Alexander Downer, the Australian High Commissioner in London, has called on the UK to resist the temptation of remaining in a customs union with the European Union after Brexit.Interviewed on BBC Radio 4’s Today programme on Monday, he said there was the opportunity for a “substantial” increase in trade between Britain and Australia if they reached a post-Brexit free trade deal.

EU customs union potential restrictions

But Mr Downer warned that, if the UK stayed in a customs union with the EU, the nation would be unable to formulate its own trade policy and negotiate deals with non-EEA nations around the world.The outgoing High Commissioner was speaking after writing the foreword for a report from the Policy Exchange think-tank, which urged the UK government to become a global leader in free trade by unilaterally abolishing tariffs, giving the country an edge in Brexit negotiations and driving down prices in the shops, according to the report.Mr Downer said, “From Australia’s point of view here’s what we would like to see coming out of the Brexit debate: number one – we naturally don’t want to see the EU and the UK introduce a whole lot of tariff barriers between them.“There are none at the moment, we don’t want to see that introduced. That would be damaging to the European and British economies but damaging to the global economy – that’s what we are worried about.“Number two – we do want to trade with the UK and we want to build back our trade with the UK. We could build substantially more trade if we were able to negotiate a free trade agreement with the UK.“If you remain in the customs union then you would have no control over an independent trade policy. In fact you’d have no control over trade policy at all.“Countries like Australia, China, Japan, the US and so on would not be able to conduct trade negotiations with the UK, we would only conduct trade negotiations with the EU.“You wouldn’t be relevant to that, because you wouldn’t have a say in those negotiations, they would be exclusively conducted by the EU.”

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Unilateral trade liberalisation

Mr Downer said Australia had experienced 26 years of consecutive growth because it had opened its markets to the world, illustrating the “huge advantages of unilateral trade liberalisation”.The Policy Exchange report said that attempting to protect industries through tariffs deterred sectors from innovating and harmed consumers.Warwick Lightfoot, director of economics at the think-tank, said, “This is one of the few areas of consensus in economics – 95 per cent of economists across the political spectrum from left to right support free trade and the principle of comparative advantage, and governments need to catch up.“Estimates suggest that even halving our tariffs could see a 2.6 per cent boost to UK GDP and unilaterally abolishing tariffs could reduce household bills by £160 a year.“Despite its rhetoric, the EU is a protectionist bloc, shielding its farmers and other producers from competition with high tariffs.“This not only imposes costs on consumers but also stifles innovation and slows productivity growth.“When Britain leaves the EU, we have the opportunity to set ourselves free from its protectionist approach to the benefit of British consumers and our economy.”

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Read more about the future of UK business in the Winter issue of our magazine 

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