Brexit Briefing: Theresa May's Customs Plan Is 'Dead'

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1) Just When You Thought There Were No More Metaphors...

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A camel is a horse designed by committee, so the saying goes, so Heaven knows what the UK’s post-Brexit customs arrangement will look like once the 11 ministers at the top Government have had their way with it.

The Cabinet’s Brexit subcommittee convened on Wednesday to discuss the various options available to the UK once we’ve left the EU when it comes to keeping ‘frictionless’ trade with the bloc – or, ‘as frictionless as possible’ as the ambition has now been dialed down to.

Theresa May’s preferred option is a ‘customs partnership’ with the EU, which would see the UK effectively mirror Brussels’ rules on imports where the goods ultimate destination is the continent.

Such a system would see traders pay whichever is higher out of the EU and UK’s tariff, and then claim back the difference if the goods’ final destination has a different rate than that already paid. Confused? That’s understandable – the Brexit department described this as “unprecedented as an approach” and “challenging to implement” when it was first proposed last year.

Whatever its faults, it is Theresa May’s preferred solution to solving the puzzle of freeing the UK from the customs union, but still making it as easy as possible for businesses to trade with the EU. And therefore, you would think it would be Government policy. It is, of course, not as simple as that.

According to numerous reports flying out of the sub-committee meeting (the Mail in particular has an excellent read-out), Brexiteers are digging their heels in. They want the UK to be completely free of any customs union or partnership in order to truly embrace all the free trade opportunities apparently open to an unshackled Blighty.

Sajid Javid – who now has a place on the committee after being promoted to Home Secretary – nailed his colours to the mast when he reportedly told the PM: “Look, I know I’m the new kid on the block, but to me this new customs partnership looks untested and unprecedented. I would have significant concerns about it going ahead.”

His “robust” opposition was said to have changed the tone of the meeting, and along with doubts raised by Defence Secretary Gavin Williamson, the “partnership” idea was torpedoed.

“In its current form the customs partnership idea is dead. There cannot be one now”, a government source told the Telegraph.

2) Will Theresa May Go For The Mac Fac-tor?

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The customs partnership model was one of two ideas put forward by the Brexit Department last summer. The other was a “highly streamlined customs arrangement” - since dubbed ‘maximum facilitation’ and ‘mac fac’ – which essentially relies on technology to make any customs checks as frictionless as possible.

This model is supported by Brexiteers – and fake plastic Remainers such as Javid – as it would mark a cleaner break from EU tariffs and rules.

Could this model win out? Given that Labour have committed to keep the UK in a customs union, the plan might not get through the Commons – let alone the Lords.

But if May decides to push forward with another form of her partnership model – more likely to get support in Parliament - that could prompt Cabinet resignations.

The European Research Group of hardline Brexiteer Tories produced a 60-page document this week explaining why it believe the partnership model would tie the UK’s hands when it comes to negotiating trade deals.

If International Trade Secretary Liam Fox shares the same analysis, it is hard to see how he could stay in his post. Alongside that, David Davis has been looking for a hill to die on for ages (if you believe the briefings), and Boris Johnson is always looking for a chance to demonstrate to the Tory membership he is a true Brexiteer.

So it comes to this: less than a year until Brexit, and with the final deal supposed to be agreed by October, the UK still does not know what customs arrangement it wants with the EU once it leaves the bloc.

It is perhaps not too over the top to state that we are now at the crunch point of the Brexit negotiations…not the negotiations between the UK and the EU, but the negotiations between one wing of the Tory party and the other.

3) The Backstop Needs Backing Up

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Michel Barnier visited the Irish border this week to dial up the pressure on the UK ahead of next month’s crunch EU summit. The EU’s Chief Negotiator insisted that unless the UK softened its position on the border ‘backstop’, a Brexit deal could fall apart.

That ‘backstop’ – which would see Northern Ireland effectively kept in the customs union and Single Market if no other deal can be reached – has already been dismissed by Theresa May as something “no UK prime minister could ever agree” to.

Even when Barnier and the UK Brexit Secretary David Davis agreed the terms of the transition deal in March, the future for the Irish border only got the yellow highlighter treatment (policy objective agreed, but needs work on the detail) instead of the green colour (agreed and waiting for sign off) which covered much of the text.

Barnier carried out a joint press conference with the Irish Taoiseach, with Leo Varadker saying the UK’s “approach to negotiations will need to change in some way” in order to get a backstop agreed.

Varadker may be putting pressure on May, but he too is under the microscope when it comes to the Brexit negotiations. The Taoiseach made great political play of the UK agreeing there would be no hard border after Brexit during the December talks – although that was always Britain’s position.

With time ticking away on the negotiations, some in Ireland are beginning to question the tactics of Varadker. Opposition leader Michael Martin warned last month: “Ireland is now being pushed later and later in the negotiations - leaving a real risk that we will face enormous pressure to accept whatever is proposed so that the financial settlement with the UK will not be lost.”

4) Add ‘Trade Deals’ To The List Of ‘Please Elaborate’

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If the UK ever does find itself in a position to strike its own trade deals, the US has been flagged up as one of the first ports of call for Liam Fox.

But a report from the International Trade Select Committee warned that rushing into a deal could be a “catastrophic error” without some serious joined-up thinking on what the UK actually wants from its agreements across the globe.

Agreeing to US rules and regulations on goods might prevent the UK from being able to get its much coveted “frictionless” deal with the EU.

SNP MP Angus MacNeil, who chairs the committee, said: “If there is a clash between the regulatory regimes of the EU and the US, which does the Government plan to prioritise? These issues need to be worked out, not just before negotiating a deal with the US, but also before we finalise our future trading relationship with the EU.”

The report again flags up questions over environmental and animal welfare standards (chlorinated chicken, here we go again) but another concern which needs to be addressed is that of access to the US services economy.

The report argues the US was “reticent” to allow greater EU access to its markets in the wake of the financial crisis, and warns the UK might not even try to get a good deal in this area: “These difficulties give rise to concerns that the Government will not seek reciprocal market access for UK service providers relative to US providers, with the Minister committing only to seeking maximum market access.”

Perhaps one way of avoiding being told you can’t have something is to not even ask for it in the first place.

Don’t Get Angry, Get Blogging…

At HuffPost we love a good blog, and here are the finest Brexit-penned entries from this week. Have a read, and if any of them provoke an urge in you to speak your brain, send a blog to and you could find yourself in this very newsletter.

Dr Lisa Cameron on why, in the face of Brexit, Britain must back a global ban on cosmetic animal testing

GMB’s Tim Roache on how a customs union will keep Britain in the manufacturing ‘Champions League’


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