Theresa May Given Ultimatum

A Customs Partnership and the Future of Britain

Prime Minister Theresa May is currently facing an internal crisis, which she must address today. Senior Brexiteers within the Conservative Party have apparently handed the Prime Minister an ultimatum demanding that she remove the option of a customs partnership with the European Union post Brexit or risk the collapse of her own Government.

The Government has apparently been exploring the customs partnership option as it would solve the problems of a hard Irish border. But a 30-page document sent to the Prime Minister by leading Brexiteers says that a customs partnership with the EU would render the International Trade Department “obsolete” as the UK would continue to be shackled to the trade agreements of the EU.

Today senior Brexiteer Cabinet Members, including Secretary of State for Exiting the European Union, David Davis and Foreign Secretary Boris Johnson, will meet with the Prime Minister to discuss different options for the customs partnership and will apparently urge her to remove the hybrid partnership.

But why is this option of a customs partnership so unpalatable?

First and foremost, such a partnership would see the UK collect tariffs on behalf of Brussels. Importers would then have to prove their products weren’t leaving the UK in order to claim the tariff back. Such an option would be complicated and ultimately unworkable.

And for the businesses involved, having to pay EU tariffs up front, and having to meet the administrative burden of proving their products are UK not EU-bound, would clearly make the UK a less attractive trade partner to non-EU countries and businesses.

For the European Union too, this is not an appealing option. A customs partnership would require the EU to change customs processes across all the EU27. They have rejected this idea previously and would be unlikely to accept it a second-time-round. It would also make the UK appear weak to the EU at the negotiating table; we had finally started to make up our minds with what we want from the deal and this proposal would give the impression we don’t know what we want again. Such a dilemma gives Brussels the chance to offer a deal that could damage the British economy.

Additionally, such a partnership would not eliminate friction. It is undeniable that there would still need to be checks at the border as rules of origin will still need to be monitored and checked.

For the UK, the Brexit vote represents a chance to reform regulation so that it is tailored and suited to the British economy. But the customs partnership would inevitably lead to regulatory alignment with the EU. The UK would still be in the single markets for goods and would need to keep the EU rules but would lack the ability to push back on any rules that didn’t work for the UK. This would harm our ability to negotiate trade deals with non-EU countries, which would be a worst of all worlds outcome and would defeat the purpose of the vote in the first place.

But one of the main risks behind this proposal that remainers must remember, is that it intensifies the possibility of a no deal with the EU. If the Prime Minister persists with her customs partnership plan, she may force Brexiteers to put in their letters and detonate the negotiations.

Leaving the customs union is the most symbolic emblem of leaving the European Union, it allows the UK to move beyond Europe and form deals that best suit us and look towards where the world is growing. If the UK remains in the customs union or forms a hybrid partnership, we would only have left the EU in name, which defeats the purpose of the vote. If the UK is to seize its future with a clean break, it must move beyond a customs partnership.