Brexit breakthrough? Ministers mull EU trade plan that could see UK tied to customs union for YEARS more but make a clean break afterwards
- Theresa May is scrambling to find a compromise solution for trade with the EU
- Boris Johnson caused a storm by branding her customs partnership plan ‘crazy’
- The partnership option backed by the PM was rejected by Brexit ‘war cabinet’
- Brexiteers are pushing for a delayed version of their ‘Max Fac’ trade proposal
Mrs May (pictured in Downing Street yesterday) is scrambling to find a way through the Brexit impasse
Brexiteers are trying to break the Cabinet deadlock on trade plans by suggesting Britain could stay tied to the EU customs union for years longer – but make a clean break afterwards.
The proposal, pushed by allies of Michael Gove, would mean dropping the customs partnership blueprint favoured by Theresa May.
But in return Eurosceptic Cabinet ministers would accept that their ‘Maximum Facilitation’ option will need much more time to put in place.
The idea has emerged as the PM scrambles to find a way to end the damaging standoff among the government’s big beasts.
Mrs May was brutally taunted during PMQs yesterday over Boris Johnson’s extraordinary public attack on her ‘crazy’ partnership proposal.
As Mr Johnson looked on sheepishly from the frontbench, Mrs May was forced to deny she had wasted months on plans that ministers could not agree on.
The spat erupted after a tense meeting of the Brexit War Cabinet last week, in which it became clear that most members did not support Mrs May’s blueprint for the UK to collect duties on behalf of the EU – and give businesses a rebate if Britain wanted to impose lower tariffs.
The other option on the table is ‘Max Fac’, which would rely on technology and mutual recognition schemes to minimise friction on trade.
In a sign of the problems in finding a way through the impasse, the PM has delayed another showdown in the key sub-committee until next Tuesday.
There has been speculation that Mrs May could stage a public intervention on Monday in a bid to bring the issue to a head.
It is not clear whether Downing Street will be receptive to the idea of a delayed ‘Max Fac’ customs arrangement.
Alongside fears that the ‘Max Fac’ option would require a hard Irish border, doubts about how long it would take to develop the necessary technology and IT systems have been the main blocks.
Mrs May’s former chief of staff Nick Timothy told the Sun last night that “ministers might accept that Max Fac will take longer to be introduced”.
Former minister Nick Boles, an ally of Mr Gove and Boris Johnson, also tweeted his support for the idea. But he added: “This must not be rushed and will not be ready by the end of the transition in Dec 2020.”
The Open Europe think-tank run by Mr Gove’s former aide Henry Newman has endorsed the concept.
Downing Street sources have conceded that the customs partnership blueprint – which would see Britain collect duties on behalf of the EU in an effort to minimise friction on trade and prevent a hard Irish border – will ‘not go ahead in its current form’.
Officials are looking at ways of overhauling the idea or coming up with a new option that can win over sceptical ministers.
Mr Corbyn kicked off PMQs by asking: ‘Does the Prime Minister agree with her Foreign Secretary that the plan for a customs partnership… is in fact crazy?’
Mrs May dodged the question, insisting the government would ‘ensure that we leave the customs union, that we can have an independent free trade policy, that we can maintain no hard border between Northern Ireland and Ireland, and we have as frictionless trade with the EU as possible’.
Mr Corbyn then challenged Mrs May over Business Secretary Greg Clark’s warning in an interview at the weekend that ‘jobs would be at risk if we don’t sort out a comprehensive customs deal’.
But the premier retorted that Labour was ‘letting Britain down’ by taking the EU’s side in the negotiations.
‘They want to go into a customs union with the European Union with no say over trade policy, with Brussels negotiating trade deals in their interests, not our own,’ she said.
Former minister Nick Boles, an ally of Mr Gove and Boris Johnson, tweeted his support for the idea of a delayed ‘Max Fac’ trade arrangement
As Mr Johnson looked on sheepishly from the frontbench (pictured), Mrs May was forced to deny she had wasted weeks on plans that ministers could not agree on
The Prime Minister faced catcalls from Labour MPs today as Jeremy Corbyn accused her of overseeing a shambolic negotiation with the EU
Theresa May (pictured at PMQs today) has pushed back another showdown at the Brexit ‘War Cabinet’ from tomorrow to next week as she struggles to find a compromise
‘The Labour manifesto said it wanted to strike trade deals, now they’ve gone back on that policy. Typical labour, letting Britain down once again.’
Mrs May stormed: ‘He talks about the state of the negotiations. Before December he was saying the negotiations were not going to get anywhere.
‘What did we get? A joint report agreed by the European Council. He said before March that we weren’t going to get what we wanted from negations. What did we get? An implementation and an agreement with the European Union Council.
‘We are now in a negotiation for the best deal for the UK for when we leave the EU and we will get the best deal for the UK for when we leave the EU.’
Speaking in the Commons immediately after the clashes, Mr Johnson denied that he had breached Cabinet collective responsibility with his public criticism of the customs partnership option.
‘I am completely in conformity with Government policy on the matter, since that policy has yet to be decided,’ he said to laughter from the Labour benches.
What are the options on the table for a customs deal with the EU?
With time ticking away on the Brexit negotiations, the Cabinet is still at daggers drawn on the shape for future trade relations with the EU.
The government has set out two potential options for a customs system after the UK leaves the bloc.
But despite a series of tense showdowns at Theresa May’s Brexit ‘War Cabinet’ ministers continue to be deadlocked over what to do.
