The UK wants to create an interim customs union with the EU to avoid a “cliff-edge” for manufacturers after Brexit.
The proposal is contained in the Government’s first “future partnership paper”, published on Tuesday by the Department for Exiting the European Union (DExEU).
The plan is designed to keep the Cabinet united after disagreements over whether the UK should remain in the customs union.
It confirms the UK will ultimately leave the system but proposes a “temporary customs union between the UK and the EU” as a “possible approach” to getting a “smooth and orderly” transfer.
The customs union allows goods to travel across the EU free of tariffs and checks.
Remaining part of this system would restrict Britain’s ability to sign independent trade deals with non-EU countries, with a common external tariff applied outside the zone.
Turkey already has its own customs union with the EU for industrialised goods, which enables participation in complex manufacturing supply chains.
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Image: The paper is an attempt to add more detail on the UK’s position before the next round of Brexit negotiations
Speaking to Sky News last month, International Trade Secretary Liam Fox said there was a difference between “the” customs union and “a” customs union – though he cautioned against using Turkey as a model.
DExEU says the interim customs arrangements would be “time-limited” so businesses can adapt to a post-Brexit system.
No timeframe is mentioned, although some Cabinet ministers have suggested it will have to expire before the next general election in 2022.
There has been criticism of the Government’s preparedness to introduce the sorts of customs systems and checks required after Brexit.
The National Audit Office was hugely critical of HMRC in a recent report.
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Labour’s shadow Brexit secretary, Sir Keir Starmer, branded the customs proposals “incoherent and inadequate” and “designed to gloss over deep and continuing divisions within the Cabinet”.
He said: “Businesses, trade unions and the country need certainty about our future trading and customs arrangements.
“They also need a pragmatic and considered approach that delivers the best deal for Britain.
“Instead, the Cabinet remain split on key issues and cannot decide between two very different but equally unachievable options.
“The first proposal suggests ‘a new customs border with the EU’ could be introduced without disrupting trade; the second suggests a new borderless customs partnership could somehow be agreed while Britain also signs external trade deals.
“These fantastical and contradictory proposals provide no guidance for negotiators or certainty for businesses.
“The proposals also make it less likely that necessary transitional arrangements will be in place by March 2019.
“Labour is clear that we need to retain the benefits of the customs union and avoid a cliff-edge for the British economy.
“That means committing now to strong transitional arrangements on the same basic terms we currently enjoy – including the single market and the customs union.”
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It is not clear whether the EU will respond to the paper, having agreed with the UK to first deal with issues of the so-called Brexit bill, Ireland and citizens’ rights during negotiations before moving on to the future EU-UK relationship.
Outlining a position on customs arrangements does, however, help bring some clarity to the position of the border with Ireland.
A further Government paper on the issue of Ireland’s border will be published on Wednesday.