Brexit: UK to Have “Shortish” Customs Union
Brexit Secretary, David Davis, has stated that the UK will propose a temporary customs union with the EU. On Tuesday, Davis made his rounds across various news programmes confirming that the government would use a position paper to propose a temporary customs union for a “shortish” period of no more than two years, so that the transport of goods could continue after the Brexit deadline.
The position paper also states that during the period, it’s expected that the UK would be able to negotiate its own trade deals, which is something it cannot do being part of the EU customs union.
Once the interim period ends, the UK would then look to agree either a “highly streamlined” border with the EU, or a new partnership with no custom borders. The government has stated that the interim period of being in the customs union would allow businesses to adjust to the new trade arrangements, which so far, have not been discussed.
The Customs Union Explained
Countries in the customs union don’t levy any import taxes on each other’s goods. Also, every country within the union imposes the same tariffs on imports from overseas.
It was confirmed over the weekend that the UK would be leaving the customs union on the Brexit deadline in a joint article by chancellor Philip Hammond and trade secretary Liam Fox.
Doing the Rounds
Speaking on ITV’s Good Morning Britain, Davis said that a transition period would be in the best interests of both the UK and Europe. “We sell them about £230bn for goods and services each year. They sell us £290bn,” Davis said.
When Davis was asked whether the UK would have to pay to remain in the customs union, he outlined: “What happens in that sort of interim period you will have to leave me to negotiate, I’m afraid. But the aim is to bring to an end to these £10bn-a-year payments. “We are still haggling with them on what we may owe them in the short term, but we are going to bring the overall thing to an end.”
The Brexit secretary was also quizzed on BBC Radio 4’s Today Programme about the temporary customs union. When he was asked about what the cost would be of such an arrangement, Davis said: “I’m not going to do the negotiation on air.” He also appeared to have brushed off any indication that a Brexit divorce bill would be finalised this year. “There won’t be a number by October or November,” he said on the Radio 4 show. Davis asserted that “a lot of progress” had been made in the negotiations over citizens’ rights. But he added: “We have made a very generous offer. It’s not perfect from either side, and we are going through the negotiation.”
What are the EU Saying?
A spokesperson for the European Commission said: "We will now study the UK position paper on customs carefully in the light of the European Council guidelines and the council's negotiating directives.
The next negotiation round will start in the week of 28 August. We take note of the UK's request for an implementing period and its preferences as regards the future relationship, but we will only address them once we have made sufficient progress on the terms of the orderly withdrawal. An agreement on a future relationship between the EU and the UK can only be finalised once the UK has become a third country. As Michel Barnier [EU chief Brexit negotiator] has said on several occasions, 'frictionless trade' is not possible outside the single market and customs union."
Chief Brexit negotiator for the European parliament, Guy Verhofstadt was critical over Davis’ proposal, tweeting: To be in & out of the Customs Union & "invisible borders" is a fantasy. First need to secure citizens’ rights & a financial settlement.”
Back in Blighty, reaction to the customs union proposal was pretty mixed. Deputy director of the CBI, Josh Hardie said that the proposals were promising. The CBI are a body who represent British businesses. "The clock is ticking and what matters now is giving companies the confidence to continue investing as quickly as possible," Hardie said.
On the other hand, Labour’s shadow Brexit secretary, Keir Starmer labelled the proposals as “incoherent and inadequate” and were created to “gloss over deep and continuing divisions within the cabinet.”
"These fantastical and contradictory proposals provide no guidance for negotiators or certainty for businesses," he added.
Director general of the British Chamber of Commerce, Adam Marshall, said that most businesses were more worried about future customs arrangements with the EU rather than new trade deals. "In the long term, we should aim to avoid imports and exports being subjected to two sets of customs checks, and to ensuring the smoothest possible future trade relationship between the UK and EU,” he said.
Even the outspoken former UKIP leader, Nigel Farage put his pint glass down to put his two pennies worth across about the government’s proposals. "We might find ourselves 10 years down the road from Brexit having not got what we wanted," he said.
"There's no doubt that during this transitional period, the free movement of people will continue, the European Court of Justice will go on having judgements over British business and, of course, we'll go on paying a membership fee. None of those three things are acceptable to Brexit voters in any way at all," he continued.