THERESA May’s Government has been accused of being in a “confused mess” after a Cabinet split emerged over the official position on customs arrangements with the European Union post Brexit.
As the Prime Minister prepares for a meeting in Downing Street on Monday with Michel Barnier, the EU’s Chief Negotiator, No 10 made clear she still had an “open mind” on what precise customs relationship the UK would have with the EU27 beyond the two-year transition period from 2021.
But No 10 rejected reports which claimed UK ministers were privately considering a customs union arrangement for trade in goods to avoid disruption to exports post Brexit; something which Brexiteers believe would hamstring efforts to strike free trade agreements with global giants such as China and the US.
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In her keynote Lancaster House speech last January, Mrs May stressed how she wanted Britain to have a customs arrangement with the EU but had “an open mind on how we do it,” setting out three options: a completely new customs agreement; becoming an “associate member” of the current customs union or remaining a signatory to some elements of it.
Asked if she had in any way narrowed down those three options, her deputy spokesman said: “The Prime Minister has an open mind when it comes to these negotiations."
Earlier as she ended the final day of her trade mission to China, Mrs May indicated she wanted some form of customs agreement with the EU27, stressing how it was not necessary to choose between frictionless trade with Europe and being able to strike new deals elsewhere in the world.
Asked whether the £9 billion of deals struck during her trade mission showed it was possible to stay closely aligned with the EU’s customs union while still increasing trade with countries like China, the PM replied: "What I want to do is ensure we have got the best possible trade arrangements with China and with other countries around the world once we have left the European Union. I do want to do those free trade agreements."
However, Liam Fox, the Trade Secretary, made clear the UK, following the two-year transition period, could have no close relationship with the EU customs union if it wanted to strike its own trade deals.
The EU customs union frees its members from internal tariffs but requires them to observe a common external tariff regime and not to strike deals with third countries.
In Shanghai, Dr Fox said: "It is very difficult to see how being in a customs union is compatible with having an independent trade policy because we would therefore be dependent on what the EU negotiated in terms of its trading policies and we'd be following behind that.
"We have to be outside of that to take advantage of those growing markets,” he declared.
No 10 made clear he was speaking for the Government.
In response, Christine Jardine, the Liberal Democrats’ Scotland spokeswoman, said: “This is just another example of the omnishambles that has engulfed the Government’s approach to Brexit and does nothing to reassure the public.”
The Edinburgh MP added: "With this confused mess it's no surprise we are seeing public opinion turning increasingly towards the idea of a referendum on the deal."
In a separate development, pro-EU MPs Ken Clarke, the former Chancellor, and his Tory colleague Anna Soubry are upping their campaign to keep Britain in the customs union by tabling amendments to this effect to the forthcoming Customs and Trade Bills, due at end of the month. Fellow Remainer, Labour's Chris Leslie, said he hoped the move would force his party’s frontbench to “get off the fence" on the issue.
Monday’s UK-EU talks come in the wake of a clash between the two sides over the rights of EU migrants, who come to the UK during any transition period.
During next week officials will hold further technical talks in Brussels with the UK Government expected to give an update on its plans for the future relationship next Friday.