We have been having a lot of discussion about the implications of moving to "WTO only" trade relations with the rEU once the UK has left. But not much has been said about the costs we already pay thanks to the EU's existing common external tariffs. It is almost not worth repeating that the EU is not a paragon of free trade with the rest of the world. While the EU treaties (claim to) aim at an undistorted market within Europe's boundaries, they do not shout from the rooftops the protectionist goals of Fortress Europe. We tend to forget that for a long time the UK ran a unilateral free trade policy with the rest of the world. When we joined the Common Market we agreed to erect barriers with former major suppliers. Food prices soared as a result, and this was much discussed during the 1975 referendum apparently.
The EU customs barrier is protectionist, aiming to save certain national industries from international competition. It (sometimes in combination with other EU policies) keeps certain prices in Europe much higher than world prices. In some areas it deliberately forces world prices down while keeping internal prices high. This is especially true with food, where Europe actually exports processed food to poorer countries - trashing their agricultural industries while we pay more than we need to. We then often send the same countries aid money. Meanwhile capital is invested inefficiently in the production and processing of food which could be imported more cheaply from elsewhere. How many whammies is that now?
This is especially visible when there is a European industry in processing a raw material that does not naturally occur in Europe. Coffee and chocolate spring to mind. Raw coffee beans can be brought into the EU without a tariff, but if an African company dares try to export roasted coffee beans to the EU it is hit. The more the developing world tries to rise up the value chain, the more it is taxed. Do you know which country dominates the EU coffee processing industry? Hint: it isn't Italy.
The EU slaps around a 32% levy on wine imported from the new world and about 18% on processed chocolate. One wonders who these are supposed to benefit. These numbers are all estimates because the rules are extremely complicated (shock) and opaque (shock): there seem to be exemptions and surcharges and quotas aplenty. So much for "frictionless" trade.
Still keen on staying in the EU Customs Union?
But surely we should not be cutting tariffs unilaterally? After all, we put ourselves at a disadvantage if we allow foreign goods in without them allowing in our exports in return? Who cares if a bottle of Chilean red is a bit more expensive than it otherwise might be? Well maybe this recent BBC article will help.