This paper considers the proposals the UK Government has made to satisfy the simultaneous objectives to leave the EU Customs Union, but have a cooperative ‘customs arrangement’ following Brexit; and to leave the Single Market, but maintain trade that is ‘as frictionless as possible’ following Brexit. These proposals have to navigate the EU’s 'red lines', primarily the ones that preclude sectoral agreements (or ‘cherry-picking’), and that guarantee an invisible land border between Northern Ireland and Ireland.Jump to full report >>
The UK government has thus far put forward two options for post-Brexit 'customs arrangements', both of which are intended to preclude border controls for customs purposes. The first of these is known as the 'maximum facilitation' ('Max Fac') solution, and involves the use of technology to avoid delays, checks and infrastructure at UK-EU borders. The second is known as the Customs Partnership (CP), and would require the UK applying the EU's tariffs at its own external borders and refunding those traders whose goods do not progress beyond the UK into the EU in cases where the UK's own future tariffs are lower than the EU's. There is a third option, not explicitly addressed by the UK government, and that is to set up a separate Customs Union with the EU following Brexit (as opposed to being members of the EU Customs Union).
Border checks will also arise when the UK exits the EU's Single Market, to ensure that products crossing the UK-EU border meet EU regulatory standards. Instead of staying in the Single Market, the UK proposes that the EU and the UK in future recognise each other's regulations, as long as those regulations achieve the same outcomes.
Progress in the Negotiations
At the time of writing, the EU has explicitly rejected ‘Max Fac’ and the current draft of the ‘Customs Partnership’ idea; its response to ‘outcome alignment’ has been less direct, but the proposal clashes with a number of ‘red lines’ that the EU has maintained throughout the negotiations, such as the integrity of the Single Market and protecting the role of the Court of Justice of the EU (CJEU).
The UK government is in the process of redeveloping its customs arrangements proposals, in the hopes of finding a compromise position on customs with the EU soon. Such a compromise position is needed for the conclusion of a Withdrawal Agreement: without agreed customs and regulatory arrangements, it will not be possible to meet the commitments made in the December Joint Report concluding phase 1 of the negotiations – particularly vis-à-vis avoiding a hard border between Northern Ireland and Ireland.
For further information on what a future customs union might look like, see Commons Briefing Paper 8290, A UK-EU customs union? 25 April 2018.
Commons Briefing papers CBP-8309
Author: Sylvia de Mars