LONDON — An extension of the customs union with the EU will be “the only viable option” for the U.K. if it cannot implement either of its two proposed alternative trade and customs arrangements before the end of the post-Brexit transition period, the House of Commons Brexit committee said.
In a new report on the state of the Brexit negotiations, the exiting the European Union select committee says continued disagreement within government about the customs arrangements it wants after Brexit is “highly unsatisfactory.”
The governments own tax authority expects that neither of the two customs proposals — maximum facilitation (or “max fac”) and the new “customs partnership” — can be fully implemented in time for the end of the transition period in December 2020.
“The Prime Minister has alluded to contingencies that can be triggered in this eventuality but has not set them out,” the report says. “[Brexit Secretary David Davis] has ruled out any extension of the customs union but in the absence of any other plan, such an extension will be the only viable option.”
Ministers are considering an extension to elements of the customs union, potentially keeping the U.K. within the EUs common external tariff for years after the end of transition.
The MPs report is however also critical of aspects of EU27 preparation for Brexit and the impact it will have on British citizens in the EU, pointing out that while the U.K. government has “at least set out the general, overarching structure” of the process for EU citizens in the U.K. to apply for settled status, there is “little sign … that the same level of organizational planning has started in many EU member states.”
Committee chair and Labour MP Hilary Benn said that U.K. ministers “should seek urgent clarification from other member states on this because British citizens need to know where they stand.”
Benns committee, in which seven member MPs backed Leave and 14 backed Remain at the 2016 referendum, also said it agrees with the government that the European Commissions current “backstop” proposal for avoiding a hard border between Northern Ireland and the Republic of Ireland is unacceptable — a sign of the near-unanimity on this point across the political divide in the U.K.
“The Commissions current proposal would undermine the constitutional integrity of the United Kingdom by effectively drawing an economic border in the Irish Sea. We support the governments rejection of this because whatever solution is reached to resolve issues around the Northern Ireland / Republic of Ireland land border must involve the whole of the UK,” the report says.
The report also revives the question of the U.K.s financial settlement with the EU, which under the draft withdrawal agreement will mandate the U.K. to pay between £35 billion and £39 billion in outstanding commitments to the bloc. On Wednesday, the committee was told by Brexit minister Suella Braverman that the withdrawal agreement as currently drafted binds the U.K. to the financial settlement, meaning that it is not contingent on the U.K. receiving acceptable terms in a future trade deal.
A political declaration on the future relationship between the U.K. and the EU, that will accompany the withdrawal agreement, “will not be a draft treaty,” the report states.
“However, the government has left open the possibility that provisions could be included in the draft withdrawal agreement to link payment of the financial settlement to agreement on the future partnership,” it says. “Any link between the financial settlement and the content of the political declaration … is a matter for the negotiations and the government should consider what specific text in the withdrawal agreement might achieve the best financial deal for the United Kingdom.”
CORRECTION: A previous version of this article misstated the division of Leave and Remain-backing MPs in the Brexit committee. Seven of the 21 committee members backed Leave in the 2016 referendum.
