The customs partnership debate.

London

Boris Johnson, the UK’s Foreign Secretary in an interview with the Daily Mail said that Prime Minister Theresa May’s proposed customs union partnership is ‘crazy’, stating the partnership would restrict the UK’s ability to ‘strike trade deals’ and claimed it would create ‘a whole new web of bureaucracy’.

Under the proposed customs partnership, officials would track shipments into the UK and collect tariffs for Brussels on goods ending up in the EU. Mr. Johnson’s comments follow a weekend of debate on the topic of the customs union.

Business Secretary Greg Clark, who is pro-remain supported the partnership model on The Andrew Marr Show.  Mr Clark insisted that the partnership idea was far from dead and warned thousands of car industry jobs could go if Britain did not stay in some form of customs union.

Within minutes of Mr Clark talking up the plan, the CBI and the British Chambers of Commerce issued statements backing his position. Meanwhile Jacob Rees-Mogg told The Daily Telegraph that the model is just "membership of the customs union and the Single Market by another name".

Yesterday’s (May 7) Financial Times front page featured warnings from Cabinet sources that if Theresa May pushed ahead with the customs partnership, she could face a ‘serious Eurosceptic backlash’. Although the Cabinet is due to meet today, sources close to Downing Street insist that the customs union issue will not be debated until next week.

Brexit Partners Perspective

  • Customs partnership does not alter the need to prepare for a “no deal” or “hard Brexit”.
  • Customs partnership will not apply to trade in services.

  • With respect to trade in goods, a customs partnership:

    • only avoids the need to impose tariffs at borders, not for the borders themselves. To do away with all border checks – whether in Ireland or at the English Channel;

    • looks like it could take a very long time to develop and implement a technical solution. The UK Cabinet was told last week that the technology wouldn’t work until at least 2023. A contrary position reported by Irish State broadcaster RTE talks about ten to fifteen years. If correct, that means the UK would be part of a customs union for a timescale unacceptable to Brexiters.

The EU has already rejected a customs partnership as fanciful. But they might conceivably accept it as some theoretical end-goal so long as the UK stay in the customs union until the necessary technology works. Again, a position unlikely to be acceptable to Brexiteers.

Under both situations, a workable solution would require the UK to follow the EU’s rules for both goods and services, a politically difficult position for Brexiteers to accept.