15/08/2017 12:31 BST | Updated 15/08/2017 16:23 BST

David Davis's Customs Union Plan Is 'Fantasy', Says European Parliament's Brexit Spokesman

Businesses are set for a Brexit red tape nightmare.

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UK plans to enter into a customs partnership with the EU after 2019 have been dismissed as “fantasy” by the European Parliament’s Brexit coordinator.

Former Belgian Prime Minister Guy Verhofstadt made the comments just hours after the Brexit Secretary David Davis revealed the UK could seek a “customs partnership” with the EU.

That plan would mean no border checks on goods traveling between the UK and the continent.

The Government admitted such a system is “innovative and untested” and would “take time to implement”.

The plan would also see businesses having to pay the highest tariff rate available and then claiming money back - a system which adds yet another layer of bureaucracy on exporters. 

Verhofstadt – responsible for the European Parliament’s Brexit approach – took to Twitter to criticise the plan. 

The customs partnership is one of two proposals put forward by Davis to help deliver the “freest and most frictionless trade possible between the UK and the EU.”

This arrangement, which would see the UK “mirror” EU tariffs on goods coming into Britain, involves an increase of red tape for businesses.

Companies selling goods into Britain would have to pay which ever tariff is higher out of the UK and EU rate, and then claim any money back they are owed at a later date.

The Brexit department’s ‘Future Customs Arrangements’ report says: “Businesses in supply chains would need to be able to track goods or pass the ability to claim a repayment along their supply chain in order to benefit.”

The other plan is for a “highly streamlined” arrangement, which would make use of new technologies to speed up the processing of goods arriving and leaving the UK.

The Government admits that this approach – which would see a customs border – would lead to “an increase in administration compared to being in the customs union.”

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Labour MP Chuka Umunna, co-chair of a cross-party Parliamentary group on EU Relations, said: “As the Brexit negotiations go forward, it is crucial that Ministers take positions based on realism rather than wishful thinking.

“Unfortunately, such realism is thin on the ground in this position paper.

“They might promise frictionless trade, but they are offering a red tape bombshell for British business.”

Labour’s Shadow Brexit Secretary Keir Starmer described the proposals as “ambiguous, unachievable and offer no viable solutions”

He said: “The first proposal for a streamlined customs arrangements is code for a hard-edged exit from the Customs Union, which will inevitably involve a border between the UK and any trading partner, including the EU27.

“This will mean delays and costs for UK businesses, especially manufacturing. The Government appear to be relying on unspecified technological solutions to reduce these burdens, but they can’t suggest how and when these new systems could be in place or how much they might cost.

“The second proposal is in David Davis’s own words “untested”. That’s because it is, in truth, a half-in half-out proposal without any clarity about how the Government plan to negotiate or deliver it.

“This will almost certainly entail considerable new bureaucratic burdens for British businesses, including complicated ‘tracking and repayment mechanisms’.”

The Government also confirmed the UK would seek to stay in a customs union with the EU after March 2019 - something that would stop Britain from implementing free trade deals agreed with other countries.

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David Davis supports the UK entering into a temporary customs union with the EU after March 2019.

Speaking on BBC Radio 4 this morning, Davis said this interim arrangement could last two years.

Announcing the report, Davis said: “The approaches we are setting out today will benefit both the EU and UK and avoid a cliff-edge for businesses and individuals on both sides.

 “The way we approach the movement of goods across our border will be a critical building block for our independent trade policy.

“An interim period would mean businesses only need to adjust once to the new regime and would allow for a smooth and orderly transition.

 “The UK is the EU’s biggest trading partner so it is in the interest of both sides that we reach an agreement on our future relationship.

“The UK starts from a strong position and we are confident we can deliver a result that is good for business here in the UK and across the EU.”