Britain rules out being in customs union with the EU
• Government remains divided over what sort of relationship should be built with the world’s biggest trading bloc
Britain has ruled out staying in any customs union with the EU after Brexit, Prime Minister Theresa May’s spokesman says as the government prepares for a crunch week of Brexit talks.
The extent of any British post-Brexit involvement in the EU’s customs union, which binds members to a trade bloc with common external tariffs, has become a major issue of contention inside May’s divided government and Conservative Party. Membership of a customs union after Brexit would prevent London from striking trade deals with countries outside the EU in future.
“The key point, as the prime minister has said on many, many occasions, is that we need to have our own independent trade policy and be able to strike trade deals with the rest of the world,” said May’s spokesman.
“We will be leaving the EU and the customs union and it is not government policy to be members of ‘the’ customs union or ‘a’ customs union.”
TWO OPTIONS
The official negotiating stance had been set out in a document published in August, he said. It gave two possible options: a streamlined customs arrangement and a new customs partnership with the EU. Britain was looking at both options and no deadline for a decision on which one to pursue had been set.
With just a year left before Britain’s March 2019 exit from the EU, May’s party remains deeply divided over what sort of relationship should be built between the world’s biggest trading bloc and the world’s sixth-largest economy. Such are the divisions that the debate over the extent of Britain’s postBrexit participation in a EU customs union has taken place in public with key ministers offering a range of views.
While May has said repeatedly that Britain would leave the customs union, some ministers have hoped that it could remain in a bespoke customs arrangement with the EU after Brexit.
But supporters of Brexit say one of the main benefits of leaving the bloc will be the ability to strike trade deals with other faster-growing countries.
The Confederation of British Industry has called for Britain to stay in a customs union.
Chancellor of the Exchequer Philip Hammond has also left open the possibility of Britain joining a new customs union. A customs union means that its members apply the same tariffs to goods imported into their territory from elsewhere and apply no tariffs to goods from other members. It also limits checks and other bureaucracies at borders between members.
Unless Britain negotiates a new trade deal with the EU, its exports would run into the union’s external tariffs, which average about 5% across all goods, including 10% for cars and over 200% on certain types of poultry.
But May is under pressure from eurosceptic members in her party to quit the trading arrangement because for them the key prize is the chance to sign new trade deals with other nations such as the US, China and India. Britain and the EU are due to hold their first formal discussions this week about what their future relationship will look like after Britain leaves the EU.
EU chief negotiator Michel Barnier will meet his opposite number, Brexit minister David Davis, in London this week for the first time since EU leaders told Barnier to negotiate a postBrexit transition period to ease Britain’s departure.
May will hold two cabinet meetings on Wednesday and Thursday at which she will try to heal deep division among her ministers over the best way to leave the EU. If no deal is reached by October, many businesses fear Britain could face a disorderly exit that would weaken the West, disrupt the peace in Northern Ireland, imperil Britain’s $2.7-trillion economy and undermine London’s position as the only financial centre to rival New York.
S&P Global says that a disorderly Brexit as a result of Britain misjudging the “selfpreservation” instincts of the EU could lead to a further downgrade of the UK’s sovereign credit rating.
THE KEY PRIZE IS THE CHANCE TO SIGN NEW TRADE DEALS WITH OTHER NATIONS SUCH AS THE US, CHINA, INDIA