CABINET’S TRADE SHOWDOWN
May warned her choice for a post-Brexit deal is mired in red tape and ‘undeliverable’
‘Burdensome controls’
THERESA May’s preferred option for a post-Brexit customs arrangement is impossibly bureaucratic and ultimately ‘undeliverable’, according to a bombshell analysis.
The PM’s proposed customs partnership will make it impossible to secure trade deals with countries such as the US and Australia and would keep Britain tied to single market rules and EU law, it concludes.
The 30-page memo, from the European Research Group, a Eurosceptic organisation led by Jacob Rees-Mogg, warns the customs partnership – which the PM will endorse at a crunch meeting of an 11-strong Cabinet subcommittee today – would end up being ‘substantially the same as a full customs union’ with the EU.
The document has been distributed to Cabinet ministers ahead of today’s meeting and is expected to be used as ammunition against the partnership plan, which was devised by Mrs May’s chief Brexit negotiator Olly Robbins.
The ‘New Customs Partnership’ (NCP) is one of two proposals for what will replace the EU’s customs union after the Brexit transition phase ends in 2021.
It would require officials and businesses to track the final destination of all goods entering the UK. Customs officials would collect tariffs on goods heading for the EU and hand over any tariffs to Brussels. The plan would in theory remove the need for any customs controls on goods traded between the EU and the UK. But Environment Secretary Michael Gove has described it as ‘ bonkers’ and Brexit Secretary David Davis has called it ‘blue sky thinking’.
Last night one Eurosceptic MP warned Mrs May that the ‘fate of the Government is tied up’ with the customs decision and suggested Mrs May could face a leadership challenge over the issue.
The report, whose authors are not named, sets out the ‘fundamental problems’ with the customs partnership, including the vast administrative burden would impose huge costs on business; Britain’s negotiating leverage would be drastically undermined because we would have to accept EU border regulations; Quota systems on imports to the EU make the system impossibly complex; Forcing the UK to stay in ‘regulatory alignment’ with the EU – in effect embracing all single market rules and diktats from EU judges.
The report argues that ministers should adopt the second customs option, of maximum facilitation or ‘streamlined’ controls. It points out that HMRC and Irish Revenue chiefs have said this would not require physical border checks in the province. Physical checks could be carried out ten or 15km away from the border.
The report says the NCP would be ‘extremely complicated and difficult to operate’.
It would create ‘wholly novel administrative and regulatory challenges for business and government’. It concludes that in practice it would be impossible for importers to recover tariffs because of the complexity of the system.
It states: ‘The customs partnership would impose costs and burdens across the whole economy, on businesses which have nothing to do with exporting to the EU. The price of avoiding controls at the point of export of goods into the EU would be to festoon the entire economy with burdensome controls, while crippling the ability to conduct an independent trade policy’.
The authors conclude: ‘The NCP proposed is undeliverable in operational terms and would require a degree of regulatory alignment that would make the execution of an independent trade policy a practical impossibility.’
Downing Street said the Government has set out two workable proposals on customs after Brexit.