International Trade Secretary Liam Fox has exposed fresh tensions at the top of the Government over Brexit after insisting Britain could not be involved in any customs union with the EU.
Speaking in Shanghai on the final day of Theresa May’s trade mission to China, Dr Fox said remaining in a customs union with the EU after Brexit would prevent Britain pursuing other trading opportunities around the world.
In contrast, the Prime Minister appeared to leave the door open to some form of customs agreement with the remaining EU27 – although she stressed that she wanted to strike free trade deals with other countries too.
Theresa May meets school children at the Yu Yuan Temple Garden in Shanghai (Stefan Rousseau/PA)
In an interview with Sky News Mrs May was asked whether the £9 billion-worth of deals struck during her three-day trip showed it was possible to increase trade with countries like China without a free trade agreement and that the UK could therefore remain “very closely aligned with the EU, and a customs union too”.
She replied: “What I want to do is ensure that we have got the best possible trade arrangements with China and with other countries around the world once we have left the European Union.
“I do want to do those free trade agreements. There is more trade that we can do even before we get to those free trade agreements.”
A Downing Street spokesman later confirmed the Prime Minister had “an open mind when it comes to these negotiations”.
However, in an interview with Bloomberg TV, Dr Fox said one of the reasons for Britain leaving was that it would no longer be bound by EU external tariffs when it came to negotiating trade deals with other countries.
“It is very difficult to see how being in a customs union is compatible with having an independent trade policy because we would therefore be dependent on what the EU negotiated in terms of its trading policies and we’d be following behind that,” he said.
“We have to be outside of that to take advantage of those growing markets. One of the reasons we are leaving the European Union is to take control and that’s not possible with a common external tariff.”
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Downing Street has rejected a report in the Financial Times that ministers are privately considering a customs union arrangement for post-Brexit trade in goods in order to avoid disruption to exports – something which Brexiteers believe would hamstring efforts to strike free trade agreements with global giants such as the US and China.
Speaking in Shanghai, Mrs May suggested it would not be necessary to choose between the two, telling the BBC: “I don’t believe that those are the alternatives.
“What the British people voted for is for us to take back control of our money, our borders and our laws and that’s exactly what we are going to do.
“We also want to ensure that we can trade across borders.”
Mrs May has repeatedly said that Brexit will mean leaving the existing EU single market and customs union arrangements. The customs union currently frees members from tariffs when trading with one another but requires them to observe a common external tariff regime and not to strike deals with third countries.
The Prime Minister said her goal in upcoming talks on the future relationship with Europe was “an arrangement for trading with the EU which is going to be good for trade between the UK and EU and good for jobs in Britain”.
She told the BBC: “It means a free trade agreement with the EU. We are now starting to negotiate that free trade agreement with the EU.
“We want that to enable trade to take place on as frictionless and tariff free a basis as possible across our borders, but we also want to be signing trade deals in the rest of the world, like here in China.”