Britain pushes to retain customs union while negotiating new trade deals

Vidya Ram London | Updated on January 09, 2018 Published on August 15, 2017

Philip Hammond, Britain’s Chancellor of the Exchequer

Issue is the trickiest in its talks with the European Union

The British government wants to remain part of the European Union customs union for a number of years, as part of transition arrangements, while still being able to negotiate trade deals with countries such as India.

A government paper published on Tuesday set out its ambitions around future relations with the customs union – the EU’s tariff free trading area – one of the trickiest issues in negotiations over Britain’s exit from the European Union.

“As we leave the European Union and therefore the EU Customs Union, the Government seeks a new customs arrangement that facilitates the freest and most frictionless trade possible in goods between the UK and the EU, and allows us to forge new trade relationships with our partners in Europe and around the world,” it states, arguing that it would be pushing for a “highly streamlined” customs arrangement that would remove the need for a UK-EU customs border.

“One potential approach would involve the UK mirroring the EU’s requirements for imports from the rest of the world where their final destination is the EU,” the report suggests.

The report also outlines Britain’s ambitions for an interim arrangement: a time-limited customs based on shared external tariffs and without customs processes and duties between Britain and the EU.

Controversially it will push for Britain to be able to begin negotiations with new trade partners, something that members of the customs union are not able to do.

“The UK has been clear that, once it has left the EU, it intends to pursue new trade negotiations with others. However, the UK would not bring into effect any new arrangements with third countries which were not consistent with the terms of the interim agreement while the interim agreement was in place,” says the report.

“Our proposals are ambitious, and rightly so. They set out arrangements that would allow UK businesses to continue to trade with their European partners in the future, while expanding their markets beyond the EU,” said Chancellor of the Exchequer Philip Hammond, who has long been pushing for a “softer” Brexit, and for whom Britain’s spelling out of ambitions for interim arrangements to smooth the process will be seen as a political victory.

The proposals were welcomed by business, albeit with caution.

“It is encouraging to see that these papers propose a time-limited interim period and a customs system that is as barrier-free as possible… But the clock is ticking and what matters now is giving companies the confidence to continue investing as quickly as possible,” said Confederation of British Industry Deputy Director-General Josh Hardie.

The European Commission also made clear that its focus remained on settling outstanding issues on Britain’s exit, before it could begin to discuss future relations.

“The quicker #UK & EU27 agree on citizens, settling accounts and #Ireland, the quicker we can discuss customs & future relationship,” tweeted Michel Barnier, the commission’s chief negotiator on Brexit, while the European Parliament’s outspoken negotiator on Brexit Guy Verhofstadt described plans of being “in & out of the customs union” and “invisible borders” as “fantasy.”

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Published on August 15, 2017
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