of the Customs Union is truly wicked.

John Redwood on Radio 4, however, made leaving sound so simple, giving an example of being able to buy South African oranges instead of Spanish. Reducing the issue to this level of simplicity is just nonsense. Just ask the Welsh lamb exporter, the suppliers in the automotive industry etc.

The sad thing is, this wicked problem is entirely of our own making.

Reducing the issue of EU membership to a binary question was reckless in the extreme.

Dr Bob Morgan

Efail Isaf