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Allie’s Brexit blog: May update

01 Jun 2018

Brexit graffiti depicting the union jack flag fading into the EU flagMay saw continued Article 50 negotiations in advance of the June European Council summit. The meeting is expected to be a stocktaking exercise during which the EU will assess the progress of the talks. 

But now, on the horns of a dilemma, the Prime Minister finds herself in a customs conundrum as ministers set to work on trying to ‘revise’ each of the two options.

Last year the UK Government put forward two proposals for future customs arrangements following our EU exit. One options, the ‘new customs partnership’, would see two different sets of tariffs at the UK external borders and Britain collecting duties on goods destined for the EU, and vice versa. This is widely reported to be the Prime Minister’s preferred option. However, HMRC has admitted it would take five years to implement – and therefore it throws up questions about timescales, particularly in relation to the agreed 21-month transition period which was provisionally agreed in March.  

The other proposal, a ‘highly streamlined customs arrangement’ - nicknamed ‘max fac’ - would see a customs border between the UK and the EU and rely on trusted trader schemes, such as authorised economic operator. Again, timescales need to be considered here, as HMRC has said this option would take three years to put in place. One criticism levelled at this proposal is that technology and trusted trader schemes do not solve everything.

"The Irish question continues to be the major sticking point"

Outlines of these two options were published last August but it is only this spring that substantive discussions on trade have begun. Granted, there are now serious time pressures and we need to be mindful of this – but speed is not always the answer. Tight timescales do not obviate the need for a range of stakeholders to contribute to and consult on policy formation, from negotiating teams to business, from health and safety experts to Border Force. In this context we are pleased to hear the Government’s recently-formed Inter-Ministerial Group on Borders includes the Secretaries of State for the Department for Exiting the European Union, the Home Office, the Department for Transport and the Department for Environment, Food and Rural Affairs.

The Irish question continues to be the major sticking point. The EU side is keen for the UK to provide a solution to the border predicament in time for the June Council meeting, stressing we they cannot ‘kick the can down the road’ as such to the October Council. Irish Prime Minister Leo Varadkar recently said the customs partnership model “is something that we could perhaps make workable”, although not in its current form. If anything, comments such as this from the EU side should provide some encouragement for British officials. Oftentimes the Brexit negotiations can come across as political one-upmanship, so it is somewhat refreshing to see constructive engagement between the two sides.

The significance and complexity of the Irish question is well-reflected in my own travel arrangements, as I have been spending more and more time in Northern Ireland. For example, this month I advocated on behalf of IoD members at a small roundtable with Michel Barnier on the border at Newry during the All-Island Civic Forum. In addition, I spoke at an IoD Northern Ireland meeting convened for our members alongside the Secretary of State for Northern Ireland, Karen Bradley.

At the Post-Brexit Customs Summit organised by City & Financial I spoke on panels which focused on the Government’s customs options and on the Irish border. Then, I travelled to Jersey where I spoke at a Brexit conference put on by Jersey International Business School. Last but not least, back in London I sat before the House of Lords EU External Affairs Sub-Committee, where I gave evidence on future customs arrangements.

With the June European Council summit now just weeks away, be sure to stay tuned to our Navigating Brexit hub if you would like to stay abreast of the latest developments in Europe and trade.


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