“Now, I want Britain to be able to negotiate its own trade agreements. But I also want tariff-free trade with Europe and cross-border trade there to be as frictionless as possible. That means I do not want Britain to be part of the Common Commercial Policy and I do not want us to be bound by the Common External Tariff. These are the elements of the Customs Union that prevent us from striking our own comprehensive trade agreements with other countries. But I do want us to have a customs agreement with the EU.
Whether that means we must reach a completely new customs agreement, become an associate member of the Customs Union in some way, or remain a signatory to some elements of it, I hold no preconceived position. I have an open mind on how we do it. It is not the means that matter, but the ends.”
Theresa May’s scoping speech on Brexit in January, when it turned to the Customs Union, was vague about details but clear about objectives. As her Foreign Secretary would put it, she wants Britain to have its customs cake and eat it after we have departed the EU. In other words, she suggested that we would have no objection to staying in the Customs Union were it not that its terms prevent members from negotiating their own trade deals with third parties. So it was that she floated associate membership of the union – a means of keeping all the benefits of membership, or as many of them as possible, while also agreeing new trade deals with non-EU member states.
Today, David Davis puts a little more flesh on these bones. Writing in City AM, he sets out “two broad approaches” for making such an associate membership-style arrangement work. The first would be “a highly streamlined customs arrangement” which would marry “tried and trusted customs processes – used in the UK, EU and across the world – with innovative measures to help make trade as frictionless as possible”. The second would be not having a customs border at all but introducing “new systems requiring businesses to distinguish between goods bound for the UK and those for the EU”. The Brexit Secretary concedes that such a system would be “complex”.
Either way, he wants new arrangements to be introduced in a “smooth and orderly manner” – which brings us to the contested matter of interim or transitional arrangements. For this period, the Government would maintain its freedom both to strike and sign those trade deals with third parties, but would “not bring into force any new agreements which were not consistent with the terms of this interim period” – in other words, it would not implement any such deals until the period was ended: cake-eating would be postponed.
Is this a “victory” for Philip Hammond or Liam Fox in the Government’s internal dispute about how to manage Brexit? Both have had to give ground over time. The Chancellor’s concession of Britain being able to sign trade deals during the interim period was written up yesterday as a victory for Fox, in the wake of their joint Sunday Telegraph article of the weekend. But that the Government now envisages any such deal not coming into effect until a transition period ended is being written up today as a victory for Hammond.
One of the weaknessness of coverage of the negotiation in our media is its close scrutiny of the British position – especially of “winners” and “losers” of Cabinet debate – combined with less engagement, or in some cases none at all, with that of our interlocuters. Keeping tabs on different nuances within the Commission and varying stances among the EU27 is a complicated business. It has been made no easier by Fleet Street reducing its foreign coverage because of pressure on budgets. Where there has been expansion, it has often been outside Europe. Look no further for an example than the Guardian: Britain’s standard-bearer for the EU cause is focusing growth in coverage and recruitment not on our common continent but in America – a backhanded tribute to the communality of the Anglosphere.
So it is that this morning we can all have no idea at all whether the EU27 and the Commission will be up for the ideas that May and Davis have proposed for both permanent and transitional customs arrangements after Brexit itself takes place in March 2019. In very crude terms, the outlines of a deal are Single Market access for Britain in return for a payment to the EU. This aim was prefigured in May’s Conservative manifesto, which dressed it up by saying that “there may be specific European programmes in which we might want to participate and if so, it will be reasonable that we make a contribution”. The Government’s announcements this week are an attempt to shift the focus of the talks from money alone. But will all have to wait until after the autumn’s federal election in Germany until the negotiating positions of the two sides start to firm up.