On Friday, UK Prime Minister Theresa May is gathering the cabinet at her country house, Chequers, to present the final post-Brexit customs plan. In the hope a truce can be agreed between her feuding ministers, the strategy will be set out in a white paper the following week. But is May’s third Brexit way another dead end?
Post-Brexit plans one and two
Two customs options have been up for discussion for near to a year now. Firstly, the new customs partnership (NCP), where the UK stays within the EU customs system and collects tariffs on Brussels’ behalf. Secondly, the alternative was the maximum facilitation scheme (max fac), which involved new technology and trusted traders. Downing Street was among the latter’s critics fearing its expense and that it did not address the problem of the Irish border. Her Majesty's Revenue and Customs (HMRC) said in May that the customs cost of Brexit would be £20 billion, more than 1% of gross domestic product (GDP), and warned time was running out to deliver the system by Brexit at the end of March 2019.
In an interview with IGTV’s Victoria Scholar, Ruth Lea, economic advisor to Arbuthnot Banking Group, says the National Audit Office believes HMRC should revamp customs procedures for March 2019 even if there is no deal. She also said the hard Irish border issue has been ‘weaponised’ by the EU and that the technology is more than capable of dealing with the trade that goes across it, which is very small compared to the Canada-US border.
Time for UK government to pare down its ambitions
This third customs union plan is expected to be a mix of NCP and the mac fax plan, with the UK reportedly seeking to stay within the single market for goods but not for services, which accounts for 80% of UK trade. The EU’s chief negotiator, Michel Barnier, has repeatedly stated that the four core freedoms of the single market, goods, services, capital and labour, are inseparable. Lea says, if the UK white paper suggests the UK are cherry picking the single market for goods it will just go in the Brussels waste paper bin. She adds, it’s time for the UK government to cut down its ambitions to a vanilla-free trade agreement with the EU on goods, and something for services, that would be the most practical way forward.