In Order To Smooth Brexit Path, An Interim Customs Union With EU Desired By Britain

In a proposal cheered by British businesses but which is likely to raise eyebrows on the continent, U.K. wants to maintain tariff-free, bureaucracy-light trade with the European Union for a period after Brexit and perhaps permanently, the U.K. government said.

After it leaves in March 2019, it will seek to negotiate a “close association” with the bloc’s customs union for an unspecified amount of time, Britain said ahead of the publication Tuesday of the first of a series of new papers aimed at fleshing out its ambitions for future relations with the EU.

Relief was expressed by industry lobby groups.

The potential for duties, border controls and regulatory uncertainty on commerce with the U.K.’s biggest market have been expressed as concern by them.

Given the U.K.’s suggestion it be allowed to line up trade accords with other countries during the interim period, the road map will likely run into opposition from the EU. The EU has said that it won’t be able to enjoy frictionless trade outside its ranks ad  has repeatedly warned the U.K. against cherry picking the advantages of membership.

“We’ve got to have some sort of a transition arrangement for a year or two,” Brexit Secretary David Davis said on Tuesday. The interim agreement “would be as close as we can to the current arrangements” while giving Britain the freedom to negotiate new trade deals, he said.

Bloc’s 27 other governments first want to resolve matters such as citizens’ rights and a financial settlement even while they have said they are open to a post-Brexit implementation phase. The EU’s lead negotiator, Michel Barnier, has complained of a lack of progress in the first two rounds even as divorce talks are set to resume in Brussels on Aug. 28.

Davis said the cost of the divorce bill was still under discussion and would not be drawn on the cost to Britain of its proposed customs arrangements.

“We are putting up some proposals, we’re not saying here’s the price list to go with these proposals,” Davis told BBC Radio 4. “At this stage were not going to commit, there won’t be a number by October.”

After a summer in which members of Prime Minister Theresa May’s cabinet forged a consensus around supporting a transitional period following, tBottom of Form

he U.K. is showing more of its hand.

Establishment of future customs arrangements to ease border crossings would be allowed by the interim period for both sides of the Channel, the Brexit department said. warnings of a “horror show” if new systems were not in place by the time of Brexit, were issued by the U.K.’s public-spending watchdog.

U.K. exporters are saved from paying tariffs on goods sold to the EU by the current arrangement. Taxes of about 10 percent on shipments of cars alone is paid by countries outside the region and lacking a free-trade accord with it.

The non-tariff barriers are potentially more expensive. According to a July report by Oxera, an economic consultancy, traffic in both directions would be snarled and proving the origin of goods could cost 1 billion pounds ($1.3 billion) a year by customs checks at a U.K.-EU border.

(Adapted from Bloomberg)


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