After its failure to settle internally on either the “customs partnership” or “maxfac” wheezes to avoid a hard border in Ireland, the government now envisages that the whole of the UK should remain in a customs union with the EU until such time as other solutions are found. Notwithstanding the fact that a customs union in itself is not sufficient to solve the border problem – alignment with single market rules is also necessary – it is a remarkable U-turn by the government.
It would also be sensible from a UK-wide economic perspective, in that it would avoid the economic hit (and lengthy queues at our ports) that a customs barrier to Britain’s main export market would bring.
But applying the so-called “backstop” arrangement to the entire UK, rather than just to Northern Ireland, is not without problems for the EU. To convince them requires a government able and willing (without being undermined internally by ultra Brexit ministers) to negotiate such a settlement and win over our 27 EU partners who are understandably sceptical and whose patience with the current government has almost reached snapping point.
What are the EU27 wary about?
First, a local backstop arrangement for Northern Ireland is one thing – and all sides agreed it needs solving as part of the Withdrawal Agreement (“divorce” deal). But to suggest that an entire country the size of the UK could remain part of a customs union with the EU goes far beyond a localised solution. Up to now it has been agreed that considerations around the EU-UK future trading relationship will be negotiated on a different legal basis and timetable – the Future Framework agreement(s) to be finalised after Brexit. The first task is therefore to persuade them to deal with this now, significantly increasing the scope of the Withdrawal Agreement talks, which are already running late and are supposed to end in October. And the government has to tell them this urgency is warranted, despite it being the one responsible for leaving it so late!
Second, the purpose of the backstop – to solve the Irish border problem – also requires alignment with single market rules, ranging from product standards to VAT systems. To remain in (or as good as in) not just the customs union but the single market as well, amounts to cherry picking the “four freedoms” of the single market – unless London also agrees to continuing with the free movement of people, abhorrent to the ultra Brexit ministers. The EU will not like the idea of cherry-picking in this way.
Third, they wonder, can the UK be relied on to manage such a system? Other EU countries were already wary of a backstop for Northern Ireland becoming an illicit gateway for UK and third country goods to come into the single market without complying with customs or regulatory requirements. Extending it to the entire UK would amplify these concerns, especially if rule enforcement is lax and there is no legal recourse to the European courts. Currently, there is a dispute about the failure of the UK to charge the appropriate customs duties on certain Chinese products, letting them into the European market at reduced rates: this is now before our common EU Court (ECJ) to settle. Allowing the UK to manage the common external tariff without being part of the EU’s legal system would be a tall order. But accepting any ECJ jurisdiction has been ruled out by this government.
Fourth, they will wonder about the proposed time-limit for all this. When will it end? The UK government envisages it lasting until such time as other solutions are found. By definition, this cannot be a unilateral decision. But is the UK really happy to allow the European Parliament (and, de facto, the Irish Parliament) to have a veto on when it ends? And what about UK budget contributions if it is still in essence a virtual partial member of the EU beyond Brexit?
Finally, for the EU, any Brexit deal cannot leave a departing Member State being seen to keep some of the biggest economic benefits of membership while not abiding by all the obligations which go with it. This is a precedent that the EU does not want to create.
All in all, if such an outcome is negotiable at all, this government is unlikely to be able to do it.