Brexit: damned if you do ...

CONUNDRUM: PULLING OUT COULD SEE MAY’S ADMINISTRATION FORCED INTO U-TURN

Debate is divided between those arguing pragmatism vs sovereignty.

London

Prime Minister Theresa May’s plan for Britain to leave the European Union (EU) customs union when it quits the bloc – and not join a similar arrangement – has become a flashpoint in the Brexit process, setting up a possible parliamentary defeat that could force her government into a damaging policy U-turn.

The EU’s customs union is a legal arrangement in which all member states participate. Some other countries have also joined under varying conditions, including Turkey and Norway, but May has ruled this out for Britain.

Members of a customs union apply the same tariff to imports from outside the union and apply no tariffs to goods from other members of the union.

Economic supply chains across Europe rely heavily on this. For example, car components crisscross borders many times for processing before a vehicle is finally assembled. The union also limits checks and other time-consuming and costly bureaucracy at borders between members.

Yet, there are drawbacks to membership. One of the biggest is nations cannot strike their own free-trade deals in goods with other countries.

May’s Brexit Cabinet subcommittee met yesterday to discuss the government’s position on a looser future customs arrangement with the EU. The issue lies at the heart of the Brexit debate, setting those who argue that pragmatism and business interests should shape government policy against those who prioritise sovereignty and the idea of Britain as a pioneering, trading nation.

The first group say staying in a customs union will smooth commerce with the world’s largest trading bloc. It will also avoid the return of a hard border between British-ruled Northern Ireland and the Irish Republic.

There are fears that reintroducing checks on what will be Britain’s only land border with the EU could reignite sectarian violence.

Brexit supporters say Britain must quit the customs union to pursue independent trade deals with other countries, which they argue is a big advantage.

The EU is already demanding Britain pay it €2.7 billion it has failed to collect due to fraud on Chinese imports. – Reuters