Insurance · 23 January 2018

CBI boss demands customs union Brexit deal that supports exporters

Carolyn Fairbairn: “We can’t afford higher barriers to trade”

Director general of the Confederation of British Industry (CBI), Carolyn Fairbairn, has called for a Brexit deal that keeps Britain in a single market customs union with the EU, to support UK exports.

In a speech at Warwick University on 22 January, the head of the UK’s most influential business lobby group emphasised that after a transition period, a comprehensive customs union between Britain and the EU, which included single market access, would be a “practical, real-world answer” to many of the economic questions raised by Brexit.

In a speech, Fairbairn said: “There may come a day when the opportunity to fully set independent trade policies outweighs the value of a customs union with the EU – a day when investing in fast-growing economies elsewhere eclipses the value of frictionless trade in Europe. But, that day hasn’t yet arrived.”

Read more: UKEF extends long-term export support to over 60 local currencies

Criticising the government’s approach to Brexit in negotiations with the EU so far, Fairbairn called for a fundamental change in approach in order to achieve a “good Brexit for Britain”.

She urged government to secure a “status quo, jobs-first transition deal” in the next 70 days to prevent businesses from falling off a “cliff edge”.

Stressing how urgently an agreement on a new deal was needed, Fairbairn also said that the country should be united behind new negotiating terms by April, so as to have new, unambiguous heads of terms agreed with the EU by October 2018.

She claimed that neither Canada’s nor Norway’s trading model with the EU represented an appropriate solution to Brexit for businesses in the UK.

Fairbairn said that Canada’s model was: “An ocean away from what we need. We can’t afford higher barriers to trade, and nor can the EU.”

The CBI has reportedly been encouraged to take a harder line with the government over its approach to Brexit and push for a second referendum in Westminster.

An internal CBI report read: “Government has all the right objectives on customs but – thus far – no proposals have been set forward that can deliver.

“A customs union would require trade-offs on achieving an independent trade policy, but the benefits of such a policy are unproven.”

Responding to Fairbairn’s comments, Britain’s foreign secretary, Boris Johnson, said on Twitter: “Staying in the customs union means effectively staying in the EU. The EU *is* a customs union. It means no new free trade deals, no new export opportunities, and no leading role in the WTO.“

The terms of the UK’s trade deal with the EU, including the issues of a customs union and free movement of goods, will remain of vital importance to exporting firms.

In her speech, Fairbairn urged the government to adopt an overriding principle when negotiating a final deal. She said: “Start with the rules we already share and move on from there. They have been 40 years in the making and support millions of jobs and communities across the UK and Europe.”

Read more: Majority of small firms will prefer trading with Europe even after Brexit

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ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

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