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- Theresa May’s government to confirm it wants a “temporary customs union” arrangement with the EU after Brexit in paper published on Tuesday. Britain will leave the customs union but seek a close interim relationship, which is as frictionless and barrier-free as possible. The plans will anger hardline Brexiteers who believe a transition period is a plot to frustrate Britain’s exit from the EU.
LONDON – The UK government will today confirm it wants to negotiate a transitional customs union arrangement to take effect after Brexit in the first of many official position papers to be published over the next few months.
The Department for Exiting the European Union (DExEU) is expected to release the papers at around midday on Tuesday. It will be the clearest insight yet into the details of what Prime Minister Theresa May, Brexit Secretary David Davis, and the rest of the Cabinet hope to achieve in divorce talks with the EU.
The paper is expected to express the government’s desire to leave the customs union but seek to negotiate a totally “new” customs relationship which is as “frictionless” as possible. The British side hopes the EU will agree to a bespoke, time-limited customs arrangement, which will protect the economy from the effects of a “cliff-edge” Brexit and allow businesses to carry on as normal, according to multiple reports.
This will be viewed as a victory for Chancellor Philip Hammond, who has urged colleagues to embrace a softer Brexit based on transitional arrangements. The plans will likely anger hard Brexiteers, including those on the Tory backbenches, who want to see a clean divorce which isn’t delayed by a transitional period. An unnamed Cabinet minister last month accused Hammond and his sympathisers of trying to “f— up” and “frustrate” Brexit.
The government also wants to be able to negotiate trade deals with countries around the world during this proposed transitional period. Full custom union members are prohibited from doing trade deals with countries outside the EU.
The EU has made it clear on several occasions it will not discuss future trade relations with Britain until significant progress has been made on issues like the rights of citizens and the money the UK must pay in financial obligations, or the divorce bill as it has become known.
However, the feeling within government is British negotiators will struggle to make progress when talks resume later this month unless the British side has a clear understanding of what it wants post-Brexit trade relations to look like.
The Confederation of British Industry (CBI) welcomed the government’s plan for a transitional customs union arrangement, describing the position paper as “encouraging” in a statement released on Tuesday morning.
CBI Deputy Director General Josh Hardie said: “Companies will welcome the progress government has made today in publishing these papers. Over the past year, businesses have been providing policymakers with the evidence, ideas and solutions to make a success of Brexit.
“So it’s encouraging to see that these papers propose a time-limited interim period and a customs system that is as barrier-free as possible.”
The Labour Party has attacked the proposals as “incoherent” and urged the government to retain the “same basic terms” of customs union membership.
“Labour is clear that we need to retain the benefits of the customs union and avoid a cliff-edge for the British economy,” a spokesperson said. “That means committing now to strong transitional arrangements on the same basic terms we currently enjoy – including the single market and customs union.”
The Liberal Democrats dismissed the plans as merely delaying the inevitable “pain” of an extreme Brexit. The party’s Brexit Spokesperson Tom Brake said: “Even if they were agreed to by the EU, these proposals will only delay the economic pain caused by leaving the customs union. “We still face the prospect of more red tape for businesses, longer queues at our borders, and higher prices for consumers once the transition comes to an end.” Brake added: “The only way to ensure ‘free and frictionless’ trade with the EU is to remain a full member of the Customs Union and Single Market. It doesn’t matter how it’s dressed up or how long it’s postponed, the government’s extreme Brexit will end up leaving Britain poorer.”
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What is the customs union? And what does the government want to achieve?
The customs union is a central part of the 28-nation bloc’s apparatus which means member states trade freely with each other and have all agreed to charge the same tariff on imports from outside of the bloc. This means countries importing goods into the EU pay the same tariff regardless of which member states they are importing to. Members of the customs union are prohibited from negotiating their own trade deals with countries elsewhere in the world.
May’s government has accepted Britain will leave the customs union when the two-year Article 50 period expires in March 2019. Opponents of this plan warn leaving the customs union would unleash economic and political chaos, like heavy tariffs being imposed on goods; long queues at customs; and the return of a hard border between Ireland and Northern Ireland. A position paper on the Irish border dilemma is expected to be published this month.
The Cabinet is keen to avoid chaos and so aims to negotiate a transitional customs arrangement which will allow Britain to continue having close relations with the customs union for an interim period as a non-EU member state.
Once the transitional period is over, Britain will seek to negotiate a “highly streamlined” long-term customs arrangement with the EU or a new “partnership” with no customs border at all, the paper is set to add.
The EU has warned Britain it will not be able to negotiate a “cherry-picked” transition deal and will be expected to adhere to EU rules if it wishes to enjoy a privileged relationship with institutions like the customs union.
“If you want the advantages you of a single market and customs union, you have to take the obligations,” EU Parliament chief Brexit negotiator Guy Verhofstadt said earlier this year.