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Updated-3: UK may have temporary EU customs union post-Brexit

[ August 15, 2017   //   ]

The UK government has suggested a temporary customs union with the European Union for an interim period after Brexit in March 2019. This would be followed by either a “highly streamlined” border with the EU, or a customs partnership with no effective border at all.

A customs union implies that the UK would impose the same tariffs and checks on imports from third countries as the EU and even collect customs duties on their behalf at its ports and airports.

The UK government would be free to start negotiating trade deals with third countries during the interim period, the paper envisages, although it is by no means clear that this would be legally possible.

The ideas are set out in the first of a series of negotiation papers on the key points.

In publishing the paper, the government appears to be responding to pressure from business to produce its plans for the post-Brexit environment and avoid accusations that it is leading the country to a post-Brexit ‘cliff edge’. It might also be an attempt to reassure port operators such as Dover that there will not be massive queues of trucks trying to enter the country. It may also be an attempt to put pressure on Brussels in the Brexit negotiations, which are set to resume next month.

However, Brussels may dig in its heels and demand that the UK’s financial settlement with the EU and rights for EU citizens living in the UK are dealt with first.

Initially, at least, the EU side gave the proposals a cool reception. European Parliament negotiator Guy Verhofstadt, was reported as saying that other issues had to be agreed before talks on trade could start.

British International Freight Association (BIFA) director general, Robert Keen said: “Having read and digested the paper thoroughly, BIFA believes it shows for the first time that there now appears to be a united position in the Cabinet in favour of a more businesslike approach to Brexit and the need to facilitate trade with the EU.
“BIFA policy ever since the 2016 Referendum has favoured retaining something as close to the Single Market as possible. In reality, certainly since the 2017 General Election, this has meant remaining in the Customs Union or something as close to it as possible, preferably in the long run but certainly during any implementation period, after the UK leaves the EU.
“That message has been central to the many discussions that BIFA has had with those in Government and we welcome the fact that the document acknowledges the work put in by ourselves and other trade associations to help increase awareness of the issues and potential impact of the introduction of tariff and non-tariff barriers.”
BIFA said that the document outlines two basic options for future EU-UK customs arrangements. One would keep the additional requirements for EU-UK trade to a minimum, but which from reading the document does imply that some form of customs declaration will be required, says BIFA.
The second, which is more closely aligned to BIFA’s policy, proposes a new customs partnership with the EU, which BIFA described as “very radical” and which has not been tried before. This would remove the need for customs processes at the border, although there would be a need to align UK and EU customs procedures.
Keen adds: “The second option would certainly resolve the Dover Straits issue, as well as that of Northern/Southern Ireland trade.
“Unfortunately, what the paper cannot address is the fact that, so far, the EU has made clear it will not discuss Britain’s future trading relationship – including customs arrangements – until it has reached agreement on several key issues, including the terms of the financial payments Britain will make on exit, the rights of citizens, and the future status of the border in Northern Ireland.
“To accommodate any of the proposals, EU negotiators would have to change that stance and it will be interesting to see if that happens, or whether those on the EU side of negotiations determine that the UK is trying to have its cake and eat it.”
The Freight Transport Association described the paper as a “step in the right direction” but warned that the ambitions laid out in the document are far from guaranteed, and will require careful negotiation.

Deputy chief executive, James Hookham, said: “The government’s ambitions for customs arrangements post-Brexit are, at present, just that, and it will take time and care to ensure that all the subtleties of current operations can be incorporated into future plans.”

British Ports Association chief executive, Richard Ballantyne welcomed the emphasis on continuity but said: “More focus is needed on the likely impacts such as delays at ports. Preserving the beneficial arrangements of Customs Union membership, such as minimal checks at the border, are extremely important to a number of ports, particularly the ferry port gateways.”

He continued: “We note the Government’s aspiration of streamlining the border in the future but it is unclear how the potential new requirements covering, for example, plant/animal product checks at the border and other issues will be resolved when we leave the EU.  In our view the UK Government has given much attention to achieving a tariff free trade agreement with the EU without focusing on the potential bureaucratic delays there could be at the border.”

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