{"id":78327,"date":"2018-05-17T05:45:46","date_gmt":"2018-05-17T05:45:46","guid":{"rendered":"http:\/\/www.bnreport.com\/uk-officials-float-brexit-customs-compromise\/"},"modified":"2018-05-17T05:45:46","modified_gmt":"2018-05-17T05:45:46","slug":"uk-officials-float-brexit-customs-compromise","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/uk-officials-float-brexit-customs-compromise\/","title":{"rendered":"UK officials float Brexit customs compromise"},"content":{"rendered":"

LONDON \u2014 When is a customs union not a customs union? When its a \u201ctime-limited goods arrangement.\u201d<\/p>\n

With the Cabinet at odds over the U.K. governments preferred option for a post-Brexit customs arrangement, officials are exploring a new option that could provide \u201ca bridge\u201d to a deal.<\/p>\n

Instead of moving immediately to the eventual post-Brexit customs scheme at the end of the transition period on January 1, 2021, the U.K. could agree to temporarily remain inside the EUs common external tariff until a future customs arrangement is ready, according to three senior officials involved in the Brexit negotiations from both the U.K. and EU.<\/p>\n

Such a temporary fix would, it is hoped, avoid a jolt for business and a hard border in Northern Ireland, while allowing ministers to say they have formally left the EU customs union \u2014 a key plank of Theresa Mays Brexit policy.<\/p>\n

With no substantial movement in the Brexit negotiations for weeks because of Cabinet indecision, U.K. officials hope the proposal might be acceptable to the EU as an alternative to the disputed \u201cbackstop\u201d proposal of keeping Northern Ireland within the EUs customs union.<\/p>\n

\n

\u201cThey have a backstop. But its a backstop that they dont like\u201d \u2014 EU official<\/em><\/p>\n<\/blockquote>\n

Such a deal also has the potential to keep the Democratic Unionist Party \u2014 whose MPs prop up Mays government \u2014 onside by avoiding a border in the Irish Sea while potentially winning Brexiteer support as a temporary \u201cbridge\u201d to the final position in which the whole of the U.K. exits the EUs customs area.<\/p>\n

\u201cBasically its keeping in the external tariff until the new system is ready,\u201d said one U.K. official. \u201cIt would have to include a sunset clause. Both sides would need this. The question is how you find the language to persuade the Irish.\u201d<\/p>\n

May agreed the need for a backstop in December to persuade EU leaders to begin Phase 2 of the talks. But she later rejected the legal language proposed by the EU in the draft withdrawal agreement as something \u201cno U.K. prime minister could ever agree to.\u201d The draft \u201cbackstop\u201d as it stands keeps Northern Ireland in the EUs \u201ccustoms territory,\u201d thereby creating a customs border in the Irish Sea.<\/p>\n

One EU27 diplomat said there is no appetite in Brussels for an alternative backstop, but that negotiators are waiting for a proposal from the U.K. that would avoid a hard border and preserve the Good Friday Agreement.<\/p>\n

<\/p>\n

The draft \u201cbackstop\u201d as it stands keeps Northern Ireland in the EUs \u201ccustoms territory\u201d | Paul Faith\/AFP via Getty Images<\/p>\n

\u201cWe need a fully operable backstop to apply unless and until a different, better, permanent, workable alternative is in place,\u201d the diplomat said.<\/p>\n

\u201cThey have a backstop. But its a backstop that they dont like,\u201d an EU official said.<\/p>\n

Search for fudge<\/h3>\n

In London, of the two customs options currently under discussion by Mays inner Brexit war Cabinet, ministers appear to be edging toward the so-called \u201cmaximum facilitation\u201d option favored by Brexiteers, according to two senior U.K. officials familiar with the internal discussions.<\/p>\n

That arrangement would create a customs border between the EU and the U.K. but seek to ameliorate its effects with technology and other special measures, so avoiding the need for a significant hardening of the border between Northern Ireland and the Republic.<\/p>\n

However, the model has already been dismissed by Irish Prime Minister Leo Varadkar as being \u201cas functional as makeup\u201d and even if a version could be put together that wins agreement in Dublin and Brussels, the new system would take years to set up.<\/p>\n

A time-limited extension of something close to the status quo could act as a bridge to that arrangement though, officials say.<\/p>\n

\n

Remaining for a limited period inside the EUs common external tariff for goods imports would limit \u2014 albeit temporarily \u2014 the U.K.s ability to initiate trade deals with non-EU countries.<\/p>\n<\/blockquote>\n

