UK customs proposal is really Brexit delayed further

UK customs proposal is really Brexit delayed further

It’s now all eyes on July 2022 — the date Brexit might actually mean Brexit.

According to senior officials familiar with internal Cabinet discussions, Britain could need just over three years after it has left the EU to make preparations for its new long-term customs relationship with the bloc — although many are still pushing for a much quicker changeover.

As POLITICO revealed Wednesday, to bridge the gap between March 29, 2019 — when Britain formally leaves the EU — and mid-2022, when officials think the new technical border solutions will be ready, Theresa May and David Davis hope to negotiate a “time-limited goods arrangement” with Brussels. The bridge is needed because the currently agreed transition period, which runs to December 2020, probably isn’t long enough.

Under this arrangement, the U.K. would stay inside the EU’s external tariff, but not its common commercial policy beyond the end of transition. That would allow ministers to claim Britain has taken back control of its trade policy as it will allow the U.K. to strike limited free-trade deals with countries around the world, even if these cannot cover tariffs in the short term.

Taken together with ongoing “full alignment” with EU farming and agricultural standards and a single electricity market on the island of Ireland during this period, the U.K. hopes this offer to remain inside the common external tariff will be enough to satisfy the EU’s demand for a legally-binding “backstop” that will be written into the withdrawal agreement guaranteeing an open border in Ireland.

While the U.K. government has yet to formally draft this proposed new backstop into legal text — the prime minister has said she plans to do this “in due course” — Cabinet ministers have signed off on the proposal, two officials confirmed.

Brussels, however, is not convinced.

First problem: The EU believes it already has a backstop in full alignment for Northern Ireland with the EU customs union — even if Theresa May made clear again that such a proposal was “unacceptable.”

Second problem: What good is a backstop if it’s time limited? As far as EU officials are concerned — supported by the Irish government in Dublin — the U.K. needs to come up with a backstop that works in perpetuity.

Third problem: The EU still does not think the U.K.’s proposed “maximum facilitation” customs model is worth the paper it is not written on, increasing the need for a backstop that works long-term. Max fac, as it is known in Whitehall, is now the clear favorite to win Cabinet backing over the so-called customs partnership that was originally the prime minister’s favored option, although there has yet to be a formal agreement among ministers on this.

A fourth, more general problem for the EU is the U.K. proposal looks like too much of a good deal for London, cherry-picking some juicy bits of the EU and abandoning others.

To the U.K. government though, this is the only acceptable way forward.

A backstop without a sunset clause is tantamount to giving foreign governments an “open-ended” veto over U.K. policy. “No parliament can bind the next,” is the maxim on which British democracy is built.

“We cannot accept any kind of open-ended approach from the European Commission,” one senior U.K. official said.

July 2022 is the “logical tie-up” between the proposed new backstop and the technical solutions the U.K. government believes can solve the Irish border, one senior official said on condition of anonymity.

So what next? The U.K. will present its new offer to Brussels within two weeks. Negotiators then have less than a month to thrash out the basis for a compromise before June’s European Council.

Hold on to your hats.

This insight is from POLITICO‘s Brexit Files newsletter, a daily afternoon digest of the best coverage and analysis of Britain’s decision to leave the EU available to Brexit Pro subscribers. Sign up here.