UK ‘can’t do deals with Commonwealth’ if we stay in customs union

‘Enormous opportunities’

BRITAIN will not be able to sign free trade deals with other Commonwealth countries if it stays in the EU’s customs union after Brexit, Australia has warned.

Theresa May has vowed to take the UK out of the customs union to allow the Government to pursue an independent trade policy.

But diehard Tory Remainers are threatening to join forces with Labour to defeat the Prime Minister over the issue in the Commons.

Now Australia’s foreign minister Julie Bishop has said the UK will be unable to strike new trade deals around the world if the rebels succeed in forcing Mrs May to back down. Miss Bishop said Australia was keen to strike a trade deal with the UK after Brexit – and said the sentiment was widely shared among Commonwealth leaders at this week’s summit in London.

She said Australia sees ‘enormous opportunities for more trade and investment, and greater engagement, with Britain’, and confirmed that talks on a future trade deal were already underway.

But she warned they would collapse if Britain remained in a customs union with the EU.

‘My understanding is that if Britain remains in a customs union then the opportunity for us to enter into a free trade agreement with Britain would not be achievable,’ she told Radio 4’s The World Tonight.

The customs union allows the UK to trade freely with EU countries behind a common external tariff with the rest of the world. Pro-Remain MPs and peers argue that the benefits of staying in would outweigh the ability to strike new trade deals with economies such as China, India, Australia and the US. Critics accuse them of trying to keep Britain in the EU by the back door. Ministers suffered a crushing defeat on the issue in the Lords on Wednesday night when peers voted by 348 to 225 to require ministers to explore the option of staying in the customs union.

Eleven select committee chairmen joined together to force a vote next week calling on the Government to make staying in a customs union with the EU ‘an objective in negotiations’ with Brussels.

Downing Street insisted Mrs May would not back down on her determination to leave the customs union. However, ministers privately fear they could struggle to win a vote on the issue in the Commons.

Mrs May was last night under pressure to strip Tory peer Baroness McGregorSmith of her role as a government business ambassador for voting to keep Britain in a customs union, in defiance of government trade policy.

But she also faced calls to remove fellow peers Lord Burns and Baroness Noakes from the board of the broadcasting regulator Ofcom after they voted with the Government on the issue.

Downing Street declined to comment yesterday.