Brexit: Britain to Leave Customs Union
Today, Monday, could be marked as a victory for Brexiteers within the Tory government and to the millions who voted in favour of Brexit, as Downing Street said that Britain was “categorically leaving the customs union” and would not look to replace it. Instead, Britain would seek a customs deal that would allow it to set its own tariffs and create third country trade deals.
“The key point, as the prime minister has said on 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,” Theresa May’s spokesman told reporters, adding, “We will be leaving the EU and the customs union.”
What is the customs union?
• Whilst Britain is under the existing customs union, there are no tariffs levied on goods moving between members of the union, there is also a common external tariff on all goods entering the union.
• Negotiations in international trade deals are conducted by the European Commission on behalf of all members of the customs union.
• The customs union does not allow its members to directly negotiate trade deals with other countries.
Despite this assumed setback for the Remain camp, ministers including chancellor Philip Hammond, home secretary Amber Rudd and business secretary Greg Clark don’t seem to have had their feathers ruffled. But, why is that?
Well, none of them believes that the new customs arrangement is anywhere close to being realised and they believe that Britain will end up staying in the existing customs arrangements with the EU, long after the two-year transition period.
Remainers are also confident that Britain will be staying in the existing customs arrangement because:
1. There is no resolution over how to maintain a fully open north-south Irish border – a major part in the Brexit deal.
2. The Labour party are expected to lay down a Commons amendment to keep Britain in “a” customs union, and it is likely to be supported many pro-EU Tory MPs.
3. The recently leaked government economic impact assessment suggests that Britain would be in a dire position if it left the customs union before any third country trade deals are forged.
4. The government doesn’t have a clear plan on what to replace the existing customs union with.
Differences between “The” and “A” customs union
In order to shine a light on the government’s vision of Britain’s trading relationship with the EU after Brexit, a spokesperson for Downing street said: “It’s not our policy to be in ‘the’ customs union. It is not our policy to be in ‘a’ customs union.
The customs union is a shorthand term for the existing EU customs arrangement. Membership would mean that Britain would remain part of the union until Brexit, and would be prevented under its terms from directly striking trade deals with other countries.
A customs union: Britain could negotiate a similar deal to the EU customs union. The arrangement, being considered by the Labour party, would prevent Britain from being able to negotiate other trade deals, but would allow close ties with the EU to be retained.
Theresa May and Brexit secretary, David Davis are to meet with the EU’s chief negotiator, Michel Barnier on Monday for the start of second phase of negotiations with Brussels.
On Wednesday and Thursday, members of the cabinet will meet to come up with an agreement on how they want Britain’s future trading relationship with the EU to look.