While serious discussions about the proposal have yet to take place in either Brussels or Dublin, another EU27 official said a temporary extension might be viable \u2014 as long as it comes with guarantees Britain could not simply walk away at the end without a new system in place to protect the open border in Ireland.<\/p>\n

\u201cThe question is whether a continuation of the status quo could become the backstop,\u201d the senior EU 27 official said. \u201cIt would solve the DUP problem and go a long way to solving the border issue. But its hard to see this being acceptable to the Brexiteers without some kind of cutoff. A time-limited backstop? It would all depend on the nature of what comes at the end of that period.\u201d<\/p>\n

Businesses are more supportive. Allie Renison from the Institute of Directors said: \u201cBusiness groups \u2026 have been saying for some time that there is a serious risk of the suggested two-year window falling far short given the issues surrounding the negotiation sequencing.\u201d<\/p>\n

\u201cThe majority of firms \u2014 SMEs in particular \u2014 only feel able to prepare and make adjustments once the changes to U.K.-EU trade arrangements are clear \u2026 So while we would prefer a continued limited customs union to avoid introducing rules of origin for manufacturing, a continuation of current provisions until the details of a different outcome can be finalized would certainly be a pragmatic outcome,\u201d she said.<\/p>\n

There remain serious question marks over whether Brexiteers would accept a delay to Britains full exit from the EU customs union beyond the end of the transition period.<\/p>\n

Environment Secretary Michael Gove told the BBC Sunday he did not favor a longer transition period for the customs union. \u201cI dont believe in an extension,\u201d he said.<\/p>\n

<\/p>\n

Environment Secretary Michael Gove | Jack Taylor\/Getty Images<\/p>\n

In April, Brexit Secretary David Davis went even further, telling the House of Commons Brexit select committee: \u201cI do not expect the solution to be an extension of the customs union. I would view that on my part as a failure.\u201d<\/p>\n

However, while there remain serious concerns among Brexiteers over \u201cslippage,\u201d a senior official close to one leading Cabinet Euroskeptic said any final deal must be assessed \u201cin the round.\u201d<\/p>\n

Remaining for a limited period inside the EUs common external tariff for goods imports would limit \u2014 albeit temporarily \u2014 the U.K.s ability to initiate trade deals with non-EU countries. That said, the U.K. would have exited the EUs common commercial policy that governs trading relationships in goods and services, so the government could argue it has taken a step toward independent trade policy, which May has described an essential component of her Brexit strategy.<\/p>\n

Clock ticking<\/h3>\n

The impasse in London has sparked alarm in Brussels and Dublin about the looming October deadline both sides have informally set to tie up the withdrawal agreement.<\/p>\n

\n

\u201cThe reality is, absolutely nothing has happened in the last couple of weeks\u201d \u2014 Senior EU official<\/em><\/p>\n<\/blockquote>\n

In a bid to calm tensions and avoid a breakdown of the talks, leading supporters of a soft Brexit in the U.K. government have begun privately urging their counterparts in the EU to \u201chave faith\u201d in Mays ability to find a workable solution to the Irish border dilemma.<\/p>\n

U.K. Cabinet ministers and negotiators have reached out to EU counterparts to urge calm, officials from both sides said.<\/p>\n

\u201cSofter Brexit people on the British side have been urging us to wait,\u201d said one senior EU27 official speaking on condition of anonymity. \u201cIts a kind-of have faith in us, we are working really hard on something we could all work with. I wouldnt call it optimism, more determination. The reality is, absolutely nothing has happened in the last couple of weeks. We are waiting for something to emerge from London but we dont have any great hope.\u201d<\/p>\n

A senior official from the U.K. confirmed ministers had reached out to EU partners.<\/p>\n

According to the officials from both sides, the Republic of Irelands Foreign Minister Simon Coveney is in regular contact with U.K. ministers, including Cabinet Office Minister David Lidington and Chancellor Philip Hammond, although his relationship with David Davis is strained.<\/p>\n","protected":false},"excerpt":{"rendered":"

LONDON \u2014 When is a customs union not a customs union? When its a \u201ctime-limited goods arrangement.\u201d<\/p>\n

..<\/p>\n","protected":false},"author":1,"featured_media":78328,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[202],"tags":[],"class_list":["post-78327","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nUK officials float Brexit customs compromise - Business News Report<\/title>\n<meta name=\"description\" content=\"LONDON \u2014 When is a customs union not a customs union? 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