May’s customs proposal will jeopardise trade deals, say Brexiteers
THERESA MAY is backing a plan for Britain’s future relationship with the European Union that would tie up firms in regulation and make trade deals with other countries “impossible”, senior Brexiteers have warned.
Well-placed sources told The Sunday Telegraph that Mrs May had signalled her support for a “hybrid” plan drawn up by senior civil servants under which a post-Brexit Britain would collect customs duties on the EU’s behalf for goods destined for the bloc.
The warnings came amid broader concerns about whether the Government could back down on its pledge to leave the customs union altogether, amid overwhelming opposition in the House of Lords and the prospect of a fresh Commons vote this week.
Jacob Rees-Mogg, the chairman of the European Research Group of Eurosceptic backbenchers, said: “Trying to keep us in a customs union would be deeply divisive in the party, the Commons and the country at large.”
The customs proposal said by Whitehall and parliamentary figures to be backed by Mrs May was originally drawn up as one of two possible ways to avoid a hard border in Ireland while retaining the set tariffs.
However, pro-Brexit ministers and MPs fear that the plan, which Mrs May could put forward to her Brexit Cabinet in the next fortnight, involves cumbersome processes for businesses that could remove any advantage the UK gains by leaving the customs union.
They are also concerned it would result in the EU demanding that the UK’s regulations on goods fully align with those imposed by Brussels, in order to agree that items arriving.
One Brexiteer said: “The Prime Minister’s scheme would make trade deals impossible. It’s all about regulation and if you’ve got to have regulatory harmonisation, it’s not worth the while of anybody doing a deal with you.”
David Davis, the Brexit Secretary, is understood to be among those opposed to the proposal. In September he dismissed it as a “blue sky idea”.
The second option, a “streamlined customs arrangement”, would combine “trusted trader” schemes with technology and other measures, such as handing exemptions to small businesses conducting 80 per cent of cross-border trade in Northern Ireland.
Despite the concerns of Brexiteers, Mrs May reiterated both options in her Mansion House speech last month.
The Daily Telegraph disclosed last week that EU officials had rejected both ideas in initial discussions, claiming neither “will work” – but No10 insist both are still on the table.
A Government source said: “We have put two sensible and practical solutions on the table and are working constructively towards getting this solved by October.”
Shanker Singham, head of the trade unit at the Institute of Economic Affairs think tank, said of the proposal: “Trade is against this because they think it’s too complicated. The logical conclusion is that people will ignore it.
“In a trade agreement, when you’re trying to offer tariff reduction as an advantage, they will say ‘that’s all very well and good but because it’s so cumbersome, it’s not much of an advantage’. You lose your leverage.”
Mrs May needed to make a decision urgently to give businesses time to prepare for the outcome, he added.