Wednesday

23rd May 2018

UK keen to keep old EU customs deal

  • UK seeks "freest and most frictionless possible trade" with EU and wider world (Photo: Andre Skibinski)

Britain wants to keep its EU customs privileges after Brexit but also wants the freedom to negotiate other trade deals.

The position on an “interim” customs pact to enter into force after the UK quits the EU in March 2019 was outlined in a British government statement on Monday (14 August) prior to a more detailed paper due out on Tuesday.

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  • Hogan (l): "High level of delusion in London" (Photo: The Council of the European Union)

“One possible approach would be a temporary customs union between the UK and the EU ... During this interim period, which will be negotiated with Brussels, Britain will look to negotiate bold new trade relationships around the world”, the British statement said.

It said this arrangement would be "time-limited”, but without giving a deadline.

It also said it would “allow for a smooth and orderly transfer” to the final customs regime.

The final regime would either be a “customs partnership” or a “highly streamlined customs arrangement”, it said.

The “partnership” would “negate the need for a customs border" between the UK and EU states.

It would mean the UK imposed the same tariffs and checks on international imports as the EU and collected customs duties on behalf of EU countries on items that entered the bloc via its ports.

The “streamlined” deal would mean a new EU customs border, including with Ireland.

But this would use high-tech solutions to create “the freest and most frictionless possible trade”, such as CCTV that recognised the number plates of lorries carrying goods of “trusted traders” to avoid systematic vehicle checks.

The ideas were welcomed by British industry lobbyists, despite the fact they go against the EU’s red lines.

The EU has said it would be illegal for the UK to negotiate new trade deals around the world so long as it is still inside its customs union.

It has also said it wanted a deal on EU citizens’ rights, on the Irish border, and on the UK’s EU exit bill before negotiating future trade relations.

Delusion?

Phil Hogan, the EU’s agriculture commissioner, told the Financial Times, a British newspaper, that he welcomed the UK’s “appetite for a pragmatic and reasonable outcome to a free-trade agreement”.

But he said “there’s a high level of delusion in London” on the amount of legal work to be done to implement its ideas in time and on the willingness of the other 27 EU states to agree to its proposals.

Keir Starmer, the shadow Brexit minister from the opposition Labour party in the UK, was more critical.

He said the proposals were “fantastical and contradictory” because they spoke of a new customs border that was not really a border.

“The cabinet remain split on key issues and cannot decide between two very different but equally unachievable options,” he said.

The Irish government said in a statement on Monday the “immediate focus” of EU talks should be “citizens' rights, the financial settlement and the Irish specific issues”.

Sinn Fein, the Irish nationalist party, called the idea of a “streamlined” border “nonsense and impossible to deliver”.

“They [the British government] are prepared to impose an EU frontier across Ireland and are prepared to play fast and loose with our economy and peace agreements,” David Cullinane, the party’s Brexit spokesman, said.

'Encouraging'

The UK is due to publish another EU “future partnership paper” on the Irish border issue, including its security ramifications, on Wednesday.

The Chamber of British Industries, a lobby group, said on Monday that the customs paper was “encouraging”, but that “the clock is ticking” to clinch a deal before by March 2019.

CityUK, a lobby group for London’s financial firms, also called for “urgent” talks on an EU deal on financial services as well as goods.

“The majority of UK exports are services,” it said.

David Davis, the British minister leading the Brexit talks, had previously advocated a so-called hard Brexit in which the UK left the customs union and single market without any kind deal in a political move that would disrupt trade.

Tuesday’s position paper indicates that he has softened his approach in line with calls by more pro-EU cabinet members, such as treasury chief Philip Hammond.

“The united desire to avoid unnecessary disruption or a disorderly exit for the United Kingdom from the European Union is a strong foundation for the negotiations,” Davis said in an op-ed for City A.M., a British website.

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