Meanwhile, Brussels has dismissed both the ideas – and warned that negotiations could stall altogether unless there is progress by a key summit next month.
Despite a series of tense showdowns at Theresa May’s ‘War Cabinet’ (pictured in February) ministers continue to be deadlocked over what to do
OPTION 1 – CUSTOMS PARTNERSHIP
Under the so-called ‘hybrid model’, the UK would collect EU import tariffs on behalf of Brussels.
Britain would be responsible for tracking the origin and final destination of goods coming into the country from outside the EU. The government would also have to ensure all products meet the bloc’s standards.
Firms selling directly into the UK market would pay the tariff levels set by Brussels – but would then get a rebate if Britain’s tariffs are lower.
Supporters of the hybrid plan in Cabinet – including Theresa May, Philip Hammond and Greg Clark – say keeping duties aligned up front would avoid the need for physical customs borders between the UK and EU.
As a result it could solve the thorny issue over creating a hard border between Northern Ireland and the Republic.
Mrs May has been advised by the chief whip that the hybrid option could be the only way of securing a majority in parliament for a Brexit deal.
But Brexiteers regard the proposal as unworkable and cumbersome – and they were joined by Sajid Javid and Gavin Williamson in criticising it at a tense ‘War Cabinet’ meeting last week.
There are fears the experimental system will either collapse and cause chaos, or prevent the UK from being able to negotiate free trade deals around the world after Brexit.
Mrs May has instructed official to go away and revise the ideas. Eurosceptics are braced for her to bring back the plan with only ‘cosmetic’ changes, and try to ‘peel off’ Mr Javid and Mr Williamson from the core group of Brexiteers.
They are also ready for Mrs May to attempt to bypass the ‘War Cabinet’ altogether and put the issue before the whole Cabinet – where she has more allies.
OPTION 2 – MAXIMUM FACILITATION
Boris Johnson (left) and Liam Fox have been pushing for the ‘Max Fac’ customs option
The ‘Max Fac’ option accepts that there will be greater friction at Britain’s borders with the EU.
But it would aim to minimise the issues using technology and mutual recognition.
Goods could be electronically tracked and pre-cleared by tax authorities on each side.
Shipping firms could also be given ‘trusted trader’ status so they can move goods freely, and only pay tariffs when they are delivered to the destination country.
Companies would also be trusted to ensure they were meeting the relevant UK and EU standards on products.
Senior ministers such as Boris Johnson, Michael Gove and Liam Fox believe this is the only workable option.
But Remain minded Tories such as Mr Clark insist it will harm trade and cost jobs in the UK.
They also warn that it will require more physical infrastructure on the Irish border – potentially breaching the Good Friday Agreement. It is far from clear whether the government would be able to force anything through parliament that implied a hard border between Northern Ireland and the Republic.
The EU has dismissed the idea that ‘Max Fac’ could prevent checks on the Irish border as ‘magical thinking’.
WHO’S IN BREXIT WAR CABINET AND WHERE DO THEY STAND?
Prime Minister Theresa May
Backed Remain, has since insisted she will push through Brexit, leaving the single market and customs union.
Cabinet Office Minister David Lidington
A strong Remainer during the referendum campaign, recently made clear he has not changed his mind about it being better if the country had chosen to stay in the bloc.
Chancellor Philip Hammond
Seen as one of the main advocates of ‘soft’ Brexit in the Cabinet. Has been accused of trying to keep the UK tied to key parts of the customs union for years after the transition ends.
Home Secretary Sajid Javid
Brought in to replace Amber Rudd after she resigned amid the Windrush scandal, Mr Javid was seen as a reluctant Remainer in the referendum.
Many thought the former high-flying banker would plump for the Leave campaign, but he eventually claimed to have been won over by the economic case. He is likely to focus be guided by evidence about trade calculations in discussions over how closely aligned the UK should be with the EU.
Foreign Secretary Boris Johnson
The Brexit champion in the Cabinet, has been agitating for a more robust approach and previously played down the problems of leaving with no deal.
He is unhappy with plans for a tight customs arrangement with Brussels – warning that it could effectively mean being lashed to the EU indefinitely.
Environment Secretary Michael Gove
Has buried the hatchet with Mr Johnson after brutally ending his Tory leadership campaign in the wake of David Cameron’s resignation.
Thought to be less concerned with short term concessions that Mr Johnson, but focused on ensuring the UK is free from Brussels rules in the longer term.
Brexit Secretary David Davis
A long-time Eurosceptic and veteran of the 1990s Maastricht battles, brought back by Mrs May in 2016 to oversee the day-to-day negotiations.
He has said the government will be seeking a ‘Canada plus plus plus’ deal from the EU.
International Trade Secretary Liam Fox
Another Brexiteer, his red lines are about the UK’s ability to strike trade deals with the rest of the world, and escaping Brussels red tape.
Business Secretary Greg Clark
On the softer Brexit side of the Cabinet, Mr Clark has supported Mr Hammond’s efforts to maintain close links with the customs union.
Defense Secretary Gavin Williamson
A close ally of the Prime Minister and viewed by some as her anointed successor. He is believed to be siding with the Brexiteers on customs arrangements and the need for Britain to be able to diverge from EU rules.
Northern Ireland Secretary Karen Bradley
Supported Remain but a relatively unknown quantity on the shape of a deal. Replaced James Brokenshire, another May loyalist, after he resigned on health grounds last month.
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