The government has published a paper about what it wants in regards to the “Irish question” in relation to Brexit, namely how to avoid a hard border between north and south Ireland that would bring with it numerous problems (not least of which would be the end of the current government via the DUP dropping out). There is one fairly straightforward way of avoiding a hard Irish border – the UK remains in the Customs Union. But if we did that, Liam Fox would be out of a job, and we can’t have that.
One interesting idea in the paper, however, is what amounts to (although the paper is cagey about putting it into these terms) Britain and Ireland forming a customs union between themselves – while Ireland remains inside of the EU Customs Union, of course, and the UK leaves it. Putting aside the initial major problem of whether or not the EU would agree to let this happen (my guess is, no), even if you could get Ireland and all of the other EU countries to give this the green light, it would still be a really bad deal for the UK. I’ll explain why.
Ireland would be in two customs unions, one with the UK, one with the EU. This would be very good for Ireland – any EU firm that wanted to sell to the British market would need to go through Ireland; likewise, any British film wishing to sell to the EU would have to also set up shop in Ireland. This would be bad for the UK in the following way: why open anything up in the UK, particularly in terms of manufacturing or food and drink, when you can just set up in Ireland instead? You’d actually be stupid not to if this happened: from Ireland you can sell to both the EU and the UK tariff and red tape free, while from the UK you can only sell to Ireland this way. There is no language problem being presented by locating in Ireland, and besides, corporation tax is lower there anyway. You can also hire anyone from the EU with no problems, which presumably you wouldn’t be able to do post-Brexit. I don’t see why the entire car manufacturing sector wouldn’t move to Ireland, for instance.
Maybe I’m missing something here, but it just seems like the ideas the government are coming up with, even when shorn of the practical difficulties of getting them agreed by the other parties involved, still place the UK in a much worse position. Increasingly, I think the idea is to move to the UK towards staying in the Customs Union, but just bringing the public along in stages. That is a polite way of saying fib to them, just less and less each time until they are where we need them to be in regards to the deal we’re likely to get.