Ifo chief Clemens Fuest argues in the DW-Interview for a customs Union and a Brexit-a postponement of two years. Enough time to agree on the enduring relationship between the British and the EU.
DW: Mr Fuest, they have proposed a shift in the Brexit to two years. The magic word is customs-Union. How are we to imagine?
Clemens Fuest: It comes to the question of how the long-term economic relations with the UK. We want to get more of these intense trading that we have today, also for the future. And since the idea is to have ultimately a customs Union. This would then make customs controls Essentially superfluous.
The great obstacle to the customs Union today is that the British in agreements with third countries. That, if Europe would conclude, for example, with the USA a free trade agreement, the British did not sit at the table. Therefore, the British don’t like the customs Union.
The proposal would therefore be that a provision in the British sit at the table. That is to say, the EU would jointly negotiate with the British trade agreements with third countries and we had the Chance to get the trade in Europe.
This would mean that there are new voting rights…
This would mean that there is a say of the British. This is clear, otherwise you don’t need to sit at the table. But in the case of trade agreements with third countries, not a big Problem. The British are so much for free trade. And it is only good if the EU is pushed a bit in this direction and some of it is diverted to be too protectionist.
Thus, the Problem of the Backstop with Northern Ireland would be solved elegantly. But can you imagine that the hard Brexiteers in the UK want to get involved?
It must be both sides of the move is the right one. And the hard Brexiteers want to Yes, that the UK decides their own external trade policy. Therefore, the customs Union does not like them. It is not only that the British are sitting there at the table. It would have to move both sides.
At the same time, it is evident that there is to win for the UK, little alone trade agreements with third parties. The are ultimately illusions. But because this is a contentious issue in the UK, would be a longer period of time. A longer period of reflection about whether the Leaving is such a great idea and if you like it, if you can’t then can achieve a customs Union, in which truly all to participate.
What was the date the response, if you have carried forward this idea with colleagues from the United Kingdom?
It is difficult. There are many to see that this desire is still very strong in the case of the Hard Brexiteers. This desire to make a stand-alone trade policy. However, among experts is clear: Through trade agreements with new Zealand or Australia, there is little to gain for the UK. It comes to trade agreements with the large blocks. It has become well as all the experts clear that the UK has not alone makes it easy enough to negotiate. The UK and the EU would be a very big market. Both sides would win if they would represent its interests towards the other.
What would have won the EU and what is the compromise that you would have to close would be?
The compromise would be that the EU, the British in trade agreements with third parties to have a say, to decide, instead of the self. That would be a big step for the EU and not to accept. But the big advantage would be that we prevent a fifth break out of the internal market, quasi-or, at least, border controls.
On the other hand, you would have power, together with a greater negotiating agreements with other countries, for example, when we think of negotiations with China or with the USA. It is important that the British are in the process – the make up nearly a fifth of the European single market.
How could it go now. Of appointment 12, the. April is coming closer, the clock is ticking. How do we go from here. Who should make the first step?
The EU, or at least representatives of the European Union have already indicated that you find it good, if a longer period would be. It would have to move now, the UK members. You would have to say that This is a reasonable solution.
The Alternative is only to not accept the May Deal, which creates these long-term problems of the world. Or without an agreement to withdraw. What would be very, very detrimental. In contrast, the British Parliament.
Clemens Fuest is Professor of Economics at the Ludwig-Maximilians-University of Munich, and a member of the Scientific Advisory Board at the Federal Ministry of Finance. Fuest is since 01. April 2016, President of the Ifo-Institute in Munich. Previously, he headed the centre for European economy, Mannheim (ZEW).