It’s hard to keep up with the convolutions of the Brexit debate in Britain. The latest twist concerns what type of customs arrangement the U.K. should have with the European Union, by far its largest trading partner, after the U.K. leaves the bloc.
The British government wants to leave the EU’s customs union but also to minimize new frictions in EU trade that will emerge with Brexit. Less than 11 months before Britain’s departure and almost two years since the referendum vote to leave, it hasn’t been able to agree on what kind of new customs agreement it wants with the EU, even though the outcome is of enormous consequence to British manufacturing.
Settling that question among ministers is only the start. Consider the other obstacles that confront whatever position the government adopts.
The first is the British Parliament.
A majority of the House of Lords, the unelected upper chamber, is determinedly anti-Brexit and seeking to soften the economic dislocation created by Britain leaving the EU. In the latest and almost certainly not the last defeat for the government, the Lords this week called for the U.K. to remain in the European Economic Area, which would give the country an intimate, Norway-style relationship to the bloc and keep it inside its single market.
The Lords’ votes often don’t matter much, but their amendments to government legislation could provide a vehicle for the elected House of Commons to defeat the government’s Brexit plans.
Such is the government’s shaky hold on the Commons that almost any outcome is possible in Brexit votes there. Having lost her majority in last June’s election, Prime Minister Theresa May depends on the support of the small Democratic Unionist Party from Northern Ireland, whose views she must take into account.
In the Commons, her Conservative Party’s 316 members include a minority of about 60 hard-line pro-Brexit lawmakers who want to sever most ties to the EU and who regularly suggest they will vote down the government over any proposal that hugs the bloc too close. The party also includes a smaller knot of strongly pro-EU members who could vote with the opposition to deliver a less abrupt break.
Holding all of the potential Conservative rebels back is the risk that their votes could bring about a crisis in the form of another general election. That could bring the Labour Party’s left-wing leader Jeremy Corbyn to power with policies such as renationalizing a host of industries.
Labour’s official position is that it favors staying in a customs union under certain conditions, though many of its lawmakers would prefer to stick closer to the EU than that.
It is thus not at all unlikely that the Commons could reject the government’s agreed approach and insist that the U.K. stay part of the EU’s customs union, at least for a time. How Conservative hard-liners would react to that is unclear.
Because of the uncertainty over Parliament, the government will likely delay many key votes until the autumn. But a decision over customs is more urgent than that, because the government hopes it will provide a solution to avoid creating a visible border on the island of Ireland, an issue the EU has said it wants to see settled by next month.
However, once the government has agreed on an approach, it amounts only to a negotiating position to put to the EU. And there arises obstacle No. 2: the EU.
Any British proposal must overcome Irish government skepticism that it will succeed in avoiding the reappearance of an Irish border. More broadly, the EU has already expressed strong doubts about both customs options being considered in London.
In the first option, the U.K. would collect customs duties for the EU. For goods entering U.K. ports and bound for the EU, Britain would pass on the duties to Brussels. For products destined for the U.K., tariff rates would probably differ and the funds retained in London. In the second option, the U.K. would use technology, such as electronic tracking of goods, to obviate the need for most border controls.
The EU has questioned the first option, asking among other things how an arrangement in which the U.K. would collect EU duties would be policed. Even with Britain inside the EU, Brussels has had issues with U.K. customs collection. On the other side of the fence, British Foreign Secretary Boris Johnson, a leading pro-Brexit voice, has described the idea of collecting EU customs duties in Britain as “crazy.”
As for the technological option, the EU also contends that the means don’t yet exist to make it workable. One EU diplomat described the ideas as “sci-fi solutions.”
Indeed, obstacle No. 3 for the two approaches being considered by London is practical: Even if one is agreed upon and negotiated, there is no evidence that the IT systems and other infrastructure to make a new system work will be in place next year—or indeed even by the end of 2020, when the expected status-quo transition period concludes.
This is one reason why there is more discussion of the transition period being followed by a further period of implementation, and why anxiety in Brussels and elsewhere is growing that negotiations to reach an U.K.-EU agreement may fail.
In fact, the shakiness of Mrs. May’s government, the divisions over Brexit in her cabinet and Parliament, and all the big questions that remain to be settled in negotiations about the future relationship, suggest almost any outcome for Brexit remains possible—even no Brexit at all.
—Valentina Pop contributed to this article.
Write to Stephen Fidler at stephen.fidler@wsj.com