Whilst currently there is no agreed line on how to proceed regarding the customs union, there is a consensus that, from a UK perspective at least, it is the dominant Brexit issue at present.
The UK government has put two options for a future customs arrangement on the table – a choice between a ‘customs partnership’ or maximum facilitation, catchily abbreviated to ‘max fac’ by those involved.
Customs partnership – This is Theresa May’s preferred option and is intended to avoid the necessity of customs checks at ports and border points. Under the plan, the UK would collect tariffs set by the EU imported into the country. If those goods remain in the UK and the UK tariffs are lower, companies would be able to claim back the difference.
‘Max fac’ – This proposal seeks only to minimise customs checks but cuts the ties with the EU more clearly. Checks would be carried out using technology, including trusted trader schemes which permit bulk payment of tariffs on a periodic basis rather than being paid every time the border is crossed.
As things stand, there is disagreement within the UK government over which option it should favour. Indeed, many believe that neither plan is currently workable. In response, Theresa May has split her cabinet into two working groups to report on each of them, with both groups consisting of advocates of the competing proposals.
The customs partnership option has been denounced as ‘crazy’ by the Foreign Secretary, Boris Johnson, and is widely rejected by hard-line Brexiteers as not amounting to fully leaving the EU. They have also voiced concern that adhering to a customs partnership would seriously hamper simultaneous attempts by the UK’s attempt to negotiate new trade deals with other nations.
Meanwhile, potential congestion at ports and border crossings, combined with the investment in infrastructure required, are among the criticisms levelled against the ‘max fac’ approach. Some have argued that the need for infrastructure to be developed may also delay the UK’s exit from the customs union, possibly until 2023. It is not clear how the EU would respond if such an extension were to be requested, but it has already said that the transition period following Brexit must end in December 2020. A further significant argument against ‘max fac’ is that it could lead to a hard border in Ireland, something that both the UK and EU are desperate to avoid.
Perhaps more worryingly for the UK, both proposals have been provisionally rejected by the EU and there are growing concerns in Brussels that the UK may not have a workable solution to present at the next European Council summit in June. Chief EU negotiator, Michel Barnier, has only gone as far as reporting that ‘a little progress’ has been made in talks since the last summit in March.
Mr Barnier’s famous ‘ticking clock’ continues to countdown to an inevitable and unavoidable decision on the customs issue but negotiating positions must be defined in advance. Easier said than done.
Article: 17th May 2018
